Will the Trump Administration Advantage Medicare Advantage?

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Medicare Advantage (MA) plans may have received a boost of support from the Trump administration when it announced increased payments for insurers in 2026, but they still could face other challenges in the future. CMS announced in early April that payments for MA and Part D Prescription Drug Plans would jump 5.06% next year, compared to the 2.23% increase proposed under the Biden administration. “I think this rate increase is consistent with the perception that the administration is supportive of MA, despite some signaling that there is also an interest in reform,” says Katherine Hempstead, Ph.D., senior policy officer at the Robert Wood Johnson Foundation.

Katherine Hempstead, Ph.D.

Katherine Hempstead, Ph.D.

Even with the higher rates, it “will probably still make the MCOs [managed care organizations] pretty cautious. I would still imagine the business climate will continue to favor the bigger players,” Hempstead observes.

The higher rate “offers some stability for plans for the coming year,” says Lynn Nonnemaker, Ph.D., a Medicare policy expert at the health policy consultancy McDermott+ who had previously focused on Medicare policy issues for AHIP and Cigna. Nonnemaker cautions that observers “not read too much into the final rate notice. There definitely is still the opportunity for CMS to put its own imprint on programs going forward.” Jeffrey Davis, M.S., director at McDermott+, added that the higher rates were based on more recent data than that used by the Biden administration. “It’s not a change in policy, but [in] how they calculate things,” says Davis. In an email, Susan Reilly, vice president of communications for the Better Medicare Alliance, which advocates for MA, said, “This administration wants to make America healthy again, and supporting Medicare Advantage will be a crucial piece of that agenda. Our priority is to ensure that Medicare Advantage remains strong and stable for more than 34 million seniors and individuals with disabilities who choose it.”

Although President Donald Trump has said he won’t cut Medicare, Elon Musk’s Department of Government Efficiency (DOGE) has been on a cost-cutting tear, including at HHS and CMS, which oversees Medicare. In March, HHS Secretary Robert F. Kennedy Jr. announced staffing and reorganization plans that called for reducing the number of full-time employees from 82,000 to 62,000 and consolidating 28 divisions into 15.

“There are lots of cooks in the kitchen when making policy,” Davis says, with the White House, DOGE, CMS, and HHS all having a stake in decisions. “Disagreement on policy happens in every administration.”

Oz’s attitude

Despite the decision, many questions remain regarding the administration’s position on the future of Medicare and MA. “It’s conceivable the administration could lean into the acceleration of the privatization of care, or they could lean into efficiency and savings,” Tricia Neuman, senior vice president and executive director for the Program on Medicare Policy and senior adviser to the president at KFF, said before the rate decision was made. CMS Administrator Mehmet Oz, M.D., MBA, spoke favorably about MA plans on his TV show, and his financial disclosures showed he owned as much as $600,000 in stock with UnitedHealth Group, the insurer with the largest share of MA enrollees. He had told lawmakers he would divest that stock if his CMS appointment were confirmed.

Tricia Neuman

Tricia Neuman

Most older Americans eligible for Medicare are now enrolled in MA plans rather than traditional Medicare, attracted by the wider array of benefits at a low or zero premium. The trade-off is a narrower network of providers and the consequences of prior authorization and other managed care practices that the MA plans use to rein in use and curb costs. Insurers that offer MA plans have come under congressional scrutiny after being accused of “upcoding”: classifying patients as sicker than they are to receive higher payments from the government. The Department of Justice has launched an investigation into UnitedHealth Group for its billing practices.

Last year, 32.8 million people, or 54% of the eligible Medicare population, were enrolled in MA plans. That’s up from 48% of the population enrolled in such plans in 2022. MA plan enrollment is expected to jump to 60% of the population by 2030, according to KFF.

However, the MA growth is coming at an added cost to the federal government — and to Medicare beneficiaries. The Medicare Payment Advisory Commission, an independent group that reports to Congress, projected in its March 2025 report that in 2025, the Medicare program will spend approximately 20% more for MA plan enrollees than it would have if those enrollees had been in traditional Medicare, which the commission calculated is the equivalent of $84 billion. The commission says the overpayment results from favorable selection — MA enrollees use, on average, fewer medical services than those in traditional Medicare — and “coding intensity,” the tendency for more diagnosis codes being recorded for MA enrollees, increasing so-called risk scores and payments. During his Senate confirmation hearing, Oz said, “We’re actually … paying more for Medicare Advantage than we’re paying for regular Medicare. So it’s upside down.”

If the Trump administration is looking for savings, “the Medicare Advantage payment system would be a likely place to start,” Neuman says. DOGE says it is focusing on waste, fraud and abuse. Upcoding could be considered a type of waste, fraud or abuse, notes Hempstead. “I do think there will be some effort to reform some of the coding practices.”

When a person is eligible for Medicare, they can choose between traditional Medicare or MA. If they don’t make a selection, they are automatically enrolled in traditional Medicare.

The controversial Project 2025, which some see as a blueprint for a conservative federal government, calls for MA plans to become the default option for Medicare. Trump denied any knowledge of the project, but many of his administration’s moves echo Project 2025 aims. “It’s very premature to think about” automatic MA enrollment, Davis says. However, if a switch to MA were the default option, it could lead to higher Medicare costs, Neuman notes. Congress and Oz have also expressed concern over MA plans’ prior authorization requirements. A KFF study found that nearly all MA members require prior authorization for certain services, compared with only a small percentage of services for Medicaid members.

In 2023, almost 50 million prior authorization determinations were made for MA members compared with about 400,000 for traditional Medicare members. During his Senate testimony, Oz said he would like to see the number of procedures requiring prior authorization limited to about 1,000.

GLP-1s

The law that established Medicare Part D prohibits Medicare from covering drugs used for weight loss. MA and Part D plans can cover glucagon-like peptide 1 (GLP-1) drugs as diabetes and cardiovascular treatments. The Biden administration had proposed changing the rules to allow coverage of obesity drugs. But in early April, CMS announced it was not going forward with the proposition, a decision heralded by groups representing MA plans as prudent, partly because of the cost: the GLP-1s are priced to cost approximately $11,000 a year in the U.S. Moreover, research so far suggests that people must stay on the GLP-1s if they are to keep the weight off. In an interview after that CMS decision, Kennedy left open the possibility of coverage for GLP-1s after people have tried other ways of losing weight.

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