Significant challenges regarding health care affordability may arise for some Americans as the 2026 midterm elections approach.
In January, the Centers for Medicare and Medicaid Services (CMS) suggested almost no increase in Medicare Advantage (MA). If this proposal is approved, average payments are estimated to rise by just 0.09% year-over-year, which translates to over $700 million for plans in 2027. CMS Administrator Dr. Mehmet Oz commented that the goal of this payment policy is to enhance the effectiveness of MA for the people it serves.
Yet, several analysts informed the Daily Caller News Foundation that this proposal could result in notable difficulties for some MA users. They might face increased out-of-pocket expenses, fewer benefits, and limited plan choices.
If finalized, analysts like Susan Riley from the Better Medicare Alliance argue that the proposed payment increase effectively amounts to a “cut.” She stated, “A 0.09% payment hike is essentially flat funding. And, flat funding isn’t neutral; it acts as a cut. With rising healthcare costs and increasing usage, when payments don’t cover the actual costs, seniors end up paying more through higher copays, benefit reductions, and even plan closures. More than 35 million seniors rely on Medicare Advantage, which is more than half of Medicare-eligible citizens.
A report by the Berkeley Research Group suggested that the proposed rate adjustments could lead to savings of around $324 per beneficiary, purely from the changes in the risk model, which could significantly affect seniors living on fixed incomes.
A spokesperson from CMS pointed out that MA continues to be a strong and expanding option for seniors, chosen for its affordability, added benefits, and flexibility. They also mentioned CMS’s commitment to maintaining patient choice and providing quality, affordable coverage to the millions of seniors enrolled in its programs.
The spokesperson stated that the proposed policy for CY 2027 reflects an average 0.09% increase in payments to plans, covering regular updates and methodological improvements aimed at enhancing payment accuracy, competition, and long-term sustainability. They noted that nearly all beneficiaries have access to premium MA plans offering drug coverage at no additional cost, along with a robust selection of extra benefits.
CMS’s proposal includes new risk adjustment data while excluding certain diagnoses, intending to assist MA organizations in focusing on enhancing value rather than simply coding practices. They assured that public feedback would be seriously considered before they proceed with any policy finalization.
Riley sounded the alarm about some seniors enrolled in MA potentially facing reduced benefits and heightened costs if the new rates are put into effect. A research paper released in JAMA revealed that nearly 10% of MA enrollees would have to change insurance in 2026 due to insurers dropping out, marking the highest dropout rate recorded. Particularly, seniors in rural areas face a nearly doubled likelihood of disruption.
She emphasized that these changes would become evident to seniors during their coverage renewals in October 2026, which coincides with the midterm elections. Riley urged the administration to amend the rates before the final notifications are sent out in April, suggesting that actual healthcare cost trends should dictate the effective growth rate, insisting that each point of understatement could cost seniors about $12 a month, translating to roughly $144 annually.
Additionally, Riley suggested that CMS should consider delaying or phasing in the proposed risk model changes, as they’re based on 2024 data, which might not accurately reflect current spending trends.
CMS is expected to release final fee notifications before April 6.
Darryl Drevna from the American Medical Group Association expressed concerns that the proposed rate changes could create a significant disconnect between caregiving costs and actual reimbursement. He commented that a 0.09% rate increase is grossly insufficient, particularly given the rising costs of labor and medical supplies, as well the continuous investments in health IT and care coordination to meet regulatory standards. He warned that minimal rate adjustments could widen the gap between care costs and reimbursement, significantly affecting older adults.
Such shortages could push healthcare plans to narrow provider networks, cut additional benefits like dental and vision coverage, and increase copays for specialist visits. This could lead to fewer MA plan options for seniors. Currently, beneficiaries boast an average selection of 32 plans.
Some of the remaining plans may limit subsidies for necessities like groceries and transportation, indicating a possible shift. Concerns were raised that if medical cost increases don’t align with the proposed rate of 0.09%, seniors and their families could face increased expenses and less favorable benefits.
Reports indicated that U.S. healthcare spending shot up by 7.5% from 2022 to 2023, compared to a modest increase of 4.6% from the previous year. This situation reinforces the worries regarding the sustainability of the current Medicare structure.
