Trump gives Medicare Advantage a big pay boost
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Private Medicare plans will get a more than $25 billion increase in federal payments for the 2026 plan year, according to a policy finalized by the Trump administration Monday.
Why it matters: The more than 5% payment bump is an unexpectedly big win for UnitedHealth Group, Humana, CVS Health and Elevance, among other big insurers.
State of play: The final 2026 Medicare Advantage payment rate is significantly higher than what the Biden administration proposed shortly before leaving office.
- The Centers for Medicare and Medicaid Services said in a news release that the boost is mostly due to updated data on health spending that wasn't available when the proposal was released in January.
- Still, analysts said the difference between the proposed and final payment rates was surprising and far higher than the historical average.
- "This leads one to believe DOGE does not care about MA," Chris Meekins, managing director at Raymond James, wrote in a client note.
What they're saying: "We applaud the Trump administration for protecting seniors and fully funding Medicare Advantage," Mary Beth Donahue, CEO of the Better Medicare Alliance, said in a statement.
- "After two years of Medicare Advantage cuts, this payment rate will provide stability for millions of beneficiaries who have faced plan closures, higher costs, and reduced benefits.
Yes, but: The Trump CMS will continue to implement controversial changes started in 2023 aimed at making payments to plans more accurate. Some health insurers lobbied the new administration to delay the changes.
- The Biden administration cautioned in its January proposal that scrapping the changes would cost an extra $3.4 billion.
Zoom out: Newly confirmed CMS administrator Mehmet Oz promoted Medicare Advantage plans as a TV talk show host before turning to politics, and health care players expected him to be a champion of the program.
- But during his confirmation hearing last month, Oz pledged to go after overpayments to insurers and prior authorization issues.
- His sentiments reflect a broader receptivity among Republicans to making changes to the program — though so far, no actual policy changes have been adopted.
Related: Trump admin won't let Medicare cover anti-obesity drugs
