Private Medicare plans are set to receive more than $25 billion in additional federal funding for the 2026 plan year, following a policy finalized Monday by the Trump administration.
Why It Matters?
The over 5% payment increase is a significant and unexpected win for major insurers like UnitedHealth Group, Humana, CVS Health, and Elevance.
The Details
The finalized 2026 Medicare Advantage payment rate is much higher than what the Biden administration proposed before leaving office.
According to the Centers for Medicare and Medicaid Services (CMS), the increase is largely driven by new health spending data that wasn’t available when the initial proposal was released in January.
Still, industry analysts were surprised by the large jump, noting it far exceeds the historical norm.
“This gives the impression that DOGE isn’t concerned about Medicare Advantage,” wrote Chris Meekins, managing director at Raymond James, in a client note.
What They’re Saying?
“We applaud the Trump administration for protecting seniors and fully funding Medicare Advantage,” said Mary Beth Donahue, CEO of the Better Medicare Alliance.
“After two years of cuts, this new rate will offer much-needed stability for millions of beneficiaries who have dealt with plan closures, rising costs, and fewer benefits.”
Yes, but: Despite the funding boost, the Trump administration will continue to move forward with controversial reforms that began in 2023 to improve payment accuracy. Some insurers had urged the new administration to hold off on these changes.
The Biden administration previously warned that reversing these adjustments could lead to an extra $3.4 billion in costs.
The Bigger Picture
Mehmet Oz, the newly confirmed CMS administrator, was once a vocal supporter of Medicare Advantage as a TV personality.
However, during his recent confirmation hearing, he committed to addressing insurer overpayments and the burdens of prior authorization, signaling a willingness among Republicans to pursue reforms. Still, no official policy changes have been made yet.
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