Medicare Advantage: Why Members and Plans Paid More

Cost shares have as much as doubled as plans get a payment rate hike.

A new analysis by eHealth of more than 250,000 applications submitted during the 2025 Medicare Advantage (MA) Annual Enrollment Period found that plan deductibles have more than doubled ($315 vs. $132). In addition, Medicare Part D premiums are also 24% higher than the 2024 plan year. The first and one of the largest health insurance exchanges in the U.S.

Meanwhile, it's Christmas in April for MA insurers, who will receive a 5.06% increase ($25 billion) in the average MA plan benchmark payment in 2026. This increase — finalized April 7 via CMS's Rate Announcement — is higher than the 4.33% increase ($21 billion) proposed at the tail end of the Biden-Harris Administration.

This Tale of Two Cities for members and payers comes as the industry responds to the Rate Announcement and CMS issues additional MA guidance on risk adjustment, Star Ratings, GLP-1 coverage for weight loss.

Rate increase reactions unsurprising

Responses to the Rate Announcement largely followed "party lines" across payers and providers.

Analysts note that the payment increases will help payers expand benefits along with profitability, with the stock prices of publicly traded insurers (UnitedHealth Group, Elevance Health, CVS Health) rising from 6-19% after the announcement.

Conversely — and even before the final Rate Announcement — AMA president Dr. Bruce A. Scott, MD lamented the plan payment increase "while physicians are in their fifth consecutive year of payment cuts."

"The stark contrast between highly profitable insurance companies that are receiving annual payment increases above inflation and physicians," Scott added, "ought to raise eyebrows of policymakers and taxpayers — as it has for physicians."

Plan rate increases amidst a bevy of new MA guidance

Paired with his eHealth's MA member cost-sharing analysis, CEO Fran Soistman added:

"Over the past two years, CMS rate adjustments for Medicare Advantage have not kept up with medical cost inflation or the pent-up demand for healthcare following COVID. That's why enrollees are being asked to take on significantly higher out-of-pocket costs, as our new report shows."

Soistman's quote came prior to the CMS Rate Announcement, and he is bullish on the Medicare Advantage program under CMS's new Administrator, Dr. Mehmet Oz.

"It's too early to say what the future holds for Medicare Advantage but Dr. Oz has been a vocal supporter of the program," says Soistman, adding: "Medicare Advantage is burdened by significant regulations and we look forward to a period of positive change."

An eMed media representative clarified that eHealth "is not against CMS targeting bad actors and supports anything that truly protects consumer interests." CEO Soistman has expanded on this position, noting that not all licensed agents and independent brokers are created equal.

Select agent and broker market guardrails were one of many requirements CMS deferred when finalizing another Medicare Advantage regulation, the Contract Year 2026 MA and Part D rule, including:

• most proposed Star Ratings changes
• artificial intelligence oversights
• coverage of GLP-1s for weight loss by Medicare Part D plans and Medicaid

In line with the Trump Administration's anti-DEI policies, CMS announced that the name of the MA Star Ratings Health Equity Index will change to Excellent Health Outcomes for All (EHO4all) and that its current reward factor will be removed.

CMS giveth and taketh away

The Rate Announcement did, however, continue phase-in of the MA risk adjustment model, which most insurers requested be paused.

As HealthLeaders examined last fall, CMS changed the algorithm that assigns diagnostic codes to address coding variability across MA payers. Depending on new data and analysis — including demographics like age and gender — payments for conditions like heart disease might be higher or lower (overall and compared to MA).

"This is so health plans don't just pick healthy people who cost less as members," noted KFF Associate Director-Program on Medicare Policy, Jeannie Fuglesten Biniek. "The plans get higher payments for people who are sicker."

Coding manipulation to increase reimbursement from CMS is a private payer strategy, which Fuglesten Biniek described as plans receiving "higher payments than are justified and from a payment system that is set up to incentivize this because CMS pays more for people who are sicker."

What's next for MA plans under the Trump Administration?

Medicare Advantage plans are likely to find a friend in Trump's second term, perhaps from policies detailed in Project 2025 from conservative think tank the Heritage Foundation.

For Medicare Advantage, Project 2025 proposes "critical reforms [that] are still needed to strengthen and improve the program" such as making MA the default enrollment option when beneficiaries age-in to Medicare coverage and removing "burdensome policies that micromanage MA plans"

Forbes notes that while Trump "has publicly disavowed Project 2025 and has not changed his stance since taking office," his first months in office "have featured a slew of executive orders that reflect proposals outlined in the policy blueprint."