Trump’s Flat Medicare Advantage Rate May Harm Seniors’ Choices

Andy | February 4, 2026August 31, 2026

The federal government’s approach to Medicare Advantage payment rates has become a major issue for Arizona seniors. Proposed flat funding rates — where the government pays insurers a fixed amount regardless of rising healthcare costs — could trigger significant changes to Medicare Advantage plans starting in 2027. Here’s what’s happening and what it could mean for your coverage.

What Are Medicare Advantage Payment Rates?

The federal government pays private insurance companies a set amount per enrollee to administer Medicare Advantage plans. These Medicare Advantage payment rates are set annually by the Centers for Medicare and Medicaid Services (CMS). The payment amount affects how much margin insurers have — which in turn affects the benefits, networks, and premiums they can offer enrollees.

According to CMS, the 2027 advance notice proposed payment rates that alarmed many health insurers — at 0.09% growth, far below what insurers said they needed to keep pace with rising healthcare costs.

Why Flat Medicare Advantage Payment Rates Are a Problem

When Medicare Advantage payment rates don’t keep up with actual healthcare cost inflation, insurers face a choice: absorb losses, reduce benefits, raise copays, or exit markets. We’ve already seen this pattern play out:

UnitedHealthcare contracted its Medicare Advantage enrollment by over 1 million members
Humana, CVS Health’s Aetna, and Elevance Health pulled back from certain markets
Major insurers have reduced extra benefits like dental, vision, and OTC allowances
Some plans have increased copays and narrowed provider networks

If flat payment rates become the norm, these trends are likely to accelerate through 2027 and beyond.

What This Means for Arizona Medicare Advantage Enrollees

If you’re currently on a Medicare Advantage plan in Arizona, here’s the practical risk:

Your plan’s benefits could be reduced at the next Annual Enrollment Period
Your doctors or hospitals could leave the network
Your plan could exit the Arizona market entirely, forcing you to find a new plan
Copays and out-of-pocket maximums could increase

This isn’t speculation — it happened to over 1 in 10 Medicare Advantage members in 2026, who were forced off their plans when insurers withdrew from markets.

Why Medicare Supplement Plans Are Not Affected

This is a critical distinction. Medicare Advantage payment rates set by the government affect Medicare Advantage plans directly. Medicare Supplement (Medigap) Plan G operates completely differently.

Medigap plans work alongside Original Medicare. They don’t depend on government payment negotiations with private insurers. The benefits are standardized by federal law, your coverage doesn’t change annually, and your doctors don’t leave a “network” because there is no network. Plan G works with any doctor who accepts Medicare — and that’s the vast majority of physicians in Arizona.

Is This a Good Time to Reconsider Medicare Advantage?

If you’re still in your Medigap open enrollment window — the 6 months after you first enroll in Medicare Part B — you can switch to a Medicare Supplement plan without medical underwriting. That window is the most important decision point in your Medicare journey.

If you’ve already been on Medicare Advantage for more than a year, switching to Medigap may require medical underwriting. That means insurance companies can review your health history before approving you. It’s not impossible, but it’s harder — which is why acting early matters.

Questions About Your Medicare Options in Arizona?

I’m Andy Orlikoff, an independent Medicare broker in Surprise, AZ. I don’t sell Medicare Advantage. I help Arizona seniors understand how Medicare Advantage payment rates and policy changes could affect their coverage — and whether a Medicare Supplement plan is a better fit for their situation.

Call or text: (623) 742-3878
Email: andy@azhealth.us
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