Trump’s Flat Medicare Advantage Rate May Harm Seniors’ Choices
Even before the Trump administration said the 2027 Medicare Advantage payment rate will be flat, insurers were pulling back from unprofitable markets.
But rising costs coupled by flat rates could trigger further withdrawals of health insurers from states and counties across the country, disrupting the choice of plan for millions of older adults enrolled in Medicare Advantage.
Already, some of the biggest names in health insurance including UnitedHealth Group’s UnitedHealthcare, CVS Health’s Aetna, Elevance Health, parent of several Blue Cross and Blue Shield plans, and Humana pulled back this year from sales of Medicare Advantage plans in certain markets after years of expanding their geographic footprints.
Take UnitedHealthcare, for example. The health insurer exited certain marketsfor this year and expects its Medicare Advantage enrollment to contract by more than 1.1 million older adults, the company said last Tuesday in its fourth quarter and annual 2025 earnings report.
When health insurers leave markets, it forces Medicare Advantage enrollees to pick new plans which may or may not have the same doctors and hospitals or benefit packages. Medicare Advantage plans contract with the federal government to provide traditional coverage available in traditional Medicare plus extra benefits and services to seniors, such as disease management and nurse help hotlines with some also offering vision, dental care and wellness programs.
Last week, the Centers for Medicare & Medicaid Services (CMS), which is run by a Trump-appointed administrator in celebrity physician Dr. Mehmet Oz, said they planned to raise rates paid to health insurers by 0.09 percent, which was less than what health insurers were expecting.
The lobby for health insurers already hinted last week that older Americans enrolled in Medicare Advantage plans could see more services and benefits reduced due to the proposed “flat program funding” proposed by CMS.
“Health plans welcome reforms to strengthen Medicare Advantage,” said Chris Bond, spokesman for America’s Health Insurance Plans (AHIP). “However, flat program funding at a time of sharply rising medical costs and high utilization of care will impact seniors’ coverage. If finalized, this proposal could result in benefit cuts and higher costs for 35 million seniors and people with disabilities when they renew their Medicare Advantage coverage in October 2026.”
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Such plans, which provide benefits for more than half of the nation’s Medicare beneficiaries, have been hit hard by rising costs in the last two years in part because seniors have a pent up demand for healthcare following the Covid-19 pandemic when many patients delayed treatment.
UnitedHealthcare is no exception. Its full year adjusted 2025 medical care ratio, which is the percentage of premium revenue that goes toward medical costs, was 88.9% compared to 85.5% in 2024. Adjusted medical care ratio was more than 91% in the fourth quarter.
“As part of our efforts to address elevated trend and funding cuts, we planned for some Medicare Advantage contraction in 2026,” UnitedHealthcare chief executive Tim Noel told analysts on UnitedHealth Group’s fourth quarter and full year 2025 earnings call last week. “We now expect UHC Medicare Advantage contraction will be in the range of 1.3 million to 1.4 million members for the full-year, including group, individual and D-SNP.”
Elevance Health, too, which is the nation’s second-largest health insurance company, also disclosed last week that it was seeing rising healthcare costs. The company’s benefit expense ratio rose to 93.5 percent in the fourth quarter.
Elevance’s benefit expense ratio gradually rose over the last year. It was 91.3 percent in the third quarter, 88.9% and in the second quarter and 86.4% in the first quarter, according to earnings reports issued throughout last year.
“For 2026, we made deliberate changes to our plan offerings and intentionally exited select geographies, prioritizing plans that deliver value to members while producing sustainable financial performance,” Elevance chief financial officer Mark Kaye told analysts on the company’s fourth quarter and annual 2025 earnings call. “As you heard from (Elevance CEO) Gail (Boudreaux), we now expect Medicare Advantage membership to decline in the high teens percentage range in 2026 while achieving meaningful margin improvement.”
Insurance companies won’t disclose the markets they are participating in for Medicare Advantage for 2027 until this fall. Stay tuned.