The Future for Medicare Advantage

The last year or so has been harsh for many of the roughly 35 million people enrolled in Medicare Advantage plans, the private insurers' alternative to traditional Medicare also known as Medicare Part C.

The outlook for 2025 and 2026? "Choppy," said Nick Herro, senior partner at Chartis, a health care consulting firm.

Jeannie Fuglesten Biniek, associate director of the Program on Medicare Policy at the health policy research group KFF, said Medicare Advantage plans have grown increasingly popular (now representing 54% of people in Medicare) because they offer one-stop shopping. Most include Medicare Part D prescription drug plans.

By comparison, when people enroll in traditional Medicare's Parts A and B, they often also need to buy a separate Part D plan and a Medigap supplemental insurance plan.

Medicare Advantage plans also offer vision, hearing and dental benefits, which traditional Medicare can't, and expectations of lower out-of-pocket costs than the alternative system.

Although Medicare Advantage plans have traditionally been viewed as lucrative for companies offering them, insurers have said government and marketplace changes in 2024 and 2025 squeezed them financially.

As a result, members in the plans commonly saw out-of-pocket costs rise, medications lose coverage, doctors and hospitals leave their networks and benefits trimmed or eliminated. Dozens of Medicare Advantage plans shut down.

"Medicare Advantage over the last couple of years has changed tremendously," said Jared Copinga, a Salt Lake City managing director and Medicare specialist at the wealth management firm Prime Capital Financial.

The economics for the insurers "got out of whack" and "many have been losing money," causing a period of retrenchment, Herro said. A recent Chartis report said, "the Medicare Advantage market is undergoing a period of correction after rapid growth in the early part of the decade."

Experts say people who have Medicare Advantage or are considering enrolling will likely see improvements in the plans this year and next due to new policies by President Donald Trump, but fewer consumer protections.

Trump and Dr. Mehmet Oz, the president's Administrator for the Centers of Medicare & Medicaid Services (CMS), are vocal proponents of Medicare Advantage. Oz became a licensed broker in almost every state for the Medicare Advantage company TZ Insurance Solutions, according to The New York Times.

"I expect policy to try to encourage the growth of Medicare Advantage as much as possible and also to make sure that Medicare Advantage plans have a good opportunity to be profitable," said Dr. Lawrence Casalino, professor of population health sciences at Weill Cornell Medicine in New York.

It's already begun.

In April, the Trump administration said it will increase government payments to Medicare Advantage plans by more than $25 billion in 2026. Put another way, insurers will get a 2026 rate increase of effectively 7.2%, far more than what the Biden administration proposed.

"Medicare Advantage plans are really happy about that," said Carrie Graham, executive director of the Medicare Policy Initiative at Georgetown University.

The big question is whether the extra money will lead to more generous benefits, lower out-of-pocket costs and the ability for some plans to stay in business.

"It's hard to draw a straight line" from the extra cash the insurers will receive to plan improvements, said Adam Finkelstein, a health policy advocate and attorney at the Manatt, Phelps & Phillips law firm in Washington, D.C. "I think increasing the rates should help stabilize the Medicare Advantage market."

Finkelstein believes the government's generous rate increase for providers may help Medicare Advantage members avoid losing access to their plans, as many did this year.

The shakiest Medicare Advantage plans are likely to be those offered by small and medium-sized insurers or offered in rural areas, experts said.

"Where you may see some plans with continued financial pressures or looking to exit are the smaller, regional ones," said Brian Fisher, managing director in healthcare advisory at the BRG consulting firm.

Said Copinga: "If you are outside of a city center, you're at risk of higher than normal increases for premiums and deductibles or just insurance companies saying, 'I'm out.' "

Here's what else to expect in the Medicare Advantage world over the next two years:

The outlook for Medicare Advantage benefits, premiums and deductibles is a little hazy right now, experts said, since insurers are trying to figure out strategies in this new environment.

"Health care plans are going to play this game of chicken" when submitting their 2026 plans to CMS in June, said Herro. "Some might say: 'Hey, this is our opportunity, let's design really rich benefits and get a bunch of members to come into our plan.' Others may say: 'Hey, we're in a deep hole. We need to dig ourselves out.' That's why I think it's going to be choppy."

Biniek is more hopeful for beneficiaries. Because of the 2026 rate increase to insurers, "I would certainly not expect benefits to become any less generous," she said.

In a recent Chartis survey of more than 30 health plan leaders, most said their Medicare Advantage benefits would be equal to last year's.

Because of the new $2,000 cap on out-of-pocket costs for prescription drugs covered by Part D plans in 2025 (it rises to $2,100 in 2026), many Medicare Advantage insurers have buffeted themselves by raising prescription drug costs and deductibles or dropping certain medications.

Now, Biniek said, "I think they have more money to blunt some of those effects." It would be harder for the insurers to justify continued changes, "but we will see," she added.

In the past two years, "we've seen dozens of terminations of contracts between health care providers and Medicare Advantage health plans," said Fisher.

Doctors and hospitals dropped out because of frustration with Medicare Advantage's reimbursement rate, bureaucracy and paperwork, Fisher said. He expects this trend to continue, meaning people may not find their favorite physicians or medical centers in certain Medicare Advantage plans.

Medicare Advantage insurers' penchant for prior authorization — demanding that doctors and hospitals get their approval to provide care — has been a huge hindrance for beneficiaries.

Herro calls prior authorization "a thorn in the side for the Medicare Advantage industry."

There's bipartisan support to fix it, however. At his confirmation hearing, for example, Oz said that he would streamline prior-authorization processes. He also said CMS could slash the number of procedures subject to Medicare Advantage prior authorization from roughly 5,500 to 1,000.

"If the administration could make a case that they've cut out this horrible thing the health plans are doing to Medicare beneficiaries, that would be very popular," said Casalino. "So, I wouldn't be surprised to see something that will enable them to make that claim."

Exactly how or when prior authorizations might be reduced and shortened is unclear, however. As of now, a rule scheduled to take effect in 2026 would require Medicare Advantage plans to approve or deny urgent prior authorization requests within 72 hours; standard requests would get up to seven days.

People looking for free advice about Medicare Advantage sometimes turn to State Health Insurance Assistance Programs (known as SHIP), but they'll likely run into trouble doing so next year.

That's because the Trump administration has shut the federal agency in charge of SHIP, the Administration on Community Living. Some parts of that agency will be moved elsewhere, though the administration hasn't said whether SHIP will be among them.

A leaked draft budget from the Department of Government Efficiency (DOGE) has called for eliminating federal funds for SHIP programs, Amy Gotwals, chief of public policy and external affairs, said at USAging, at the American Society on Aging's recent On Aging 2025 conference.

SHIPs appear to have enough funding to last through the upcoming Medicare Open Enrollment season, October 15 to December 7, 2025, not beyond that.

Perhaps the biggest Medicare Advantage change that may be coming is a proposal to make it the default choice for enrolling in Medicare. Currently, people 65 and older sign up for traditional Medicare's Parts A and B and can then switch to Medicare Advantage.

David Lipschutz, co-director of the Center for Medicare Advocacy, told On Aging 2025 attendees he has heard that CMS may be working on proposals to turn Medicare Advantage into the default choice.

"It's entirely possible that we could see Medicare Advantage become the default enrollment option within the next few years," said Finkelstein. He said CMS has the authority to make this change in limited cases but hasn't used it.

"But there would be so many questions of how making Medicare Advantage the default would be done," said Graham.

Although Oz said at his confirmation hearing that "there's a new sheriff in town," Casalino doubts he'll do anything meaningful to protect Medicare Advantage customers and people considering enrolling.

Lipschutz agrees. "We expect less emphasis on consumer protection from Medicare in this administration," he said at On Aging 2025.

The Trump administration has scuttled Biden administration proposals restricting the marketing of Medicare Advantage plans. Among other things, Medicare Advantage brokers would have been required to give people more information and insurers would have had to update their doctor and hospital network lists within 30 days of a provider joining or leaving a plan.

The Justice Department, however, recently sued the giant Medicare Advantage insurers Aetna, Elevance Health (formerly known as Anthem) and Humana, alleging that they paid unlawful kickbacks to brokers that directed Medicare beneficiaries to the insurers' plans, "regardless of the suitability of the MA plans for the beneficiaries."

The Justice Department said the insurers paid brokers at eHealth, GoHealth and SelectQuote hundreds of millions of dollars to steer people into plans that might not have been in beneficiaries' best interests. Aetna, eHealth, Elevance, GoHealth and Humana have denied the allegations.

Meantime, the upshot for people planning to sign up for Medicare Advantage: "There's nobody truly looking out for you as much as you are," said Herro. "So, you're going to have to spend a little more time making sure the plan you're in is the plan you should be in."

Richard Eisenberg is the former Senior Web Editor of the Money & Security and Work & Purpose channels of Next Avenue and former Managing Editor for the site. He is the author of "How to Avoid a Mid-Life Financial Crisis" and has been a personal finance editor at Money, Yahoo, Good Housekeeping, and CBS MoneyWatch. Read More