Less of a Medicare Advantage

Col#261-10/21/25

LESS OF A MEDICARE ADVANTAGE
By
Richard Davis

Medicare Advantage (MA) was created in 1997 to move the Medicare program further into the private insurance marketplace. It was a Republican led effort to privatize Medicare by offering people cheaper premiums and enticing them with things like gym memberships and cheaper drugs.

Over the years the plan has been so successful that more than 50% of Medicare beneficiaries have moved to the plans. The federal government was paying private insurers handsomely to offer the plans and they were rolling in a new source of income. But things are changing and some insurance companies are dropping the plans because they are not continuing to make the level of profit they have become accustomed to.

Health insurance is not about health because it treats individuals as if they were profit centers. Insurers count on people not using their product too much. But when a company insures seniors they will eventually end up having too many sick people use their insurance and that is not a good thing for them.

Seniors who were lured into the MA plans thought they were too good to be true, but they signed up anyway. They are great plans if you don’t use them, but once you need them you face unanticipated out of pocket costs that can reach from $6000-$10,000 or more a year. People in traditional Medicare know what their costs will be every year.

So why are insurance companies dropping MA plans? The simple answer is that they are not making enough money. The government has changed many of the rules governing the plans and the insurance companies don’t like the new rules. Some of these rules create improvements to the MA program because lawmakers on both sides of the aisle are enamored of the program.

Some changes include: Out-of-pocket caps. The annual out-of-pocket cap for Medicare Advantage will rise to $2100 in 2026, up from $2000 in 2025. This change is part of the ongoing redesign of Part D drug coverage, stricter prior authorization rules. Plans must respond to authorization requests more quickly, within 14 business days. Expanded Benefits: Many plans will introduce new supplemental benefits, including expanded access to dental, vision, and hearing services. Some plans will also offer $0 copays for primary care visits and preventive services. Changes to Part D Drug Coverage: The new rules will include higher deductible and a $35 cap on insulin costs, along with free vaccines under the Inflation Reduction Act.

Although these changes may look like they are not too bad, the result is that beneficiaries will have fewer choices and more insurance companies will increase the cost of premiums. There are still enticements to join the plans but, overall, the benefit to seniors is not as good as it initially was when the plans were first created.

Hospitals will now have a greater administrative burden. Insurers have been seeing decreased MA payment for services over the years and that gets passed along to hospitals.

The entire U.S. health care system is in turmoil and the changes in MA are a reflection of the mess we are in. Seniors who want to have predictable health insurance costs with less risk can remain in traditional Medicare or they can switch from MA back to traditional plans during the open enrollment period from October 15 to December 7.

Now, more than ever, it is critical for seniors to embrace traditional Medicare and keep away from the confusion and unpredictability of Medicare Advantage.