Private insurers offering Medicare Advantage plans in the US could see a significant payment increase in 2026 under a proposal from the Centers for Medicare and Medicaid Services (CMS), potentially gaining an average 4.3% increase, or 2.2% excluding adjustments for patient risk scores. This proposal, released ahead of the incoming Trump administration, would deliver the largest payment boost since 2023, equating to an additional $21 billion compared to 2025.
Shares of major insurers surged after the announcement—Humana rose 7%, UnitedHealth gained 3.9%, and CVS Health increased 2.7%.
Insurers have long criticized recent payment rates as insufficient to cover rising medical costs. The Biden administration had taken steps to limit Medicare Advantage payments, citing concerns over waste and alleged overbilling linked to inflated patient illness risk scores. For 2025, payments saw a slight cut when risk score adjustments were excluded.
Despite industry opposition to CMS’s risk coding reforms, officials maintain that the market remains strong. JPMorgan analyst Lisa Gill noted optimism that the Trump administration could introduce more favorable policies.
Medicare Advantage Growth and Costs
Medicare Advantage covered over half of Medicare beneficiaries in 2023, costing $455 billion, excluding drug plan costs. The US is projected to spend $9.2 trillion on private Medicare plans over the next decade. However, according to the Medicare Payment Advisory Commission, the government is expected to spend $83 billion more in 2024 on Medicare Advantage enrollees than if they were covered under traditional Medicare.
Calls for Oversight
Democratic lawmakers, including Senator Elizabeth Warren, have urged stronger oversight, arguing that some insurers inflate patient risk profiles to secure higher payments. Past administrations have also faced criticism for their timing—Trump’s first term saw a Medicare Advantage rate proposal released just days before Biden took office in 2021.
The final notice for the 2026 rate changes is expected in April, with insurers and policymakers closely watching the outcome.
