Medicare Moves Toward Election Season Clash With Insurers

Health insurers could slash their Medicare Advantage plan menus this fall, while the 2024 general elections are in progress.

Officials in the administration of President Joe Biden set the stage for a conflict Monday by locking in a 3.7% average increase in federal payments per Medicare Advantage plan enrollee for 2025.

The Centers for Medicare and Medicaid Services, the agency that oversees the Medicare Advantage program, put that number in a final version of the 2025 Medicare Advantage rate announcement.

The 3.7% increase is unchanged from the figure included in an advance notice posted in February. It’s bigger than the 3.32% increase provided for 2024. But America’s Health Insurance Plans says average spending per member was more than 7% higher in 2023 than in 2022.

The 3.7% increase “did not fully account for rising health care costs and a sharp increase in seniors’ use of care,” according to Mary Beth Donahue, president of the Better Medicare Alliance, a group for Medicare Advantage program supporters.

What it means: In some years, Medicare plan issuers persuade CMS officials to sweeten the terms described in the final Medicare Advantage rate announcement.

If that fails to happen this year, some insurers may not change their plan menus. Others could narrow Medicare Advantage plan menus or leave the program entirely.