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US Proposes Tiny Medicare Advantage Rate Hike
27 Jan
Summary
- Proposed average rate increase for Medicare Advantage plans is 0.09%.
- Shares of major health insurers dropped more than 10% after the announcement.
- Final rate announcement from the Medicare agency is expected on April 6.
The U.S. government has put forth a proposal for Medicare Advantage plans, suggesting an average rate increase of 0.09% for payments to private insurers. This proposed policy update, which affects how insurers are compensated for managing these plans, has led to a significant stock market reaction, with shares of major health insurance companies dropping by more than 10% in after-hours trading.
Government officials have indicated that this proposed rate aims to modernize the risk adjustment model, which accounts for patient health status, and ensure taxpayer funds are used efficiently. The projected outcome is an additional $700 million in payments for 2027. However, industry experts and trade groups have voiced concerns, noting that a 0.09% increase falls far short of expectations, especially given rising healthcare costs and utilization.
America's Health Insurance Plans, a trade group, warned that if finalized, these rates could result in benefit reductions and increased costs for the 35 million seniors and individuals with disabilities enrolled in Medicare Advantage. The trade group advocates for reforms but stresses the need for adequate program funding amidst rising medical expenses. The Medicare agency is scheduled to release its final rate announcement on April 6, with the proposed policies taking effect for the following year.
