A key lobbying group for Medicare Advantage insurers is ringing warning bells about disruptions to care as a result of increasingly unfriendly government regulations — despite the Biden administration projecting stability in the market next year.
Insurers will offer fewer MA plans nationally in 2025, and on average have raised the out-of-pocket burden on seniors while winnowing the supplemental benefits so popular in the privatized Medicare program, according to an analysis of CMS data performed by Avalere on behalf of the Better Medicare Alliance. The findings mirror those from other research groups.
Insurers were forced to take these steps as a result of stricter government policies, including payment cuts, the BMA said.
“Seniors are choosing Medicare Advantage in record numbers because the program works. But recent policy changes are leaving them with fewer choices, higher costs, and reduced benefits,” said BMA CEO Mary Beth Donahue in a statement.
The BMA’s analysis echoes a chorus of disappointment from other insurer groups, including industry giant AHIP, in the wake of the CMS releasing data on 2025 plans last month. According to the lobbies, Washington is to blame for insurers offering fewer benefits to MA seniors next year.
However, that take ignores a bevy of other factors that have coalesced over the past year and a half to threaten the once sky-high reimbursement of MA plans.
Regulatory changes are part of the picture, but not solely at fault. Most notably, starting last year, seniors began utilizing more healthcare than insurers’ actuaries had forecast, driving up medical costs and shrinking profit margins.
As a result, some of the largest insurers in the program, including UnitedHealthcare, Humana and CVS’ Aetna, told investors they would pare back benefits and cut underperforming plans, preferring to potentially sacrifice member growth instead of profits.
Market watchers were concerned those cuts could be drastic. Yet according to CMS data, the number of MA plans nationally is decreasing by just 2.8%. As a result, almost 2 million existing beneficiaries might have to choose a new plan — about 7% of MA enrollees, according to an an analysis by ATI Advisory cited by the BMA. That’s a notable jump compared to the average of 1.5% in years prior, though still low.
Meanwhile, the major supplemental benefits underpinning MA plans — vision, dental and hearing — are staying relatively stable, and telehealth offerings actually expanded for next year. The average MA enrollee will also have lower premiums, with an average premium of $17 in 2025 compared to $18.23 in 2024.
Vision, dental and hearing benefits stayed mostly stable, while other perks shrunk for next year
Percentage of plans offering key supplemental benefits, 2024 vs. 2025
Instead, plans elected to trim benefits with a less direct impact on health — benefits they expanded heavily in past years to attract more seniors to their coverage. Plans offering over-the-counter benefits, for example, will decline from 86% this year to 73% next year, the largest drop in any of the benefits studied.
OTC benefits, including prepaid debit cards, are a good area for plans to cut because they don’t factor into government limits on how much payers can slash benefits year over year, according to experts. However, they’re also one of the more popular extra benefits among seniors, so trimming OTC coverage can be a gamble.
According to an analysis by investment bank TD Cowen, CVS’ Aetna and Humana made the largest cuts to OTC, while UnitedHealthcare — the largest MA payer in the U.S. — avoided trimming the benefit.
Plans also chose to increase maximum out-of-pocket limits on seniors, which could saddle beneficiaries with higher costs. Next year, 93.7% of plans have out-of-pocket thresholds below the government’s allowed maximum, down from 97.4% in 2024, the BMA found.
“As policymakers consider policy and payment changes for 2026, stability for the Medicare Advantage program is critical to minimizing further disruption and preventing unintended consequences for beneficiaries,” the group’s report reads.
MA payers are facing a perfect storm, according to experts. Most recently, the government released quality or “star” ratings for 2025 that are on average lower than this year, though the specific impact varies by plan. Lower star ratings equates to lower MA reimbursement from the government.
Humana, UnitedHealth and Centene have all separately sued the CMS to overturn damaging results.
The Medicare open enrollment period runs October 15 through December 7.
