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The Trump administration is expected to spell out its intentions for Medicare Advantage soon — a program that enrolls about half of U.S. seniors but has drawn intensifying criticism for costing the government too much.

Why it matters: 

Centers for Medicare and Medicaid Services chief Mehmet Oz called the system “upside down” during his confirmation hearings, hinting at possible changes to the way the federal government pays and regulates plans.

• Any big changes would be a departure from a history of friendly treatment from Republican administrations.
• Those could become apparent in the proposed 2027 Medicare Advantage rule, which may come out before the end of this year.

How it works: 

Many privately run Medicare plans charge no monthly premium and provide supplemental benefits that traditional Medicare doesn’t cover, like dental coverage and help paying for over-the-counter drugs.

• The program was created on the premise that private insurers could manage care better and at a lower price point than the federal government.
• But some insurers have since drawn fire for categorizing patients as sicker than they are to get higher payments, and for overly complicated pretreatment reviews.
• Advisors to Congress projected the federal government would spend about $84 billion more on Medicare Advantage enrollees this year than for people in traditional Medicare. (Insurers say the advisors’ methodology is flawed.)

Oz has a history of promoting Medicare Advantage plans on his popular television show and advocating for an “MA for All” policy.

• But he’s been more openly skeptical since joining the administration, as a growing cadre of GOP policymakers ask questions about the program’s finances and insurers’ role in driving up costs.
• “I came both to celebrate what you’re trying to do, but also be honest about some of the issues that we’re seeing at CMS,” Oz said at the industry lobby’s conference last month.
• Oz believes choice and competition are needed for a strong Medicare program, but also that CMS has a responsibility to keep “program payments fair, transparent, and grounded in data,” Catherine Howden, the agency’s director of media relations, told Axios in response to a request for comment.

This is an opportunity for Medicare Advantage insurers to have some strategic conversations with CMS about Oz’s vision for the program, said Daniel Fellenbaum, senior director at Penta Group.

• UnitedHealthcare, Humana and Aetna are the three biggest Medicare Advantage insurers and cover more than 20 million seniors combined.

Where it stands: 

This year CMS announced what it termed an “aggressive” strategy to increase audits of the diagnoses Medicare Advantage plans document for enrollees, which could claw back money from insurers.

• Medicare’s Innovation Center said it’s working on pilot programs that could change the way the government pays the plans.
• Industry onlookers are also expecting the administration to propose changes to the star ratings system, which measures Medicare Advantage plan quality and dictates bonus payments to plans.

What they’re saying: 

Insurers and advocates of private Medicare plans remain optimistic that Oz has their best interests at heart.

• “He seems to stress good oversight and holding the program to high standards without losing sight of what’s working for seniors,” said Susan Reilly, vice president of communications at Better Medicare Alliance.
• Insurance trade group AHIP welcomes “constructive, data-driven conversations with policymakers on actions that strengthen Medicare Advantage,” CEO Mike Tuffin said in a statement to Axios.
• AHIP wants a focus on stability in the program after several years of medical costs increasing faster than Medicare Advantage payment, it said.

Reality check: 

The 2026 update to plan payment, the first of this administration, is better than anticipated for insurers, giving them more than $25 billion increase in federal payments.

• The Trump administration also struck voluntary agreements with insurers to simplify the rules for authorizing procedures and treatments ahead of time, rather than using its regulatory authority to require changes.
• “We hear rhetoric talking tough on MA, but we’ve not seen them put that into actual reality,” said Chris Meekins, managing director at Raymond James.
• Any big policy changes next year would also become apparent to seniors right before the midterm elections. Bigger policy swings from the administration might be more likely to go into effect for 2028, Meekins said.

What we’re watching: 

President Trump has been vocal about his distaste for health insurance companies on social media lately as Congress debates extending enhanced premium subsidies for Obamacare coverage.

• That ire could seep into how he directs his administration to regulate Medicare Advantage.