The Trump administration is shaking up how health systems are paid for outpatient care with a plan that could reduce Medicare hospital spending by nearly $11 billion over the next decade.
Why it matters:
It’s a big step forward for “site-neutral” payment policies that have been touted as a way to save taxpayers and patients money, but that hospitals say will lead to service cuts, especially in rural areas.
Driving the news:
Medicare administrators on Friday finalized a proposal to reduce what the government pays hospitals to administer outpatient drugs, including chemotherapy, at off-campus sites.
The move would equalize payment rates to hospitals and physician practices for the same services — an idea that Congress debated last year but didn’t act on in the face of aggressive hospital lobbying.
Medicare now pays about $341 for chemotherapy administration in hospital outpatient facilities, compared with $119 for the same service delivered in a doctor’s office.
Medicare next year will also start to phase out a list of more than 1,700 procedures and services only covered when they’re delivered in an inpatient setting.
What they’re saying:
The policy changes will give seniors more choices on where to get a procedure and potentially lower out-of-pocket costs at an outpatient site, the Centers for Medicare and Medicaid Services said.
Some health policy experts said the change will help make Medicare more affordable.
“We hope the administration will continue its efforts and adopt site neutrality for other services in future rules,” Mark Miller, executive vice president of health care at Arnold Ventures, said in a statement.
The other side:
“Both policies ignore the important differences between hospital outpatient departments and other sites of care,” Ashley Thompson, a senior vice president at the American Hospital Association, said in a statement.
“The reality is that hospital outpatient departments serve Medicare patients who are sicker, more clinically complex, and more often disabled or residing in rural or low-income areas than the patients seen in independent physician offices.”
Hospital outpatient departments still will see an $8 billion overall increase in their Medicare payments in 2026.
But the Trump administration contends that new technologies and other factors are shortening recovery times for procedures done on an outpatient basis.
Between the lines:
Health systems still scored a small win when CMS dropped a plan to speed up the repayment of $7.8 billion in improper cuts the first Trump administration made to safety-net providers’ reimbursements in the federal discount drug program.
The policy would have clawed back the money from hospitals’ Medicare reimbursements. Scrapping the idea “helps preserve critical resources for patient care during an already challenging time,” Soumi Saha, senior vice president of government affairs at Premier, said in a statement.
Still, CMS said it may try again in 2027. And law firm Hooper Lundy Bookman is already sending out feelers to hospitals willing to challenge the version of the repayment plan that will go into effect next year, per an alert sent Friday night.
What we’re watching:
Whether health systems challenge the site-neutral payment changes. The hospital payment plan came weeks later than expected and will make it harder for facilities to update billing, revise their budgets and train staff, Saha said.
The administration is also launching a survey of hospitals’ outpatient drug acquisition costs next year, which is seen as a prelude for cutting reimbursements under the discount drug program.
Harvard psychologists Daniel Simons and Christopher Chabris ran a now-famous experiment in the late 1990s. They showed students a short video of six people passing basketballs and told them to count the number of passes made by the three players in white.
Halfway through the film, a person in a gorilla suit walks into the frame, beats its chest and exits. Amazingly, half of viewers — both then and in multiple recreations of the study — never notice the gorilla. They’re so focused on counting passes that they miss the obvious event happening right in front of them.
The authors call this “inattentional blindness.” And you don’t need to visit a research lab to see it. It’s everywhere in American healthcare.
Policymakers, business leaders and medical societies are all busy counting their own pass equivalents: metrics like insurance subsidies, premiums and enrollment numbers.
As a country, we need to stop counting passes long enough to observe how the gorilla negatively affects people everywhere: in Washington, in boardrooms, in workplaces and in rural communities. Only then can we confront the gorilla head on.
1. The gorilla in Washington
In Congress, lawmakers spent 43 days debating how to reopen the government. The fight centered on whether to continue funding the enhanced premium tax credits that have made coverage more affordable for roughly 20 million lower-income Americans who purchase health insurance through the Affordable Care Act’s online exchanges.
Democrats argued that ending those payments in 2026 would cause premiums to spike and make care unaffordable. Republicans warned that continuing them would add nearly $400 billion to the federal deficit over the next decade. Both believed they were protecting Americans from financial harm. And both were right. If the cost of providing medical care isn’t reduced, neither the federal government nor the average family will be able to afford it.
The United States spends $14,885 per person each year on medical care while the next highest-paying nation, Switzerland, spends $9,963 per person with far better clinical outcomes, according to the Peterson Center, .
If the U.S. could cut the spending gap between American and Swiss healthcare in half, our nation would save $700 billion annually. Those savings could help maintain ACA subsidies, lower out-of-pocket costs for families and reduce federal deficits.
But the gorilla inflicts financial damage far beyond just the ACA exchanges. Between federal funding cuts and eligibility changes, analysts warn that millions of Americans enrolled in Medicaid will become uninsured starting in 2026. Meanwhile, because federal law limits Medicare payment growth to the rate of inflation, hospitals make up lost revenue by charging private insurers and their enrollees more (already about 250% of Medicare rates). Ultimately, employers and workers will pay the price.
2. The gorilla in corporate America
America’s C-suite leaders are conducting the business equivalent of counting passes. Instead of confronting the cost of medical care itself, they’re focused on comparing premiums, raising deductibles and choosing plans with narrower physician networks.
But without major changes in how care is delivered, no plan will remain affordable.
The average cost of family health coverage premiums will approach $30,000 next year, with employers paying about $24,000 and workers responsible for the rest, according to an October KFF survey of 1,862 non-federal public and private firms. A projected 9% premium increase means employers and employees together will spend roughly $2,500 more next year per worker — limiting wage growth, hiring and investments in innovation.
America doesn’t have an insurance problem. It has a medical cost crisis.
3. The gorilla in the workplace
While workers focus on wages, benefits and job security, the same cost crisis threatening businesses and government is about to hit them hard.
More than half of U.S. adults receive health insurance through an employer. But as medical costs rise, companies are turning to automation and generative AI to reduce their expenses.
Amazon offers a vivid example: the company eliminated 14,000 office and professional roles and announced plans to combine robotics with generative AI to replace as many as three-quarters of its warehouse workforce. The company plans to create new, higher-skill jobs to maintain the robots, but far fewer (and not for the same people who were displaced).
When workers lose employer-based insurance, they don’t stop getting sick. They turn to Medicaid or subsidized exchange plans. That strains government budgets, lowers hospital reimbursements and pushes insurers to raise commercial premiums even higher.
Unless the cost of medical care drops dramatically, the gorilla’s impact will reverberate throughout society.
4. The gorilla in rural hospitals
The cost crisis is devastating people everywhere, but perhaps nowhere more than in rural America. Over the past two decades, 150 rural hospitals have closed or stopped offering inpatient services. Another 700 facilities (nearly one-third of those remaining) are at risk of shutting down.
With small patient populations and high fixed costs, many rural hospitals can no longer provide inpatient care. But instead of reducing the high cost of care delivery, most communities pursue short-term relief: emergency grants, temporary bailouts and added Congressional funding.
These efforts can delay closure, but they don’t change the math. Even when hospital beds are empty, the buildings must be staffed, heated, insured and maintained, turning every day into a financial loss.
To survive, the model will have to change, and painful sacrifices will be necessary.
Addressing the gorilla everywhere
The United States can dramatically reduce healthcare spending while improving quality. But doing so will require a structural overhaul, not incremental tweaks. Three major opportunities already exist.
1. Shrink our hospital footprint
America maintains far more hospitals than it needs, with many offering duplicate services at high fixed costs. A more sustainable system would:
Eliminate overlapping specialty programs in crowded markets.
Small rural hospitals could transition into 24-hour emergency and urgent-care hubs supported by telemedicine and reliable, low-cost transportation to larger facilities.
2. Prevent diseases before they happen
According to the CDC, more effective control of chronic diseases would reduce medical costs up to $1.8 trillion by preventing as many as half of all heart attacks, strokes, cancers and kidney failures. Three pragmatic opportunities include:
Every complication avoided is a hospital admission, ICU stay or surgery that never happens and is never billed.
Pay for value, not volume
Healthcare’s fee-for-service payment system rewards doing more, not doing better. Capitation — fixed monthly payments to physician groups and hospitals — flips the incentive structure, rewarding improved health, not just disease treatment.
Under capitation, prevention becomes financially rewarded, chronic diseases are managed earlier and more effectively, and care shifts to high-quality, cost-efficient settings, including outpatient facilities and virtual platforms.
The result is a virtuous cycle: healthier patients, fewer complications and significantly lower cost.
No single group — government, employers, patients or clinicians — can solve this crisis alone. Success will require all stakeholders to overcome their inattentional blindness and confront the gorilla together. The only question is how much worse things must become before we do.
A Florida retirement haven is thrown into chaos as a $360 million Medicare overbilling scandal and a Humana–UnitedHealth standoff leave seniors scrambling to keep their doctors.
Behind the gates of The Villages (the pastel Shangri-La of Florida retirement lore) is a place where American seniors zoom around on golf carts like 1977 Thunderbirds and keep wrist stabilizers on the ready for impromptu pickleball matches. It’s a community built on the promise that retirement is a time for sunshine, camaraderie and — most importantly — a health system that doesn’t leave you out in the cold.
HEALTH CARE un-covered has published stories about The Villages in the past – and how the retirement community is rife with Medicare Advantage shenanigans. And today, many Villagers have been blindsided by these shenanigans like they’re part of a Big Insurance hostage crisis straight out of an episode of Days of Our Lives or General Hospital.
A TVH / UnitedHealth dispute leaving seniors “duped”
Earlier this year, The Villages Health (TVH) — the health system serving more than 55,000 retirees — promised a smooth handoff as it prepared to sell itself to CenterWell, Humana’s senior-focused primary-care chain. TVH’s CEO assured residents that “no change in care” was coming, according to News 6.
But then came the bankruptcy filing. And then the revelation that TVH owed more than $360 million to the federal government for “Medicare overbilling.” And then the sale. And, according to Village-News, then a bankruptcy judge confirming that, yes, TVH was indeed being swallowed by CenterWell for $68 million.
In other words: the health care version of a soap-opera plot twist. Only with fewer glamorous outfits and more Chapter 11 filings.
On November 7, the very day the sale of TVH closed, patients received a message warning them that their UnitedHealthcare Medicare Advantage plan — the plan they were nudged toward back in 2016 when TVH tried to push all patients into UnitedHealth’s grasp — might not be accepted after Dec. 31, 2025. If negotiations fail, residents must switch doctors or switch insurers.
Message from The Villages Health to their “Valued Patient(s)”.
“Not to be notified until basically the last minute that there isn’t a contract between CenterWell and United at this time is very alarming,” Villager Phyllis McElveen told Spectrum News. “We had already gone out and selected our UnitedHealthcare plan for 2026. We had already done everything. And now to know we might have to make a change is just not a pleasant feeling.”
At The Villages, you can imagine that picking the right Medicare plan is akin to competitive sport — one step removed from a pickleball tournament. The residents do their homework and many reportedly attend “Medicare prep presentations.” So for Villagers, being blindsided is a big deal.
Longtime patient Nancy Devlin told News 6 that she dug through Humana’s and Aetna’s plans to find a plan that might allow her to stay with the physicians she’s seen for six years. But for Devlin, her digging was to no avail. None of the plans matched what she currently had with UnitedHealthcare. Not the same covered medications. Not the same premiums. Not the same out-of-pocket costs. Not the same networks.
“They duped us,” she said. “It’s more expensive and doesn’t have my medications, or I have to pay for them, and I don’t pay for my medications now.”
For retirees on limited incomes, doubling drug costs is a gut punch that can mean one less trip to visit their grandkids or postponing that cruise to the Bahamas. Or for some, putting enough food on the table.
A deal gone sour
To understand how this crisis happened, go back to 2016, when TVH urged residents to switch into UnitedHealthcare Medicare Advantage or lose access to their doctors. Fast-forward to today. TVH is bankrupt, Humana now owns the centers, and UnitedHealth, the world’s largest health conglomerate (and the once-preferred partner for Villagers) is persona non grata unless a deal is reached.
The timing could not be worse. Open enrollment ends December 7, which means that tens of thousands of retirees have just around two weeks to decide whether to switch insurers or switch doctors.
What’s happening here is not simply a contract negotiation gone awry, but a symptom of something deeper. TVH didn’t just owe “some money” to Medicare. It owed about $360 million because of what Humana and The Villages described as a gigantic “Medicare coding error.”
UnitedHealthcare, in turn, accused The Villages’ controlling Morse family of quietly pulling out $183 million between 2022 and 2024 – funds UnitedHealth argued were siphoned off just before the bankruptcy filing.
If that allegation sounds familiar, it’s because we’ve seen versions of this story across the health care industry: private companies treating Medicare Advantage plans like piñatas stuffed with taxpayer dollars. Sometimes, the bat misses the piñata and smacks a whole village of seniors.
Here’s what happens next
The Villages, for all its mid-century charm and retirement-resort quirks, is a microcosm of a national problem that Medicare Advantage is, too often, run for Big Insurance’s advantage with seniors just an afterthought. Corporate acquisitions, bankruptcies, risk-coding schemes, contract disputes and Wall Street demands that lead to fewer and fewer in-network doctors and hospitals and covered drugs. Meanwhile, billions in taxpayer dollars flow through this system with relatively no accountability. Medicare Advantage is corporate welfare on steroids, with the “invisible hand” of the market misleading and then slapping the hell out of vulnerable American seniors to enrich the big guys in control with cushy government handouts.
For Villagers, it’s either/or:
Either CenterWell and UHC strike a deal: The crisis cools, residents keep their current doctors in 2026.
Or no deal is reached: Tens of thousands will either change doctors, change plans or risk being turned away at medical appointments starting Jan. 1, 2026.
Representative Mark Pocan (D-WI) yesterday introduced eight bills aimed at strengthening traditional Medicare and reining in some of the worst practices in the privately-run Medicare Advantage business. For years, lawmakers have danced around the mounting evidence that private Medicare Advantage plans overbill taxpayers between $80 and $140 billion annually and quietly impose barriers to seniors’ care to boost profits.
Traditional Medicare remains one of the most successful public programs in American history. It was built around a simple promise: If your doctor says you need care, you get it. But as Medicare Advantage has grown, that promise has eroded for millions of people. MA plans are largely run by big insurance conglomerates – like UnitedHealthcare, Elevance and CVS/Aetna – and those insurers decide what care is covered, which doctors you can see and how long you can stay in a hospital. Each cent they have to shell out for your care is a cent they can’t keep in their pockets or split with their shareholders. Wall Street’s relentless demand for more and more of that money incentivizes them to deny or delay care that mean life-and-death for millions of American seniors.
And it’s not just health care policy nerds like me that have been focused on this issue – even the U.S. Department of Justice (DOJ) has taken aim at Medicare Advantage. In February, news broke that the DOJ had launched a civil fraud investigation into UnitedHealth Group, the largest MA insurer, for the company’s alleged use of diagnoses that trigger higher Medicare Advantage payments. And in July, the company confirmed it is the subject of a DOJ criminal investigation. The DOJ reportedly questioned former UnitedHealth Group employees about the company’s business practices.
You can see the entire package of bills on Pocan’s website. They include the Denials Don’t Pay Act, which would force Medicare Advantage plans to face real consequences if too many of their prior-authorization denials are overturned; The Right to Appeal Patient Insurance Denials (RAPID) Act, which would ensure every denial is automatically appealed, sparing sick and elderly patients from navigating a process many never even know exists; and the Protect Medicare Choice Act which would stop insurers and brokers from pushing seniors into Medicare Advantage by default.
Pocan and his co-sponsors understand that Medicare Advantage’s prior authorization hurdles and widespread denials are just Wall Street-directed obstacles that second-guess physicians and delay care. Patients pay the price. Doctors pay the price. And taxpayers pay the price.
More Perfect Union has just posted a video breaking down a truth that Big Insurance hopes you never hear: rising “health care costs” are really rising health insurance profits.
As I explained in the video, UnitedHealth, Cigna, CVS/Aetna are part of a cartel of corporate conglomerates that have built a business model that relies on overpayments in Medicare Advantage, shrinking doctor networks and a sprawling web of vertically integrated subsidiaries that vacuum up our premiums, deductibles and tax dollars — and turn them into shareholder returns as Wall Street relentlessly demands.
Here’s a bit of what I said:
“Your premiums, deductibles and pharmacy bills are all going up. We’re told it’s because medical costs are rising, but the bigger story is who’s capturing the money. In just three months, UnitedHealth Group made $4.3 billion in profits on revenues of $113 billion.
Over the past five years, the cost of a family premium has increased 26%. This year, the average cost of a family policy was almost $27,000.
Just about everybody with private insurance will be paying a lot more than that next year, regardless of whether you get it from your employer or buy it on your own. That’s because UnitedHealth and other big insurance companies cannot control rising health care costs.
In fact, insurance companies benefit from medical inflation. They just jack up their premiums enough to cover the additional cost and guarantee them a tidy profit.”
The video points out the real drivers of cost growth — from UnitedHealth’s nearly 2,700 acquisitions to Medicare Advantage overpayments that funnel billions from taxpayers into corporate profits.
If you haven’t watched it yet, I hope you will and share it with everybody else you know. It’s clear that Congress must pass common sense guardrails to stop Big Insurance from writing the rules of American health care and squeezing Americans.
Republicans are taking a harder line against extending enhanced Affordable Care Act subsidies — and doubling down on an alternative plan that would send the money directly to consumers.
Why it matters:
President Trump’s opposition to an extension makes it increasingly unlikely that Republicans will agree to renew the tax credits, even though it’s not clear how the GOP alternative would work or whether the party can reach a consensus.
Driving the news:
Trump wrote on Truth Social on Tuesday that the “only” plan he will support is “sending the money directly back to the people,” and that Congress should not “waste your time” on anything else, like a subsidy extension.
Trump didn’t elaborate on how his plan would work. The ACA already gives people financial help in buying insurance.
Some GOP proposals envision giving people money for a health savings account on top of existing ACA coverage, mitigating concerns about healthy people leaving the market.
Senate health committee Chair Bill Cassidy (R-La.) outlined a plan on Monday that would redirect the enhanced subsidy money to an HSA to help pay out-of-pocket costs for people who chose bronze-level ACA plans, which tend to have high deductibles.
He argued the move would direct money away from insurance companies and to consumers, and empower them to shop for health services.
Anotherpossible outcome would be allowing people to buy cheaper, skimpier coverage that doesn’t comply with the ACA’s benefit requirements. Some policy experts warn that would destabilize the ACA markets, by prompting an exodus of healthier people.
That would leave a sicker risk pool and prompt insurers to raise premiums, resulting in a “death spiral,” said Larry Levitt, executive vice president for health policy at KFF.
By contrast, “I don’t think there’s any risk of, you know, a collapse or death spiral, from what Senator Cassidy is talking about,” Levitt said, though without the enhanced subsidies there would still be “potentially millions of people who just won’t be able to afford insurance at all.”
Between the lines:
Senate Majority Leader John Thune (R-S.D.) wouldn’t rule out a bipartisan solution when asked about Trump’s comments on Tuesday, saying “we’ll see” how negotiations go and that “there’s an openness” to a deal on the GOP side.
He said the biggest obstacle, though, could be whether Democrats agree to apply the Hyde Amendment to the subsidies and add restrictions on using the funds for abortions.
The intrigue:
Cassidy is framing his plan as the most realistic option, given White House and House GOP leadership resistance to the subsidies.
“The president is not going to sign a straightforward extension of premium tax credits,” Cassidy said. “So if you actually want something which can pass and get a vote on the House floor, then what the president is proposing is actually a better way.”
Yes, but:
Democrats believe mounting public concern about rising health costs gives them the upper hand pushing for a subsidy extension.
“Sending people a few thousand dollars while doing nothing to lower health care costs is a scheme to help the ultra-wealthy at the expense of working people with cancer or pre-existing conditions,” Senate Democratic Leader Chuck Schumer said in response to Trump’s comments.
“Americans want Congress to extend the ACA tax credits to keep health insurance premiums from skyrocketing on January 1,” he added.
The big picture:
The war of words is further diminishing the chances that a group of moderates in both parties can find a bipartisan agreement to extend the subsidies with some modifications favored by Republicans, like an income cap and anti-fraud measures.
House GOP leaders have also been criticizing the subsidies. House Majority Leader Steve Scalise (R-La.) said on Fox News on Sunday that the party would be bringing forward legislation in the coming weeks on other ways to lower costs, like expanding HSAs or cracking down on pharmacy benefit managers.
The Senate Finance Committee will hold a hearing Wednesday morning on health care costs, giving senators a chance to stake out their positions further in public.
The bottom line:
It’s unlikely that Trump’s plan would gain the necessary 60 Senate votes to advance. But it could give Republican senators political cover if they oppose a subsidy extension.
Republicans could still opt to use the reconciliation process to pass a bill with a simple majority. Though the White House floated the idea on Tuesday, it’s not clear if any GOP-only plan has the votes to pass.
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 thegovernment 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.
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 thegovernment 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.
Wall Street reacts to the failed ACA subsidy extension — and to the president’s swipe at “money sucking insurance companies.”
Wall Street got the jitters yesterday after Donald Trump’s pointed remarks about “money sucking insurance companies” and a Congressional deal that failed to extend the enhanced subsidies under the Affordable Care Act (ACA) marketplace plans. According to one market analysis, shares of Centene (CNC) plunged about 8.15% in pre-opening trade, while competitors such as Molina (MOH) fell 4.6%, Elevance (ELV) dropped 3.7%, UnitedHealth Group (UNH) slipped 1.9% and Humana (HUM) declined 1.45%.
Why the sell-off? Because the enhanced ACA subsidies — which reduce premiums for some marketplace enrollees — expire at the end of the year and without renewal, an estimated 3.8 million people could lose coverage, and premiums would rise significantly for others. Insurers that rely on the stability and growing enrollee base of the ACA marketplace face heightened risk when that funding is in question – especially when the dollars are guaranteed – like when they are shoveled out from the federal government.
Still, it’s worth noting that the ACA marketplace business is not the primary profit engine for most large payers. Their bigger gains typically come from taxpayer-funded programs like Medicare Advantage, Medicaid managed-care contracts and veterans’ / VA contracts.
Here’s how five of the major players fared in 2024 profits:
Centene: $3.2 billion (+590% since 2014)
UnitedHealth Group: $32.2 billion (+214% since 2014)
Elevance: $9.1 billion (+78% since 2014)
Humana: $2.6 billion (+8.3% since 2014)
Molina: $1.18 billion (+780% since 2014)
Because most of their gains have not come from ACA exchange plans (and especially not the thin margin employer market) but through their other government-subsidized businesses, investors can have some certainty their investments in those companies are still largely safe and Big Insurance will be able to weather this storm.
For instance, the industry has always been able to strongarm rough patches in the consumer market – as long as they can stave off any meaningful changes to their bread and butter taxpayer-funded programs. As we reported last month, the industry’s outside PR and lobbying friends – Better Medicare Alliance and Medicare Advantage Majority – have hit the airwaves and the halls of Congress to halt the advancement of the No UPCODE Act. The bipartisan bill, sponsored by Senators Bill Cassidy (R-LA) and Jeff Merkley (D-OR) would end wasteful, fraudulent practices in Big Insurance’s Medicare Advantage businesses that funnel taxpayer money into the pockets of industry executives and Wall Street shareholders and could save taxpayers as much as $124 billion over the next decade and keep the Medicare Trust Fund solvent for years longer.
As of this morning, insurers seem to be fairing better. Centene, UnitedHealth Group, Elevance, Humana and Molina are all back in the green.
Research suggests UnitedHealth may be running a shell game — one that lets insurers flout regulations and obscure the harmful consequences of their vertical integration strategies.
A new Health Affairs study has confirmed that UnitedHealth Group — the nation’s largest health care conglomerate — is doing more than dominating the market; it’s playing by a different set of rules.
Researchers Daniel Arnold of Brown University and Brent Fulton of UC Berkeley analyzed new federal “Transparency in Coverage” data and found that UnitedHealth’s insurance arm, UnitedHealthcare, pays its own Optum physicians 17% more on average than it pays other doctors for the same services. And in markets where UnitedHealthcare holds a large share — 25% or more — that gap explodes to 61%.
The Affordable Care Act’s medical loss ratio (MLR) rule requires insurers to spend at least 80–85% of premium revenue on patient care, rather than on administrative expenses and profits, but if an insurer can funnel “medical spending” to its own subsidiaries — in this case, the thousands of subsidiaries that now comprise Optum — it can appear to comply with the law while actuallyshifting massive amounts of revenue from one pocket to another.
Under the MLR rule, insurers are required to send rebate checks to their customers if they don’t comply with the MLR requirement. The Health Affairs research suggests that UnitedHealth may be flouting that rule by deliberately overpaying the health care delivery operations it owns to comply with the letter of the law if not the intent. Because physician practices and other provider entities are exempt from the MLR rule, regardless of ownership, UnitedHealth can avoid sending its customers the rebates they otherwise would get and pad the conglomerate’s bottom line.
As the researchers put it:
“The results suggest that intercompany transactions within health care conglomerates may warrant scrutiny, as they may be signals of regulatory gaming or attempted foreclosure.”
Another way to game the system
This study also highlights another consequence: independent physician practices are being squeezed out. When UnitedHealth pays Optum doctors more — and non-Optum doctors less — it creates an uneven playing field that could drive small and mid-sized practices out of business.
The authors warn that this pattern “could lead to independent practices closing or joining larger groups such as Optum”. Over the past decade, Optum has quietly amassed more than 90,000 doctors under its control — more than any other private organization in the country.
And it’s not just doctors – UnitedHealth owns nearly 2,700 entities – a pharmacy benefit manager, a data analytics firm, home health companies and even surgery centers. The study notes that in 2024, Optum reported $253 billion in revenue, but 60% of that was simply money moving internally from UnitedHealthcare. In other words, UnitedHealth’s empire is built on being able to feed itself by self-dealing.
The point
This research provides some of the strongestevidence yet that UnitedHealth’s “vertical integration” strategy is distorting the market — not to improve care but to maximize profits under the guise of “compliance.”
For regulators at the Department of Justice, the Department of Labor (which has jurisdiction over employer-sponsored plans administered by UnitedHealth and other insurers) and the Centers for Medicare and Medicaid Services, this should be a wake-up call. As the authors conclude, even a 1% artificial price increase through these internal transfers could significantly reduce the rebates insurers owe consumers under the medical loss ratio rule. That’s billions of dollars that patients, taxpayers and employers are entitled to but that never leave the company’s bank account – except to reward shareholders and top executives. During just the first nine months of this year, UnitedHealth reported making nearly $19 billion in profits on revenues of more than $334 billion. Both revenues and profits likely would have been considerably less if not for the apparent gaming the Health Affairs researchers uncovered.
HENRY KOTULA 