New Medicare Advantage proposal would create $13B windfall for insurers

Bob Herman covers health insurance, government programs, hospitals, physicians, and other providers — reporting on how money influences those businesses and shapes what we all pay for care. He is also the author of the Health Care Inc. newsletter. You can reach Bob on Signal at bobjherman.09.

Medicare Advantage insurers scored a Thanksgiving gift, as President Trump’s Medicare agency added back a bonus system that rewards health plans with consistently high marks.

The Centers for Medicare and Medicaid Services also is proposing to eliminate a dozen star ratings measures that it deemed too administrative. Notably, one of those star ratings measures focuses on the performance of an insurance company’s call centers — the exact metric that Humana and UnitedHealth Group have sued over, alleging that CMS unfairly downgraded them because of missed phone calls.

Medicare said the changes would cost taxpayers $13.2 billion between 2028 and 2036, as more insurers get higher star ratings and bonus payments. That’s a relatively small amount of money for the Medicare Advantage program, which is expected to cost more than $750 billion just in 2028. But it still amounts to large extra sums for individual health insurers that are looking to boost their slimmed-down Medicare profit margins.