Health insurance companies stumble after Trump proposed keeping Medicare prices constant

The proposal would entail a net average payment increase of 0.09% for Medicare Advantage plans in 2027, according to a statement from the Centers for Medicare and Medicaid Services, or CMS, on Monday. This number is much lower than Wall Street analysts’ expectations that the agency will propose an interest rate increase of between 4% and 6% for next year.

CMS typically finalizes Medicare Advantage rates in early April. If the current proposal stands, the rate increase would result in more than $700 million being paid to Medicare Advantage plans in 2027, according to the agency’s statement.

The closely watched government payment rate determines how much insurers can charge for the monthly premiums, plan benefits they offer, and, ultimately, their profits. The Wall Street Journal first reported on the government’s interest rate proposal on Monday.

Medicare Advantage is a privately operated health insurance plan contracted by Medicare. More than half of Medicare beneficiaries are enrolled in such plans, due to lower monthly premiums and additional benefits not covered by traditional Medicare, according to health policy research firm KFF.

CMS said it is also looking to cut down on the money-making industry billing practice. Part of the proposal aims to improve payment accuracy and ensure Medicare insurers receive adequate reimbursement, the newspaper reported.

“These proposed payment policies are intended to ensure that Medicare Advantage works best for the people it serves,” CMS Administrator Dr. Mehmet Oz said in the release. “By enhancing payment accuracy and modernizing risk adjustment, CMS helps ensure beneficiaries continue to have affordable plan choices and reliable benefits, while protecting taxpayers from unnecessary spending that is not directed toward meeting real health needs.”