Protect Seniors From Medicare Advantage Funding Cuts

1. The Medicare Advantage Funding Crisis

The federal government is failing America’s seniors. Washington is not raising Medicare Advantage payments fast enough, yet healthcare costs continue to climb. This gap threatens the health and financial security of more than 35 million older Americans.

The Trump administration must act. It should honor its commitments to seniors while targeting the structural causes of runaway healthcare costs.

2. How a Near-Flat Rate Harms Seniors

CMS Proposes a 0.09% Rate Increase

The Centers for Medicare & Medicaid Services (CMS) recently issued a near-flat advanced rate notice of just 0.09% for Medicare Advantage plans in 2027. That number is alarming. CMS’s own analysis found that national healthcare spending grew 7.2% in 2024 and an estimated 7.1% in 2025.

The math simply does not add up. Consequently, seniors will feel the difference directly in their pockets and their care.

The Gap Does Not Disappear

When payments grow more slowly than costs, someone absorbs the shortfall. In this case, that burden falls on Medicare Advantage plans and the seniors enrolled in them. Insurers must respond to the gap somehow. Therefore, they raise premiums, cut supplemental benefits, narrow provider networks, or exit high-cost markets entirely — especially rural communities.

For many seniors, this translates to losing dental, vision, or hearing coverage — benefits that traditional Medicare does not provide.

3. Who Bears the Real Cost

Seniors on Fixed Incomes Face the Most Risk

Seniors enrolled in Medicare Advantage rely on the promises made when they first chose their plans. Notably, 95% of enrollees stick with the same plan year after year. They made long-term decisions based on stable expectations.

Cutting effective funding means higher costs or fewer benefits for people who often live on fixed incomes. Consider these facts:

• More than one-third of Medicare Advantage enrollees earn less than $25,000 annually.
• For seniors living primarily on Social Security, even small cost increases create real hardship.
• When seniors cannot manage unexpected expenses, the financial burden often shifts to caregivers and family members.

The human cost of underfunding Medicare Advantage is therefore wide-reaching and deeply personal.

4. Fixing the Root Cause of Rising Healthcare Costs

Address Structural Drivers, Not Just Symptoms

Instead of shortchanging seniors, the government must reduce the underlying cost of healthcare. Congress holds powerful tools to achieve this on both the insurance and provider sides of the market.

One key reform: lawmakers could direct Medicare Advantage payments to beneficiaries rather than insurers. This approach lets seniors choose plans that best meet their individual needs. Furthermore, when funding follows patients instead of flowing automatically to plan administrators, insurers must compete on the value they deliver.

5. Competition and Insurance Reform

Allow Insurance Sales Across State Lines

Additionally, Congress should allow health insurance sales across state lines. This single reform creates meaningful market pressure. Insurers in high-cost states would face competition from lower-cost rivals, while plans in lower-cost states would need strong networks to remain attractive. Greater competition benefits consumers on both ends.

More competition means better pricing, better service, and better outcomes for seniors nationwide.

6. Hospital Transparency Must Improve

Hospitals Ignore Federal Pricing Rules

Hospital costs are a major driver of rising healthcare expenses. Federal rules already require hospitals to publish transparent prices for many services. However, hospitals largely ignore this requirement. Currently, fewer than one in four hospitals comply with the mandate.

As a result, patients remain in the dark about what care will actually cost them. Moreover, patients often pay more through their insurer than they would if they paid directly. Hospital service prices have grown three times faster than inflation and, in some cases, 280% since 2000.

Enforce Accountability Now

Congress must strengthen enforcement of hospital transparency rules. Hospitals that ignore federal requirements should face meaningful penalties. Accountability here would slow one of the largest engines of healthcare cost growth in America.

7. Drug Pricing Reform Saves Billions

America Lags Behind Europe on Biosimilars

Drug spending is another significant cost driver. Biosimilars — the “generic” versions of complex biologic drugs like insulin and many cancer treatments — offer major savings. Yet America trails Europe in both approving and adopting them.

Fewer biosimilars receive FDA approval in the U.S. Even fewer earn interchangeable status compared to European health authorities. Streamlining FDA approval standards and removing unnecessary regulatory barriers would increase competition. As a result, prices on some of the most expensive medicines would fall sharply.

8. A Call to Action

Opportunity Exists — If Washington Acts

Each of these reforms reduces healthcare costs for Medicare Advantage patients. Moreover, many would lower costs for patients across the entire country. Reducing the cost of care makes Medicare more affordable for taxpayers. It also preserves the benefits seniors were promised and depend on every day.

Controlling spending must mean addressing structural cost drivers — not shifting the burden onto the very people Medicare exists to protect. The Trump administration has a clear opportunity to adjust 2027 Medicare Advantage rates to reflect the real needs of America’s seniors and their families. The time to act is now.