Design Highlights
- Wall Street reacted negatively to CMS’s proposed changes, leading to stock declines for major health insurers like UnitedHealth and Humana.
- Analysts expressed disappointment over minimal payment increase adjustments, which fell short of investor expectations for substantial reforms.
- Proposed Medicare Advantage coding changes aim to improve payment accuracy but are criticized as inadequate to address deeper sector issues.
- Rising costs in Medicare Part B and Part A, including premium and deductible increases, contribute to affordability concerns for seniors.
- Overall market sentiment indicates uncertainty about the future stability of the Medicare Advantage sector and its impact on beneficiaries.
Led by Mehmet Oz, the Centers for Medicare and Medicaid Services is trying to improve payment accuracy and risk adjustment by restricting how illnesses are coded for Medicare Advantage enrollees. But let’s be real—this isn’t a robust solution. Proposed average pay increase is a clear indication of the administration’s lack of commitment to supporting the Medicare Advantage sector.
Under Mehmet Oz’s leadership, CMS is tinkering with illness coding for Medicare Advantage, but this hardly addresses the real issues.
The stock market’s reaction was swift and brutal. UnitedHealth Group, Humana, and CVS Health all saw their stocks plummet by over 9% in after-hours trading. Ouch! Wall Street analysts were clearly disappointed by the proposed increase, and it showed. Investors were hoping for something more substantial, but instead, they got this tiny pay raise. It’s like expecting a feast and getting a single crumb.
On the Medicare Part B front, changes are not looking rosy either. The standard monthly premium is set to jump to $202.90 in 2026, a hefty $17.90 increase from the previous year. Annual deductibles are also rising, and high-income beneficiaries are now facing premiums that could hit $689.90. So much for affordable healthcare, right? It’s a bitter pill to swallow for many. For context, seniors face an average monthly premium of $1,047 across all health insurance plans, making these Medicare increases even more significant.
Meanwhile, Medicare Part A isn’t faring much better. The inpatient hospital deductible is rising to $1,736, up from $1,676, and the coinsurance for days 61-90 of hospitalization is increasing to $434 per day. And let’s not forget the coinsurance costs, which are also increasing. All this while insurers are dealing with flat funding against rising medical costs. It’s a recipe for disaster, leading to higher premiums for consumers and anticipated cuts to benefits for seniors. If you think the insurance industry is just going to roll over and take it, think again. Expect some serious blowback.
This proposed increase impacts about 35 million seniors and people with disabilities renewing in October 2026. So, what’s the takeaway? Well, it’s clear that while the CMS claims to support payment accuracy, the reality on the ground feels much different. The proposed rates seem more like a half-hearted attempt to maintain the status quo than a genuine effort to support beneficiaries.
In the end, it’s the seniors who will feel the brunt of these cuts, and that’s the real tragedy.
