New Medicare Advantage proposal would create a $13 billion windfall for insurers

Bob Herman covers health insurance, government programs, hospitals, doctors and other providers, describing how money influences these companies 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 received a Thanksgiving gift, as President Trump’s Medicare agency added a bonus system that rewards health plans with consistently high ratings.

The Centers for Medicare and Medicaid Services is also proposing eliminating a dozen star rating measures that it considers too administrative. Notably, one of these star rating metrics focuses on an insurance company’s call center performance — the exact metric that Humana and UnitedHealth Group sued over, alleging that CMS unfairly downgraded them due to missed phone calls.

Medicare said the changes would cost taxpayers $13.2 billion between 2028 and 2036 as more insurers get star ratings and higher bonuses. That’s a relatively small amount of money for the Medicare Advantage program, which is expected to cost more than $750 billion in 2028 alone. But it still represents significant additional sums for individual health insurers looking to increase their shrinking Medicare profit margins.