It is best not to argue with the market but that isn't going to stop us from pointing out that the Medicare Advantage "rates" that purportedly sent the MCOs tumbling is as much political theater as an indicator of what the federal government plans to pay for services. As policy has been shoved aside in favor of politics, everywhere all day long, important program revisions are reduced to 140 characters or less, like "President Biden is cutting Medicare" of "President Biden supports the privatization of Medicare."
If you are running CMS you must stay out of hot water with both poles of the political spectrum and somehow produce an actuarily respectable rate notice. Appreciating this navigational feat is not what Wall Street is known for. Instead, they appear to be using a tried and true method that calls for CMS teasing out a lower than necessary rate in the Advance Notice and responding to the hew and cry of MCOs by raising it in the Final Notice.
That might make some lobbyists look good but it doesn't work when the government is so neatly divided as it is now.
And what does it matter? The fact is that the "rate" diverges noticeably from what the government has paid MCOs in the past and what it projects it will pay in the future. The 2023 report on Medicare from the Office of the Actuary calls for an increase in outlays to MA plans of about 10.3% increase YoY. In 2025, the 2024 YoY% was 9.8%. The gap between the advertised rate and the actual payments is a function of the program's scope and complexity.
I suspect that MA rates are but an excuse. The fact is, inflation has/is reaccelerating and that is never great for the highly regulated and slow moving health care industry. When what I suspect will be the last leg of the inflation story - the money printing ends in January - clears, it will be important to remember the above.
Let me know what you think.
Emily Evans
Managing Director – Health Policy
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