Trump’s benchmark payment rate increase for insurance companies? It comes at a cost, both for insurers and Americans — here’s the skinny for older adults in the Medicare Advantage plan (2025)

Criticism of the plan

The Medicare Advantage program has not been without its critics since its inception in the Balanced Budget Act of 1997.

The program uses taxpayer dollars to pay private insurers for coverage for older adults and those with disabilities. Medicare Advantage was introduced by Republican Representative John Kasich in the omnibus, and the Democrats have been critical of using public funds to pay private companies through the program.

How much the federal government spends on Medicare Advantage influences its monthly premiums and plan benefits. There is no baseline of coverage across the different private insurers who participate in the program.

Pundits have said the Biden administration was skeptical of the program, and the low rate of increase proposed for 2026 by Biden was seen as a cut to funding, given the rate of inflation.

Despite stricter rules enacted by the Trump administration on billing practices, the Department of Justice has launched a civil fraud investigation into UnitedHealthcare’s practices. Critics have looked askance at Trump for continuing to pour taxpayer money into an industry mired in legal woes.

Trump’s policies and their impact on older adults

There is little evidence, however, that Trump's policies will be a big win for the average American. While a boost in funding might mean savings will be passed on to clients, it seems more likely that the cash injection will be used to rally the insurers’ market performance.

“Though required by law, this excessive increase in payments to Big Insurance — when evidence demonstrates they are already being overpaid — demonstrates the crucial need for Congress to fix the way payment rates for MA insurers are calculated,” pundit Rachel Madley wrote on her Substack Health Care Un-covered. “Sadly, analysts expect the extra payments Big Insurance will get in 2026 will go to increasing profit margins, not increasing benefits or availability of care.”

With Medicare Advantage enrollment already on the rise, other analysts predict that, following this announcement, even more Medicare-eligible seniors may elect to join the program in 2025 and 2026. Only time will tell if the $25 billion is used to improve profits or to increase benefits for a growing number of seniors.