CMS proposes 0.09% Medicare Advantage rate increase, raising alarms

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(The Center Square) – The Centers for Medicare and Medicaid Services has proposed a 0.09% advance rate increase for Medicare Advantage plans in 2027, a figure analysts say falls short of expectations and projected medical cost growth.

The proposed increase follows roughly a 5% rate increase for 2026 and trails analyst expectations of 4% to 6%. CMS has projected that overall Medicare spending will rise 8% in 2025 and 9% in 2026. The Wall Street Journal Editorial Board noted that spending is growing even faster, at 11% this year.

Hospital service prices have climbed sharply over the past two decades. An analysis of Bureau of Labor Statistics data shows hospital services increased more than 280% from 2000 to 2025, roughly three times the overall inflation rate during that period.

Over 30 million seniors use Medicare Advantage plans, which private insurers offer under federal contracts.

The Wall Street Journal Editorial Board warned that the proposed rate would not keep pace with rising medical costs.

“If payments to insurers are cut, the companies will shrink benefits,” it wrote. “After the Biden team reduced payments for 2024 and 2025, insurers increased deductibles, reduced supplemental benefits, scrapped plans and narrowed provider networks.”

The Affordable Care Act caps Medicare Advantage plan profit margins, meaning insurers must spend a fixed percentage of revenue on patient care. The Journal argued that if payments do not reflect underlying medical inflation, plans may offset the difference by adjusting benefits. 

The proposed 2027 rate also comes as debate continues over the role of the Medicare Payment Advisory Commission, or MedPAC, which advises Congress on Medicare policy. The Journal wrote that MedPAC has been “co-opted by progressives who dislike private markets and the Medicare Advantage program for seniors.” 

“Progressives are now using a recent MedPAC report to push for bigger cuts in Medicare Advantage (MA) that would undermine that program’s demonstrated popularity,” it said.

The proposal arrives as lawmakers from both parties focus on affordability issues ahead of the midterm elections. President Donald Trump has highlighted efforts to reduce costs for American families, and health care spending remains a central concern for seniors. 

CMS has not yet finalized the 2027 rate. The agency typically issues a final notice after a public comment period.