The government's program to provide Medicare beneficiaries with competitive health plan options is undergoing changes as President Joe Biden exits office. Under this program, health plans are invited to bid below government-set benchmarks for providing services. The administration then pays rebates to plans that bid below the benchmark, passing savings to beneficiaries through lower premiums, reduced cost sharing, or additional benefits.
In 2024, average rebates reached $194 per month, motivating many beneficiaries to select Medicare Advantage plans. Since 2018, the choice of plans for beneficiaries has doubled from 17 to 34 in 2025, although options fell slightly from a peak of 36 in 2024. Consequently, approximately 7% of beneficiaries, nearly 2 million individuals, were required to switch plans for the first time in over a decade. The availability of supplemental benefits, comprising 17% of Medicare Advantage spending, has also diminished.
Plans' reduction is attributed partly to efforts by Democrats to streamline health plans in favor of a single-payer system. Biden's administration faces scrutiny for adjusting payment calculations, affecting payments more harshly for patients with significant health needs. With preliminary 2026 payment policies imminent, the incoming administration will face the task of evaluating these policies swiftly.
Robert F. Kennedy Jr. is tapped to lead the U.S. Department of Health & Human Services and will oversee Medicare. Encouraging "social factors of health," such as improved nutrition and fitness, is part of his plan to manage chronic illness burdens. Kennedy, along with Trump's prospective administration, may challenge bureaucratic stances like the cuts to nutritional and fitness benefits, which may adversely affect seniors' health.
