Overview
- Medicare Advantage enrollment reached 55% of eligible beneficiaries in 2026, shifting most Medicare spending into private plans and concentrating market share among a few large insurers.
- Payments to Medicare Advantage plans run about 14% higher per person than traditional Medicare, which MedPAC estimates adds roughly $76 billion in federal spending this year.
- Beneficiaries face mixed changes: Part B premiums jumped 9.7% in 2026, average in-network out-of-pocket caps for Advantage plans are $5,421, and most enrollees (75%) pay no supplemental premium beyond Part B.
- New cost controls are active: negotiated Part D price cuts that took effect on January 1, 2026 cut costs on 10 drugs by about half for nearly 9 million beneficiaries, and CMS launched the six-state WISeR pilot in January to apply AI-assisted prior authorization in original Medicare.
- Utilization management is expanding in Medicare Advantage, with 99% of enrollees in plans that require prior authorization for some services, and CMS set a modest 2.48% payment update for 2027 that could prompt insurers to change benefits for next year.