Some Americans could face significant new health care affordability challenges shortly before the 2026 midterm elections.

In January, the Centers for Medicare & Medicaid Services (CMS) proposed a nearly flat Medicare Advantage (MA) rate increase which, if finalized, is expected to result in an average year-over-year payment increase of 0.09%, or over $700 million, to plans in 2027. CMS Administrator Dr. Mehmet Oz said in a statement that the recently proposed payment policies are aiming to ensure MA “works better for the people it serves.”

However, several analysts warned the Daily Caller News Foundation that CMS’ proposal could lead to major issues for some MA enrollees, such as significant out-of-pocket cost increases, fewer benefits and less plan options.

If finalized, the proposed MA payment increase would effectively function like a “cut,” according to Susan Reilly, vice president of communications at Better Medicare Alliance.

“The proposed 0.09% payment increase is flat funding — and flat funding is not neutral,” Reilly told the DCNF. “It functions as a cut. Medical costs are rising, utilization is increasing, and when payment falls short of real costs, seniors absorb the difference through higher out-of-pocket costs, reduced benefits, and plan closures. More than 35 million seniors depend on Medicare Advantage — over half of all Medicare-eligible Americans.”

“Independent analysis from Berkeley Research Group estimates the proposed rate changes would amount to a $324 per beneficiary cut from risk model changes alone. That’s real money for seniors on fixed incomes,” Reilly added.

A CMS spokesperson told the DCNF in a statement that MA “remains a strong and growing option for seniors, with beneficiaries choosing MA for its affordability, added benefits, and flexibility.” The spokesperson also stated that CMS is “committed to preserving patient choice and ensuring the program continues to deliver high-quality, affordable coverage for the millions of seniors who rely on it.”

“CMS’ proposed CY 2027 MA payment policies would result in an average 0.09% increase in payments to plans, reflecting routine annual updates and proposed methodological improvements that promote payment accuracy, competition, and long-term program sustainability,” the spokesperson told the DCNF. “Nearly 99% of beneficiaries have access to a $0 premium MA plan with drug coverage and enrollees often have a robust set of supplemental benefits to choose from. The Advance Notice proposes continuing CMS’ efforts to orient MA toward competition based on affordable, high-quality coverage options. CMS’ proposed changes to bring in newer risk adjustment data and exclude certain diagnoses from risk adjustment, such as those from reviews of patient charts not associated with a verifiable provider encounter, are intended to ensure MA organizations are focused on driving value for their enrollees rather than their coding practices.”

“CMS will carefully consider public input before finalizing any policies,” the spokesperson added.

Reilly also asserted there have already been key “warning signs” about some seniors enrolled in MA potentially facing fewer benefits and rising costs if the proposed rate gets finalized.

“A peer-reviewed study published in JAMA in February found that nearly 1 in 10 MA enrollees were forced to find new coverage for 2026 due to insurer exits — the highest forced disenrollment rate ever recorded,” she said. “Rural seniors were nearly twice as likely to face disruption. If the proposed rate is finalized, seniors can expect higher out-of-pocket costs, fewer supplemental benefits like dental, vision, hearing and transportation, plan closures especially in rural and underserved areas, and narrower networks with reduced access to specialists.”

“Seniors will notice these changes when they renew their coverage in October 2026 — right before the midterms,” she emphasized.

“The most immediate and impactful step the administration can take is to fix the rate before the Final Rate Notice in April,” Reilly added. “Specifically, CMS should revise the 4.97% effective growth rate to reflect actual medical cost trends — every one-point understatement costs plans approximately $12 per member per month, or $144 per senior annually.”

Reilly also said she thinks CMS should “delay or phase in the proposed risk model changes, which were calibrated on 2024 data distorted by a temporary skin substitute spending spike that has already been corrected.”

CMS will issue a final rate notice no later than April 6, according to Health Management Associates.

WOODLAWN, MARYLAND – MARCH 19: A sign in front of the Centers for Medicare & Medicaid Services building on March 19, 2025 in Woodlawn, Maryland. (Photo by Kayla Bartkowski/Getty Images)

CMS’ proposed rate change could lead to an “unsustainable gap between what it costs to deliver care and actual reimbursements,” according to Darryl Drevna, senior director of regulatory affairs at the American Medical Group Association (AMGA).

“The 0.09% proposed rate change is wholly inadequate and does not reflect the reality AMGA members and their patients face,” Drevna told the DCNF. “Workforce costs are up, medical supplies have seen double-digit price increases, and organizations are still making ongoing investments in health IT and care coordination infrastructure just to meet existing regulatory requirements. Against that backdrop, a near-zero rate increase will create an unsustainable gap between what it costs to deliver care and actual reimbursements.”

“For seniors, that gap has real consequences,” he continued. “When payments fall short, plans respond by narrowing provider networks, cutting supplemental benefits like dental and vision coverage, raising copays for specialist visits, and in some cases, especially in rural and underserved areas, exiting markets entirely. Seniors should expect disruption in their plan choices, provider networks, and cost sharing.”

Moreover, senior enrollees may be left with fewer MA plan options if the proposed rate increase gets finalized, Michael F. Cannon, director of health policy studies at the Cato Institute, told the DCNF.

“Seniors may face fewer MA plan options — right now, the average enrollee can choose from among 32 plans — and the remaining plans may have fewer subsidies for groceries, transportation, and pet care,” Cannon said. “Other than that, probably not much [will] change.”

“There will be some seniors who lose their current MA plans and end up with no choices,” he added. “The solution to both of those problems is to reform Medicare by turning it into a cash-transfer program.”

Though, Cannon also argued that the proposed rate increase could “lead to lower costs, in the sense of lower spending on Medicare.”

In 2026, MA rates rose by 5.06% in 2026, after increasing 3.7% the year prior, according to Crowell & Moring LLP.

Additionally, the 60 Plus Association, a nonpartisan seniors advocacy group, claimed in a March 10 X post that having a 0.09% MA rate for 2027, “when medical costs are rising 7–9% is effectively a cut.”

“When payments don’t keep pace with reality, seniors and their families feel it through higher costs, fewer benefits, and fewer plan choices,” the post added.

Health spending in the U.S. notably climbed 7.5% from 2022 to 2023, compared to only a 4.6% increase from 2021 to 2022, KFF reported in October 2025.