“If I had a world of my own, everything would be nonsense. Nothing would be what it is, because everything would be what it isn’t.”– Lewis Carroll in Alice’s Adventures in Wonderland

I don’t know about you, but I prefer that the world not be made mostly of nonsense. After the last two years of a major Medicare Advantage (MA) meltdown between payors and providers, providers started terminating payors whose admin burden made reimbursement move significantly below cost. However, when you wake up to news that MA payors can expect a 5% increase in 2026, that requires a second look.

Here’s what we know about MA today:

The Medicare Payment Advisory Commission concluded in a report to Congress that Payments to MA plans average an estimated 122% of what traditional Medicare would have expected to spend on MA enrollees if they were in traditional Medicare with Medicare supplements.

This is bad for taxpayers, right?

It sure is. In fact, a report from the nonpartisan Medicare Payment Advisory Committee estimates that from 2007 to 2024 MA plans have received $612 billion in overpayments.

Care denial rates rose 56% for MA in a one-year period compared to a 20% increase in care denials for commercial members. Both of these numbers are ridiculous, but the 56% MA number is astonishing.

This is bad for beneficiaries and providers, right?

The overturn rate of appeals in MA is over 80% compared to an overturn rate of 29% for traditional Medicare. Thus, medically necessary care was delayed due to administrative restrictions most of the time.

This is bad for beneficiaries and providers, right?

At this point, the challenge would be to determine what about MA is going right — for anyone but the payors. Yet CMS is announcing a proposed increase to MA plans.

Healthcare Dive reported:

The payment hike should help insulate insurers from the worst of rising costs, which flattened margins last year as seniors in the privatized Medicare plans used more medical care than expected…. Plans will likely funnel the higher reimbursement in 2026 into improving profits but could also increase their benefits, analysts said.

Will higher payment rates to MA plans necessarily translate into higher reimbursement rates for providers who participate in MA networks? I’m not holding my breath, and my bet is neither are health systems. Beckers reports that so far in 2025, 22 health systems have dropped some or all of their MA contracts. That’s in addition to the 32 that dropped in 2024 and at least 25 in 2023.

The three biggest MA payors — UnitedHealthcare (9.9 million), Humana (5.8 million), and Aetna (4.1 million) — probably aren’t too worried about shrinking networks. They own their own providers, particularly United and its massive Optum Care operation.

As health plans employ hundreds/thousands of physicians, ancillary services, and more, they unlock profits for insurers. Optum — whose nonregulated profits are growing substantially — is controlling healthcare at all facets. The margins are also more impressive than most provider organizations as well. Vertical integration at its best.

MA plans might not be overly concerned with shrinking provider networks, but MA beneficiaries should be. Investopedia referenced a study by Kaiser Family Foundation that found, “Some narrower networks cover less than 30% of a county’s physicians.” This creates issues around both access to care and cost of care.

Many MA plans are HMO plans with no out-of-network benefits. Beneficiaries who can’t find a local provider — or who can’t get in to see one — have to travel to receive care, delay it, or skip it all together.

Yes, MA plans look attractive to beneficiaries during open enrollment. They don’t have to figure out how Parts A, B, and D go together. The premium might seem reasonable and in some cases is still $0. Optional extras, like gym memberships, dental and vision coverage, and gift cards for over-the-counter items offer added value. Yet try getting prior authorization for care, or coverage for care that has been authorized, and the shine fades quickly.

Let’s be honest. This premium increase only benefits MA plans. There’s no evidence that it will benefit anyone else. CMS has created the ideal scenario for MA plans in which they are rewarded for not accurately predicting how many services their members might use. Last I checked, isn’t that exactly what actuaries are supposed to do — accurately predict risk so plans can rate appropriately? As for the rest of us, we’re left with a world where nothing is what it is and everything is nonsense.