Medicare Advantage Auto-Enrollment Policy May Fail Seniors

Mehmet Oz, administrator of the Centers for Medicare and Medicaid Services, during a healthcare affordability event in the Oval Office of the White House in Washington, DC, on Thursday, Apr. 23, 2026. CMS may soon change the default for newly eligible Medicare beneficiaries to Medicare Advantage rather than original Medicare. Photographer: Will Oliver/EPA/Bloomberg

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The Trump administration is reportedly mulling over a policy change that could see auto-enrolling newly eligible beneficiaries into Medicare Advantage plans or Accountable Care Organizations. However, this proposed policy shift could result in increased costs for the federal government and potentially impose more restrictions on the access to care for seniors and disabled individuals, including prior authorization requirements and narrower physician and hospital networks.

Chris Klomp, director of Medicare, told STAT News that auto-enrollment in Medicare Advantage would be a better alternative compared to the current default system, which is fee-for-service, original Medicare. However, this claim is up for debate on several fronts. For instance, a March report by the Medicare Payment Advisory Commission revealed that Medicare paid $76 billion more for Medicare Advantage patients in 2025 than it would have for the same patients if they had been enrolled in original Medicare. These increased payments to Medicare Advantage plans help to fund the supplemental benefits provided by these insurers.

Although Medicare Advantage plans do offer low or even no premiums, the limitations imposed by their budget-conscious, profit-driven model include a restricted choice of doctors and hospitals, and frequent use of prior authorization, which could limit patient access to certain prescription drugs and other technologies.

What Distinguishes Traditional Medicare from Medicare Advantage?

About 68 million elderly and disabled Americans are served by Medicare. As they turn 65, most Americans are automatically enrolled in Medicare, which covers costs related to hospital and physician (including outpatient) services, also known as Part A and Part B, respectively.

With each healthcare service billed and reimbursed separately, this is why it’s called “fee-for-service” Medicare. However, since 1983, Medicare has employed a diagnosis-related group-payment system that standardizes reimbursement rates for patient hospital stays, which vary by disease and condition category.

In addition to traditional Medicare, beneficiaries can also opt for prescription drug coverage (Part D) through stand-alone plans that manage the pharmacy benefit.

Alternatively, those eligible for Medicare can choose to enroll in Medicare Advantage, referred to as Part C. In this case, private insurers receive a fixed monthly fee per enrollee from the government to cover health services, including hospital, outpatient, and physician services, and in most cases, prescription drug coverage, all integrated under one insurer.

Low premiums and extra benefits such as vision and dental care, which are not covered by traditional Medicare, have drawn more and more beneficiaries to enroll in Medicare Advantage over the past two decades. As a result, the number of available plans has also risen. Medicare Advantage now serves more than 50% of the Medicare-eligible population.

How a Policy Shift Could Impact Seniors

Currently, the default option is traditional fee-for-service Medicare, while Medicare Advantage is available to those who carefully select it. However, the Trump administration is now contemplating flipping the default option and auto-enrolling beneficiaries in Medicare Advantage plans or an ACO. Once enrolled in a Medicare Advantage plan or ACO, beneficiaries would have to stay for three years before being able to switch back to original Medicare.

An ACO is a healthcare delivery model that is financially incentivized to deliver more efficient care at a lower cost. Under an ACO, doctors, hospitals, and other medical providers join forces to provide coordinated care, commonly for those enrolled in traditional Medicare. The ACOs that Medicare beneficiaries could be auto-enrolled in are those participating in the Medicare Shared Savings Program, a voluntary initiative designed to motivate healthcare providers to create ACOs for delivering cost-effective care to Medicare beneficiaries.

How the Centers for Medicare and Medicaid Services would decide whether a newly eligible beneficiary would be automatically enrolled in a Medicare Advantage plan or an ACO remains unclear. Moreover, with Medicare Advantage options varying significantly, it’s uncertain which one would be selected by default. Tricia Neuman, executive director for the Program on Medicare Policy at KFF, voiced her concerns to MedPage regarding whether the federal government would assign a new Medicare beneficiary a plan allowing them to maintain treatment from their chosen doctors, or if there’s a risk they would be placed with an insurer that would require them to switch doctors.

Generally, the Medicare Advantage program reduces out-of-pocket costs as long as beneficiaries stay within the designated network, but it often limits the choices of doctors and healthcare providers. Conversely, original Medicare offers broader access and flexibility in terms of physicians and healthcare providers.

Moreover, unlike traditional Medicare, forced disenrollments are a growing threat to Medicare Advantage plan members. An analysis by the Johns Hopkins Bloomberg School of Public Health showed that about 10% of Medicare Advantage enrollees — around 2.9 million seniors — are being forced to search for new coverage in 2026 as insurers leave markets. The average disenrollment rate for Medicare Advantage beneficiaries rose from 1% in 2018-2024 to 7% in 2025, and then to 10% (nearly 3 million people) in 2026. In Vermont, 92% of beneficiaries had to search for alternative plans or switch back to original Medicare.

Although growth in Medicare Advantage enrollment has been slowing down recently, there was a slight increase in the number of sign-ups against predictions last fall that there would be a decrease: 34.4 million people were enrolled in a Medicare Advantage plan in 2025, up from 33.4 million in 2024. Nevertheless, nearly every major insurer got rid of enrollees, with the exception of Humana and Kaiser Foundation Health Plan, which saw increases of 1.3 million beneficiaries and 64,000, respectively.

How Might the Administration’s Changes Impact Medicare Advantage Plans?

Recently, Medicare Advantage plans have faced headwinds such as rising medical costs and increased use of healthcare services and technologies by beneficiaries. The Inflation Reduction Act’s redesign of the outpatient drug benefit also presents challenges because it exposes payers to much greater cost liability, especially for high-cost beneficiaries.

However, CMS has been aiding Medicare Advantage in weathering the storm through a series of regulatory actions, such as increasing payments to insurers and easing regulations.

CMS finalized a 2027 payment rate increase of 2.48% to privately run Medicare Advantage plans, which was considerably higher than the 0.09% rate initially suggested in January. In total, this equals a $13 billion increase in federal government payments to private insurers to administer health plans for individuals aged over 65 and certain disabled individuals. The higher rate is expected to assist insurers in stabilizing their businesses as they face rising medical costs.

Last year, CMS decided on a generous payment increase to Medicare Advantage plans of 5.1% for 2026. This was a $25 billion boost and differed significantly from the 2.2% increase proposed by the Biden administration in its final days.

CMS has also relaxed regulations regarding the so-called star ratings system. Earlier this month, the agency removed 11 of the quality and care metrics that Medicare Advantage plans are evaluated on, including, among others, call center performance, appeals, and complaints. These evaluations are intended to assess the quality and performance of health plans based on patient satisfaction and the use of clinically appropriate tests and treatments. By reducing the number of metrics that plans are accountable for, this could generate nearly $19 billion in bonuses for insurers over the next decade.

With a potential change looming in the default option for newly eligible Medicare recipients to Medicare Advantage or an ACO, it’s safe to conclude that this administration favors expanding the Medicare Advantage market. This is not only stipulated in Project 2025, a conservative policy blueprint, but prior to his tenure as CMS administrator, Oz stated his support for a Medicare Advantage for All healthcare system. This suggests that Medicare Advantage could play a role as a potential model for broader healthcare reform.