Trump Administration Cuts Medicare Advantage Star Ratings, Delivering $18.6 Billion Windfall to Insurers

The Trump administration is dramatically reducing the number of quality and care measures that Medicare Advantage plans are graded on, funneling an extra $18.6 billion to health insurers over the next decade.

The Regulation

• Released: CMS final regulation, April 2026
• Impact: Cuts star ratings quality measures significantly
• Cost: $18.6 billion over 10 years (up from initial $13.2B estimate)
• Beneficiaries: Health insurers including UnitedHealth, Humana, Elevance

What Changed

Medicare Advantage star ratings (1-5 stars) directly determine bonus payments to insurers. The administration is:

1. Reducing quality measures: Fewer metrics to evaluate plan performance
2. Lowering evaluation thresholds: Easier for plans to achieve higher ratings
3. Extending the timeline: Changes effective 2028-2036

Why It Matters

• Higher star ratings = higher government payments to insurers
• Patients may see reduced quality monitoring of their health plans
• Original estimate was $13.2B — the final rule is 41% more generous to insurers
• This provides a "sizable buffer" for insurers facing higher medical claims

Industry Context

Medicare Advantage insurers have been lobbying the administration for more favorable payment terms amid rising medical costs and coding changes. The government is expected to release final 2027 payment rates by April 6.

Critics argue that reducing quality oversight may harm the 33 million Americans enrolled in Medicare Advantage plans.