The Medicare Privatization Plan Isn't Even Wearing a Disguise

When one Medicare option becomes more expensive while another receives billions more, the resulting migration isn't simply consumer choice.

I have always loved research, although “loved” may be a polite word for what happens when one suspicious sentence wanders into my line of sight. I can’t simply read it, nod, and continue with my day like a well-adjusted person. I need the original source, the footnotes, the earlier version, and the spreadsheet somebody quietly placed at the bottom of the page hoping no one would open it.

That curiosity was part of what made me good at my job as a Healthcare Quality Analyst and Compliance Officer. For five years, I learned never to stop with the explanation printed at the top of a healthcare policy. I kept digging until I understood who assumed the risk, who received the money, and what happened to the patient after the cheerful announcement ended.

Healthcare documents have a particular gift for making enormous human consequences sound like administrative housekeeping. The language is calm, the chart is blue, and the word “stability” appears often enough that you begin to wonder what’s currently on fire.

So, when I first read that the Trump administration was ending a subsidy for Medicare prescription plans, the explanation seemed almost reasonable. The program was temporary, it cost billions of dollars, and Mehmet Oz, the administrator of the Centers for Medicare and Medicaid Services, said it’d become an unnecessary bailout for insurance companies.

Perhaps it was, but you know me well enough by now to know that I needed to see the receipts. Fine, I thought, let us look at the bailout. The program being eliminated is called the Part D Premium Stabilization Demonstration. The Biden administration created it after the Inflation Reduction Act redesigned Medicare’s prescription drug benefit.

That redesign gave beneficiaries real protections. Before 2025, Medicare Part D had no firm annual limit on what a person could spend out of pocket. The law established a $2,000 limit in 2025, increased it to $2,100 in 2026, and will set it at $2,400 in 2027. It also capped insulin costs, made recommended vaccines free, and allowed Medicare to negotiate prices for certain expensive drugs.

The law reduced the amount patients could be forced to pay, but it didn’t cure the American pharmaceutical industry of its commitment to charging whatever the market, the government, and the human pancreas can bear. A larger share of catastrophic drug spending shifted from beneficiaries and the federal government onto the private insurers operating Part D plans.

The insurers responded by raising their bids, because insurance companies remain deeply committed to the principle that risk is best shared with everyone except themselves. CMS created the stabilization program to keep those increases from reaching beneficiaries all at once. In 2026, it reduced the average stand-alone Part D premium by an estimated $16 per month. The program cost approximately $6.2 billion in 2025 and $3.6 billion in 2026, for a two-year total of $9.8 billion. That’s real money, and questioning whether the government should continue spending it is fair, but what really matters is what the money accomplished and what happens when it disappears.

The Government Accountability Office found that without the program, beneficiaries who remained in their existing stand-alone drug plans between 2024 and 2025 would have seen their monthly premiums nearly double on average. Thirty-seven percent would’ve faced increases exceeding $40 per month. CMS officials expected enough disruption to cause widespread plan switching and potentially interfere with people’s access to medication.

The money went to private insurers, which is why Oz can call it a bailout, but its measurable purpose was to prevent those costs from landing immediately on beneficiaries. Ending the payment doesn’t make the underlying expense vanish; it simply allows the expense to continue traveling until it reaches somebody with less negotiating power. Usually, that person has a mailbox, a fixed income, and a prescription they can’t politely decline.

The administration says Part D insurers have now gained enough experience with the redesigned benefit to operate without additional support. Perhaps they have, two years should be plenty of time for an insurance company to locate every available exit, exception, tier, formulary adjustment, and human wallet.

If the administration were removing federal support from private insurers as a matter of principle, the argument would at least be consistent. The problem appeared when I followed the money into the next room. For 2027, CMS has finalized more than $13 billion in additional federal payments to Medicare Advantage plans. That represents a 2.48 percent policy increase over 2026, or an estimated 4.98 percent increase after anticipated changes in risk scores associated with population changes and coding practices.

The administration is therefore eliminating a Part D program that cost $3.6 billion in 2026 while increasing Medicare Advantage payments by more than $13 billion in 2027. This is where the supposed savings begin behaving strangely.

The 2027 cost of continuing the Part D demonstration was never finalized, so we can’t calculate an exact net figure. If the program had remained near its 2026 cost, ending it would have saved approximately $3.6 billion while the Medicare Advantage increase added more than $13 billion. Across those two decisions, the government would still spend roughly $9.4 billion more.

That isn’t an audited net savings estimate because the programs are different and the third-year Part D cost was never established. It’s simply a comparison of the direction and scale of two decisions made by the same administration. Essentially, the government has removed three dollars from one pocket, placed thirteen dollars in the other, and begun accepting congratulations for traveling lighter.

The Medicare Advantage increase isn’t identical to the Part D stabilization program. Medicare Advantage payments support comprehensive hospital, physician, and prescription coverage, while the Part D demonstration provided temporary assistance to stand-alone drug plans. Some of the Medicare Advantage increase reflects updated healthcare costs and utilization.

That distinction is important, but it doesn’t make the comparison irrelevant. Both policies direct public money to private insurance companies, and both are defended as necessary to preserve stable, affordable coverage. One is being described as a wasteful bailout, while the other is being presented as responsible stewardship. The comparison became even harder to ignore when I looked at CMS’s original proposal.

In January, CMS proposed increasing Medicare Advantage payments by only 0.09 percent, or approximately $700 million. By April, the final increase had grown to more than $13 billion. Some of that change came from updated information about healthcare costs, but CMS also declined to implement its proposed risk-adjustment model fully, preserving significantly more money for Medicare Advantage insurers.

The administration didn’t merely inherit a $13 billion increase from the heavens. It moved from proposing $700 million to approving more than $13 billion, a difference of approximately $12.3 billion. Once we put those decisions beside each other, the important question is no longer whether the administration supports federal payments to private insurers. Clearly, it does. The more useful question is which part of Medicare those payments are helping people choose.

Stand-alone Part D plans are primarily used by beneficiaries who have Original Medicare, often paired with a Medigap policy. Medicare Advantage allows a private insurer to administer a beneficiary’s Medicare coverage through its own network, cost-sharing rules, formulary, and authorization processes.

Many Medicare Advantage plans advertise very low or zero-dollar premiums because insurers can use federal payments and rebates to reduce what beneficiaries see on the front end. That can make the plans genuinely attractive, particularly to people already struggling to afford separate premiums for Medigap and prescription coverage.

Now imagine opening a letter that says your stand-alone drug premium is increasing. Later that afternoon, another envelope arrives promising prescription coverage, dental care, eyeglasses, a gym membership, and possibly a renewed sense of purpose for almost nothing per month. The decision may feel voluntary, but the government has helped determine the prices printed on both pieces of paper. That’s what I mean by privatization by friction. Original Medicare doesn’t need to be abolished if remaining in it gradually becomes more expensive and complicated while the privately administered alternative receives more money and better advertising.

The trade isn’t always obvious from the glossy brochure. Medicare Advantage plans may use narrower provider networks, require prior authorization, divide medications into different formulary tiers, and impose substantial annual out-of-pocket limits. If someone drops a Medigap policy to join Medicare Advantage, federal law doesn’t always guarantee that they can obtain the same supplemental coverage again later. Outside particular protected circumstances, an insurer may deny the application or charge more because of the person’s health history.

That’s serious anywhere, but the idea of endless Medicare Advantage choice becomes almost tenderly absurd where I live. Here in Coos County, Oregon, the bustling marketplace of general Medicare Advantage plans for 2026 consists of exactly one option, excluding Special Needs Plans. There are no zero-premium general Medicare Advantage plans available here.

Our solitary plan is a three-star Wellcare HMO-POS plan that costs $35 per month in addition to the Part B premium. It includes a $615 prescription deductible and a $7,900 in-network annual out-of-pocket limit. One plan is not a competitive marketplace. It’s an insurance company putting on a fake mustache and asking whether we would like to compare it with the other gentleman.

This is the part national discussions about healthcare choice tend to miss. Shopping requires more than a website and a row of brightly colored buttons. It requires participating doctors, accessible specialists, functioning hospitals, reasonable travel distances, and a network extending to wherever a human body might inconveniently require care.

In a rural community, access isn’t an abstract policy measurement. It’s whether the specialist exists, whether the clinic is accepting patients, whether the insurer recognizes the provider, and whether someone can drive several hours while sick.

I used to encounter the distance between access on paper and access in real life as part of my work. A provider directory can be technically full while containing a doctor who retired, a clinic that isn’t accepting patients, and a specialist located far enough away that the appointment should come with a hotel voucher. The spreadsheet says the providers exist, and the person holding the insurance card still can’t get care. Both facts can occupy the same system without causing it any emotional distress.

Oz says more than 90 percent of Medicare beneficiaries will continue to have access to drug coverage costing less than $10 per month. That sounds reassuring until we sit with the wording. He is not saying that 90 percent will keep their current coverage for less than $10. He is not saying the least expensive available plan will cover their particular medications, place them on affordable tiers, include their preferred pharmacy, or offer a manageable deductible.

He is saying a low-cost option will exist.

That difference between nominal access and meaningful access is where people get lost. A plan can be available without being usable, just as a physician can appear in a directory without being reachable and a prescription can technically be covered while remaining financially out of reach. None of this requires us to imagine CMS officials plotting Medicare privatization beneath a flickering light. The incentives are sitting in public documents, behaving with the subtlety of a raccoon in a trash can.

The administration is removing assistance from the stand-alone drug plans used by people in Original Medicare. It is substantially increasing payments to Medicare Advantage plans. It’s telling beneficiaries facing higher prescription premiums that inexpensive alternatives remain available. Oz has previously advocated expanding Medicare Advantage into the foundation of a much broader privately administered healthcare system.

If one door becomes more expensive while the government sends billions of additional dollars through the other door, people will predictably move toward the second one. The administration can call that movement consumer preference, but it still helped build the hallway.

This isn’t proof of a secret scheme, and it doesn’t mean every Medicare Advantage plan is bad or that every person enrolled in one has made the wrong decision. For some beneficiaries, Medicare Advantage may be the most affordable or practical option available. The problem is calling the resulting enrollment shift a triumph of choice while the government is actively tilting the floor.

The more I looked at these policies, the less they resembled a serious effort to reduce federal spending. What emerged instead was a decision about which version of Medicare the government intends to make easier to afford.

One pathway preserves Original Medicare and allows beneficiaries to purchase separate prescription coverage. The other places public Medicare dollars under private management, where insurance companies control networks, formularies, authorizations, and the difference between what the government pays and what a person’s care costs. The administration is withdrawing support from the first pathway while increasing payments to the second. It can call one payment a bailout and the other an investment, but the labels don’t change the direction of the money.

They don’t have to order seniors into Medicare Advantage. They only have to make Original Medicare more difficult to keep, make the private alternative appear cheaper, and describe the direction people slide as freedom.

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