How would Trump's proposed Medicare changes impact out-of-pocket costs for seniors?
Executive summary
President Trump’s policies have already raised Medicare Advantage (MA) payments—CMS set a roughly 5% average boost for 2026 that advocates say funnels more money to private plans [1]. At the same time, administration actions and proposals (star-rating changes, rolling back Biden-era MA consumer protections, and adopting Project 2025 ideas) shift incentives toward privatization and could raise or lower seniors’ out‑of‑pocket costs depending on plan design and drug negotiations [2] [1] [3].
1. Money to insurers, not a straight cut for seniors’ cost-sharing
The administration’s MA rule changes and rate notices increase payments to Medicare Advantage plans—CMS finalized policies that effectively raise MA revenues by billions and that industry analysts call a windfall for insurers [1] [2]. Those higher plan payments do not automatically translate into lower premiums or cost‑sharing for enrollees: insurers can use extra margin to boost benefits, lower premiums, or restore profitability. Reporting notes the change will send roughly $13 billion to MA insurers over a decade via star‑rating adjustments and that CMS estimated a multi‑billion dollar lift tied to the 2026 rate increases [2] [1].
2. Star‑rating overhaul: more bonuses, less oversight
The Trump CMS moved to restore an older bonus formula and eliminate about a dozen quality measures from the MA star ratings, a change estimated to cost taxpayers about $13 billion between 2028–2036 while producing larger bonus payouts to plans [2] [4]. Reduced quality metrics and the return of lucrative bonuses favor plan profits; advocates warn this weakens consumer protections and could indirectly raise out‑of‑pocket exposure if plans respond by tightening networks, prior authorization, or benefits that shield enrollees from costs [1] [2].
3. Consumer protections scaled back — potential for higher cost barriers
The Center for Medicare Advocacy and other watchdogs say the final CY2026 rules omitted Biden‑era proposals intended to strengthen oversight (like limits on utilization management and equity analyses) while increasing MA payments [1]. If utilization management is loosened and guardrails are not implemented, enrollees could face more prior authorizations, denials, or administrative hurdles that raise practical out‑of‑pocket burdens (administrative costs, additional provider visits, or paying upfront while appeals proceed), a pathway flagged by advocacy groups though not quantified in the available reporting [1].
4. Drug price moves are mixed — some lower costs, some higher caps
The administration touted negotiated lower prices for a set of high‑cost drugs and deals that cut prices for obesity drugs and other medicines—Medicare announced maximum Part D prices for certain drugs and a Trump‑brokered “TrumpRx” obesity drug agreement that cuts manufacturer prices for Medicare [5] [6]. Conversely, reporting notes other proposals (and elements of Project 2025) would roll back Inflation Reduction Act protections like out‑of‑pocket drug caps, and Project 2025 explicitly contemplates changing Part D caps and design—measures that could raise seniors’ drug spending if enacted [3] [6]. Available sources do not provide a single net estimate of overall drug cost impact for all Medicare beneficiaries.
5. Privatization trends shape who bears costs
Experts and analysts cite a trend toward more Medicare enrollment in private MA plans, and the administration has levers to accelerate that shift—by increasing MA payments or loosening rules—potentially moving more beneficiaries into plan designs with different cost‑sharing structures compared with traditional fee‑for‑service Medicare [7] [8]. KFF and other observers note federal payments to MA exceed comparable fee‑for‑service spending, meaning taxpayers subsidize private plans; how plans deploy that subsidy determines seniors’ out‑of‑pocket exposure [7].
6. Two competing outcomes — benefit expansion vs. tighter access
There are two plausible, competing scenarios in current reporting: one in which insurers use higher payments to add supplemental benefits or lower premiums (which would reduce some out‑of‑pocket costs for enrollees) and another in which plans prioritize profitability and operational levers (networks, utilization management, benefit limits) that increase enrollee costs at point of care [1] [2]. Sources document both the increased payments and the rollback of consumer protections but do not disclose a consensus forecast that quantifies net out‑of‑pocket change for typical seniors.
7. Limitations and what reporting does not say
Available sources document payment increases to MA plans, star‑rating changes, drug price deals for a subset of medicines, and policy proposals in Project 2025 [1] [2] [6] [3]. They do not provide a single, consolidated estimate of net out‑of‑pocket cost change for the average Medicare enrollee across Parts A/B/D and MA vs. traditional Medicare. They also do not specify how individual insurers will deploy added revenue into premiums, deductibles, copays or supplemental benefits (not found in current reporting).
Bottom line: administration actions are tilting incentives toward private plans by increasing MA payments and rolling back some oversight [1] [2]. Whether seniors pay more or less out of pocket will depend on how insurers convert those dollars into benefits or operational changes—and on whether Congress or courts alter key proposals from Project 2025 and the FY2025–26 rulemaking [3] [1].