Medicare Turns 60
July 29, 2025
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Hello and welcome back to TrustWorks On Call, here with your healthcare business and strategy 411 for the week. If you enjoy our work, please consider forwarding it along to a friend and encouraging them to subscribe!
This week, to commemorate Medicare’s 60th birthday tomorrow, we’re going Beyond the Whiteboard on Medicare Advantage enrollment, and we’re Dialing In on what the program might look like for its 80th birthday. But first, before we get to the news, we must acknowledge and call out Health Secretary Robert F. Kennedy Jr.’s reported plan to fire and replace all members of the US Preventive Services Task Force. Should he follow through, we’ll surely cover it in the next TrustWorks On Call. In the meantime, disagree or not, this potential move demands scrutiny. We stand with the American Medical Association and other medical organizations in urging healthcare voices to weigh in, as these policy decisions shape care for countless numbers of patients.
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Behind the Headlines
Unpacking the forces driving healthcare's biggest stories.
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1. ACA exchange premiums set to spike as health plans struggle.
- Affordable Care Act (ACA) exchange insurers have requested a median premium rate increase of 15 percent for 2026, the largest spike since 2018.
- Insurers point to the expiration of enhanced ACA subsidies, which will contribute to adverse selection and a sicker risk pool, and the onset of tariffs, which will drive up the price of drugs and medical supplies, as justifications for raising premiums.
- In advance of these rate increases, Centene, Oscar Health, and Molina, three insurers focused on ACA exchange coverage, have announced disappointing Q2 results and cut their full-year earnings guidance, partly driven by higher-than-expected utilization from their exchange-covered members.
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TrustWorks Take: ACA exchange enrollment more than doubled from 2020 to 2025, thanks in large part to the 2021 American Rescue Plan’s enhanced subsidies. Congress’s decision to allow these subsidies to expire at the end of this year will significantly disrupt Americans' healthcare coverage, well before we see the main effects of the planned Medicaid cuts, 76 percent of which are scheduled to occur from 2030-2034. The application of tariffs, the expiration of enhanced subsidies, and the ongoing financial struggles of prominent exchange carriers are all coming together to severely destabilize the exchanges next year. This will price healthier people out of coverage, make healthcare more expensive for sicker people, and undermine employers experimenting with Health Reimbursement Arrangements, which have been showing potential as an alternative to traditional employer-sponsored insurance, by worsening the risk pool and driving up premiums. Just as more Americans have embraced the ACA, a decade of hard-earned gains is colliding with a short-sighted rollback of the very policies that made its success possible.
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2. UHG confirms DOJ probe of Medicare business.
- UnitedHealth Group (UHG) announced last Thursday that it had “proactively reached out to the Department of Justice” (DOJ), in response to reports surfacing that the company was under investigation for possible Medicare fraud.
- The DOJ has not confirmed the nature of the probe, but reporting suggests that the investigators are focusing on UHG’s Medicare Advantage business, which has been accused of fraud and overbilling before.
- In March, UHG won a ruling in a separate civil fraud case, initially filed by a UHG whistleblower in 2011 and joined by the DOJ in 2017, after the DOJ failed to prove its case that UHG had illegally pocketed more than $2B of MA overpayments.
- UHG’s Q2 2025 financial results, posted Tuesday, saw a 19 percent drop in net profit compared to Q2 2024.
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TrustWorks Take: UHG’s confirmation of this DOJ probe comes as the company attempts to right the ship under CEO Stephen Hemsley, who returned to the position by replacing Andrew Witty in May. As the New York Times succinctly summarized, UHG’s last two years have featured: “A gargantuan cyberattack. Federal investigations, including a criminal inquiry into one of its most important businesses. The killing of a top executive. A public relations crisis. Disappointing profits. A plummeting stock price.” The timing of this investigation adds to UHG’s public relation woes, but, as the company pointed to in its statement, the DOJ has accused UHG of MA fraud before without success. Although the results of this new probe, which isn’t even a formal suit yet, are not yet worth speculating on, Republican lawmakers could use it as more fuel for their fire as they build a case for advancing MA reform amid credible allegations of waste, fraud, and abuse. And at the very least, it complicates the argument that greater privatization of Medicare will lead to better stewardship of resources, particularly when the largest private actor remains under such sustained federal scrutiny.
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3. Trump executive order pushes hospitalization for homeless, mentally ill people.
- Last week, President Trump issued an executive order targeting “vagrancy,” by directing federal agencies to find ways to encourage the “civil commitment” of individuals with mental illness or who live on the streets “in appropriate facilities for appropriate periods of time.”
- The order also directs the Substance Abuse and Mental Health Services Administration (SAMHSA) to not fund “harm reduction” or “safe consumption” programs.
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TrustWorks Take: The involuntary commitment of people with mental illness is largely the domain of state and local governments, so this executive order could be seen as posturing. However, dozens of red, blue, and purple states have expanded their involuntary commitment statutes in recent years, and federal pressure could accelerate this trend. Hospital emergency departments have been overwhelmed by the number of patients boarding in their facilities while waiting for a short supply of psychiatric hospital beds, and now they face an oncoming perfect storm. Payment for these services, already meager, will only worsen with Medicaid cuts and the gutting of SAMHSA. Additionally, the cancellation of harm reduction programs, which tend to effectively improve health outcomes and mitigate public health risks, will only exacerbate problems faced by patients suffering from drug addiction and the emergency department staff who treat them. Trading proven solutions for punitive optics, these policies risk eroding what progress we’ve made by going in the opposite direction of evidence-based models that put supportive housing and integrated care first.
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Beyond the Whiteboard
Visualizing key trends from the healthcare industry
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Who enrolls in Medicare Advantage?
First introduced as Medicare+Choice in 1997, Medicare Advantage took just 25 years to become the coverage choice of a majority of Medicare enrollees, and its momentum is still building. In 2020, MA’s share of Medicare enrollment was 42 percent; in 2025, it’s now 54 percent; and in 2030, it’s projected to reach 61 percent. Despite the rapid change in MA penetration over time, the age distribution of MA vs. traditional Medicare (TM) is extremely balanced. In 2022, just as MA enrollment was on the verge of the majority, the Medicare population ages 65-84 was split evenly between MA and TM. Only among the oldest enrollees did TM prove more popular, while those with qualifying disabilities under age 65 were opting more for MA.
Seniors’ growing preference for MA plans over traditional Medicare (TM) can be attributed to MA’s supplemental benefits, prescription drug coverage savings, and cost-sharing limits (i.e. $0 premiums and copays), although aggressive marketing tactics and brokers’ financial incentives are also helping drive seniors’ decisions. A fully informed decision between MA and TM often comes down to a tradeoff of affordability and access, constrained by utilization management and network availability. TM offers virtually no limitations on physician choice and enables ease of specialty access, but with more cost-sharing. MA plans offer narrower networks but more cost protections. Because of this, perhaps the most significant difference between MA and TM enrollees is income. 47 percent of TM enrollees report an annual income of $40K or more, compared to only 32 percent of MA enrollees. If the choice between MA and TM is almost entirely financial, it raises important questions about whether a policy shift toward further privatization genuinely reflects consumer choice.
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Dialing In
Sharing insights from our work with clients
When Medicare Turns 80
With Medicare’s 60th birthday coming at a rather bleak time for federal healthcare policy, I tried striking up a more hopeful conversation with a colleague last week about what Medicare might look like on its 80th birthday. With saner heads prevailing, a new generation of leaders in charge, and voting blocks of Millennials and Generation Z that have never enjoyed good healthcare benefits, what types of reform might be possible? At the same time, once more than 20 percent of the population is over 65, what kinds of financing fixes might Medicare require?
My colleague made the case that, by then, there’s a decent chance we have some kind of Medicare Advantage For All. Major healthcare reform should aim to control costs, extend coverage, and be palatable to industry stakeholders. While (traditional) Medicare for All may offer the best path to cost control, it accomplishes that by eliminating the private insurance industry and those commercial rates they’re paying providers. MA For All, in contrast, would allow the government to set capitation rates for the population, while encouraging payers and providers to work together to deliver quality care that still generates a tidy margin for them to split. Employers get to offload the burden of providing insurance to payers and the government, and universal coverage could become a population-wide guarantee. Everyone wins, right?
Of course, as soon she finished making the bull case for MA For All, we both thought of plenty of reality checks. As things stand, MA doesn’t offer effective cost control, instead costing more than traditional Medicare. Reforming the tax code to pay for all of this, even if it could produce a net reduction in national health spending, would be incredibly unpopular. And providers hate MA, with its utilization management and low reimbursement rates, so how are they winning in this situation? I also could not resist suggesting that this conversation may be premature because no model will deliver lasting solutions until we answer the more fundamental question: Is healthcare a right, or just a market product.
Rather than staying lost in the weeds and practicalities, we agreed that healthcare is in dire need of ambitious, imaginative thinking, and that more can change in a decade or two than we think. Whether they’re predictions or thought exercises, our healthcare world needs to be having more conversations like this one until we reach the kind of clarity and consensus our healthcare future demands.
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