(Reuters) - The U.S. government on Wednesday proposed a 2025 reimbursement rate for Medicare Advantage plans run by private insurers that reflects an effective growth rate of 2.44% and a total increase of 3.7%.
The closely watched proposal, known as the "advance notice", will be used by companies such as UnitedHealth Group (NYSE:UNH) and Humana (NYSE:HUM) to bid this year for contracts for Medicare Advantage plans they will sell in 2025.
The government payment rates affect how much insurers charge for monthly premiums, which plan benefits they offer and ultimately, how much they can profit.
About 65 million people are enrolled in the government's Medicare program for people aged 65 and older or who are disabled. About 34 million are in the orginal Medicare and the rest are in plans run by health insurers but paid for by the government.
The government has a three-year plan to decrease payments for Medicare Advantage as part of an effort it said will bring them more in line with the orginal Medicare coverage.
The proposed rates typically change after feedback from the insurers, other entities and the public. The final rate announcement will be published on or before April 1, 2024.
Elevance Health and CVS Health Corp (NYSE:CVS)'s Aetna also offer Medicare Advantage.