Big Changes Could Be Coming to Medicare in 2025

Key Points from 24/7 Wall St.

• Mehmet Oz has been tapped to oversee Medicare in the new year.
• Oz will likely aim to push more seniors onto Medicare Advantage plans.
• Oz has also been tasked with cutting costs and eliminating wasteful spending.

Medicare provides health coverage and benefits to millions of older Americans, and it’s not unusual for the program to undergo changes from one year to the next. In 2025, the standard Medicare Part B premium is rising from $174.70 to $185. The annual deductible for Part B is also increasing from $240 to $257. And Part A inpatient hospital deductibles are rising, too.

On a positive note, beginning in 2025, the out-of-pocket limit for prescription drug spending is $2,000, down from $8,000. That should result in big savings for enrollees who take costly medications.

But while these changes to Medicare are set in stone, more changes could be in the works due to a change in leadership. Recently, president-elect Donald Trump nominated Dr. Mehmet Oz to head up the Centers for Medicare & Medicaid Services (CMS). And that could lead to a pretty notable shakeup in the new year.

A push toward Medicare Advantage could be coming

Older Americans have two choices for securing health coverage under Medicare. They can opt for original Medicare, which is Parts A and B plus a Part D drug plan, or they can sign up for an all-in-one Medicare Advantage plan.

There are a number of benefits to choosing Medicare Advantage, but also, some drawbacks. Medicare Advantage plans cap annual out-of-pocket spending and commonly offer supplemental benefits beyond what original Medicare covers – things like dental care, eye exams, and hearing aids.

On the flipside, Medicare Advantage plans commonly limit enrollees to a narrow provider network. And most Medicare Advantage plans require prior authorization for procedures, creating bottlenecks and making it harder for seniors to get the care they need.

Dr. Oz, meanwhile, has long been a supporter of Medicare Advantage and has advocated for it as a replacement for original Medicare. In fact, Oz has proposed expanding Medicare Advantage to all Americans outside of those who qualify for Medicaid and having it replace not just original Medicare, but traditional workplace insurance plans as well as marketplace insurance plans under the Affordable Care Act.

Oz’s thoughts are that Medicare Advantage provides superior care because plans compete with one another for enrollees. His “Medicare Advantage for All” plan would be funded by a special payroll tax split between workers and their employers.

Now it’s unlikely that “Medicare Advantage for All” will become reality in 2025. A change like that would take time. But is it likely that Dr. Oz will take steps to push more older Americans onto Medicare Advantage? That’s a yes.

Smarter spending could be in store

In announcing Dr. Oz as his nominee to head up CMS, president-elect Trump pledged that he would cut waste within the program. Whether cutting waste means cutting Medicare services, however, is still to be seen.

But there’s a good chance Dr. Oz will lead an extensive audit of Medicare spending to find ways to trim the fat. And that’s not necessarily a bad thing, as it could lead to improved services for older Americans.

All told, a lot could happen to Medicare in 2025 with Dr. Oz at the helm. It’ll be interesting to see what changes come about at a time when Medicare sorely needs a financial overhaul at the very least.

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