From Pumpkin Spice to Price Hikes: The True Flavor of Medicare Open Enrollment 2025

As others’ thoughts turn to the Great Pumpkin, the elderly along with the newly elderly are being treated to advertising about Medicare Advantage and MediGap policy offerings. Yes, the of health insurance trick or treat has returned, and in this instance it isn’t about Obamacare or government shutdowns. Medicare’s open enrollment began on October 15 and runs through December 7, a short window to make decisions that can shape your healthcare costs for the year.

Before jumping into the changes, here's a quick reminder of all of Medicare’s moving parts, which is a foundation for understanding the choices ahead.

Untangling the Alphabet Soup: Parts A, B, C, and D

• Part A – covers the cost of hospitalization, skilled nursing facilities, hospice care, and some home health care. For those having paid into the social security system it is “free.”

• Part B – covers the costs of office and ambulatory care along with physician fees, medical supplies, and preventive services not covered by Part A. It requires a monthly premium, roughly $206 and has a deductible of $288. To get us in the financial ballpark, if you have 3 or 4 doctor visits annually, you will meet your deductible, resulting in a total out-of-pocket cost of $2760. Then of course there are co-insurance costs. Medicare Part B pays 80% of their established charges, the remaining 20% remains your responsibility.

  To offset co-insurance costs, many people purchase a MediGap policy—supplemental insurance that covers expenses not paid by Parts A or B. Plans vary in coverage and price. For example, one of the more comprehensive options adds about $5,000 to my annual costs.

• Part D – covers prescription drugs, both brand-name and generic. Although technically “voluntary,” delaying enrollment past age 65 triggers steep annual penalties, making it functionally mandatory. Part D plans include monthly premiums, copays, and co-insurance. Copays are fixed amounts per drug, while co-insurance is a set percentage—usually about 20%—of a drug’s price. Each plan has its own formulary determining which drugs are covered and how. As costs rise, medications often shift from copay to co-insurance categories. Apixaban, brand name Eliquis is the most widely used blood thinner and the most used drug among Part D enrollees. It requires, unsurprisingly, co-insurance. My Part D coverage, which includes Eliquis, runs me roughly $4500. That cost, is lower than in the past because of Congress having set a limit on how much I have to pay for medications before I receive them without co-payments or co-insurance. 

With drug coverage addressed, the next piece of the Medicare puzzle is how Parts A, B, and D come together under Medicare Advantage.

• Part C – Medicare “Advantage” (MA) a program that combines Parts A, B and D along with some swag. I have written, along with many others, about Medicare Advantage. This is nominally a risk sharing program where the insurance company receives a per capita amount for each beneficiary and they keep the profit and eat the losses. The MA programs control their costs by restricting a patient’s choice of hospitals and physicians, known as “narrow networks,” moving more expensive medications into co-insurance tiers, like their Part D brethren, and reducing care costs through prior authorization and other hurdles, which are now automated by AI. They offer some additional coverage for dental, eye and hearing care, as well as a monthly allowance for over-the-counter needs or even food. What they fail to mention is that many of these freebies come with an income test, they are for those Medicare beneficiaries that can barely make ends meet. Finally, these MA programs are paid by on how ill their beneficiaries are documented to be. There is a long history of MA programs gaming the system to increase the apparent illness of their beneficiaries to “up code” the amounts they receive. MA programs currently provide coverage for 54% of Medicare’s beneficiaries. As to that risk-sharing, “Congress’s Medicare Payment Advisory Commission (MedPAC) estimates that MA payments in 2024 were 22 percent above traditional Medicare — a difference that amounts to $83 billion in annual spending.” For the upcoming year, MA programs will cost about $20/monthly in addition to Part B coverage raising your total costs to $3000.

For perspective, my own annual medical costs total around $12,260. By comparison, someone using a Medicare Advantage plan might pay about $3,000 in premiums but could face up to $9,350 in out-of-pocket costs, bringing their total to roughly $12,350. These figures are personal estimates, not universal truths—but they underscore a key point: medical care for seniors is far from low-cost or “free.”

The Shifting Landscape of Medicare Advantage

While MA programs have expanded rapidly, that growth is slowing, possibly even contracting. As beneficiaries’ healthcare costs rise, insurers’ profit margins shrink. To compensate, they shift more expenses to enrollees by moving drugs from copay to co-insurance tiers or raising out-of-pocket limits. The recent spike in Part D premiums reflects the same pattern: when the government raised allowable maximums, insurers responded by raising premiums.

Among the economic drivers are:

• Post pandemic increases in utilization and rising costs of care
• Government adjustments to MA payment formulas and risk-scoring rules, reducing prior overpayments.
• MA programs have gobbled up most of the low-hanging fruit, the walking well, beneficiaries that cost far less than their capitated payments. Growing further enrollment may bring more high‐cost enrollees, what is described as “adverse selection.” Why chase low-margin, potentially no-margin, beneficiaries?
• As profitability decreases so does competition which in the past has been driven by those swag benefits. As the margin weakens so does the incentive to offer additional “carrots.”

As a result, there may be fewer MA options, the perks will shrink as the premiums rise, and networks of hospitals and physicians may become even leaner.

Making Sense of Your Options

If you decide to review and reconsider your coverage it would be best to gather some information before you begin. You should identify the physicians and hospital or health systems you use and wish to retain, and have a list of your medications. With those in hand you can make use of the resources at Medicare.gov – unlike much of the system, this information is relatively straightforward and helpful. Begin here to explore your options. It will look at traditional Medicare as well as Medicare Advantage and after you make a choice there, it will show you the options where you live. 

Medicare may never be simple, but understanding how its pieces fit together is a power move in a system that counts on confusion. Ask questions, compare plans, and don’t let the ads do your thinking for you—the best coverage is the one you actually understand.