Welcome to the June 2026 edition of The American Enterprise. This month, we are featuring essays by Mark J. Warshawsky on the Trump administration's plan to make Medicare Advantage the default coverage option for Medicare enrollees, Robert Pondiscio on the educational opportunity of artificial intelligence in schools, Philip Wallach on gerrymandering and the future of America's voting system, and Charles Lane on the politics of the immigration debate.

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June 2026

Welcome to the June 2026 edition of The American Enterprise. This month, we are featuring essays by Mark J. Warshawsky ([link removed] ) on the Trump administration's plan to make Medicare Advantage the default coverage option for Medicare enrollees, Robert Pondiscio ([link removed] ) on the educational opportunity of artificial intelligence in schools, Philip Wallach ([link removed] ) on gerrymandering and the future of America's voting system, and Charles Lane ([link removed] ) on the politics of the immigration debate.

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Medicare Advantage by Default ([link removed] )

Warshawsky_06.26 ([link removed] )

By Mark J. Warshawsky

The Trump administration is considering ([link removed] ) a change to Medicare that could help make healthcare more efficient and cheaper for millions of American seniors and disabled people, but it comes with important caveats.

The proposal would make Medicare Advantage (MA) plans the default coverage option for Medicare enrollees, rather than traditional fee-for-service (FFS) Medicare. This move could affect a wide swath of Americans and the flow of hundreds of billions of dollars. Fifty-five percent ([link removed] ) of Medicare beneficiaries (35 million) have chosen MA, which includes 5,500 plan options offered by 164 organizations at a cost of $540 billion to the federal government. On average, a Medicare beneficiary can choose from 39 plans offered by eight organizations, although some local markets are more concentrated. MA enrollment rates are currently higher ([link removed] ) among those dually eligible for Medicaid (68 percent), black and Hispanic beneficiaries, those who self-assess as being in poor health, and those with low incomes.

One study estimated that ([link removed] ) if this default policy change were made, under certain assumptions, another seven million beneficiaries would enroll in MA, meaning roughly two-thirds of Medicare beneficiaries would be enrolled. Other research suggests ([link removed] ) the number could be even higher. This would tip the balance decidedly toward private plans and call into question the current policy structure of a program design based on FFS, suggesting instead that it should be restructured as a competitive premium-support system. This move will take time and require political capital to enact, but it should be the ultimate end goal. Thinking of the interim, the Trump administration should ask itself, “Would changing MA to be the default coverage option increase federal costs, and would it cause harm to beneficiaries?”

The Anatomy of MA

The MA program allows those enrolled in both Parts A (hospital insurance) and B (physician insurance) to receive benefits from private plans—such as health maintenance organizations, preferred provider organizations, medical savings accounts, and other types—rather than Medicare FFS. MA plans use alternative payment models, negotiate with individual providers, employ care-management techniques like prior authorization, and provide incentives for beneficiaries to seek care from more efficient providers. These features should reduce costs, and in a competitive insurance market, those reductions will be passed on to beneficiaries. This can occur through lower premiums and cost-sharing liabilities, supplemental benefits not covered by Parts A and B (such as dental, hearing, and vision insurance), and integrated Part D (drug insurance) benefits.

In addition, MA plans are required by law to offer an out-of-pocket spending limit, a protection not included in FFS. Most FFS beneficiaries who are not covered ([link removed] ) by Medicaid (for the poor) or a prior-employer retiree health plan (which is common for unionized and government workers) will pay for a Medigap policy to fill in the FFS deductibles and co-pays. These financial disadvantages of FFS must be weighed against the freedom it offers from the constraints and limited provider networks of MA plans.

Because Medicare pays MA plans a fixed rate for each enrolled beneficiary, plans are incentivized to avoid high-cost beneficiaries or attract those with low expected costs. To counter this incentive, an elaborate payment mechanism combines a base rate and a risk score to adjust for differences in expected beneficiary medical costs. The base rate is determined in part by the FFS benchmark costs for the county where the beneficiary resides and the plan’s quality rating. If the plan bids below the benchmark, as nearly all do (at an average of 95 percent), the base rate paid is the bid plus a majority share of the difference between the benchmark and the bid. This “rebate” share increases with the quality rating.

Creating these benchmarks is its own complex calculation. Each county’s benchmark equals the projected average per capita FFS spending, with a bonus for low-spending counties and a small reduction for high-spending counties. The risk score is a beneficiary-level index value relative to the national average FFS beneficiary, calculated using a risk-adjustment model from the Centers for Medicare & Medicaid Services (CMS) that incorporates demographic information such as age, gender, Medicaid eligibility, institutional and disability status, and certain diagnoses grouped by type and severity according to similar treatment costs. CMS tracks demographic information while MA plans submit diagnostic information, which is incorporated into the risk score with a one-year lag. Diagnosis codes must be supported by evidence in the patient’s medical record and are subject to CMS audits, though such audits are infrequent.

Read the full essay here. >> ([link removed] )

KEEP READING

Pondiscio_06.26 ([link removed] )

Ban the Phones. Don’t Ban the Future. ([link removed] )

Robert Pondiscio

Wallach_May.26 ([link removed] )

Does Democracy Demand 435–0? ([link removed] )

Philip Wallach

Lane_3.2026 ([link removed] )

Will the Immigration Debate Break Our Nation? ([link removed] )

Charles Lane

Thanks for reading!

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