Weekly Health Policy Briefing 03/05/2026

This week, the Medicare Advantage industry group, the Better Medicare Alliance, hosted its executive policy summit in Washington, D.C., which included a conversation with Chris Klomp and John Brooks from CMS during a tense moment between the industry and its regulator, with a paltry 0.09% revenue increase penciled in for 2027. Between this and earnings calls over the last few weeks with the major MA plans, I’ve been thinking about game theory, coalition management, and when it makes sense to defect.

America’s health care businesses exist in competitive markets with firms and management teams incentivized to take risks, win market share, and grow earnings at the expense of their competitors.

You can quibble with this assessment. There’s certainly a lot of room for improvement, and lots of ideas to make the market more competitive. But it’s not not competitive, which means that there’s very little in the way of positive-sum opportunities for industry-wide cooperation. But not none!

Especially when it comes to regulatory and government relations, where there are generally some common themes that everyone in a particular industry or segment can agree on. Individual firms employ government relations teams, but quite a bit of lobbying happens at the segment or industry level with groups and associations that pay membership dues to finance their advocacy.

Pharmaceutical companies are represented by PhRMA, hospitals by the AHA, doctors by the AMA, health insurance by AHIP, and so on. These groups are in the business of finding common denominators for their members and working on representing their interests to Congress and the executive branch. For instance, PhRMA members generally all agree on stuff like 340B reform, patent infringement from compounding pharmacies, and tariffs being a headwind for their business. Eli and Novo may be competitors, but they’ve got those interests in common, and it’s incentive compatible for them to pool their resources together and say, “this is what the interests of the pharmaceutical manufacturers are” on a particular set of issues.

Health care’s a pretty big part of the economy, so you can slice the industry groups even finer. The AMA tries to represent doctors as a profession, but there are smaller groups that represent specific specialties. When Medicare proposed an efficiency adjustment for procedure-based specialties, this was a little awkward for the AMA because it was taking money from one part of their coalition and giving it to the other. The AMA ended up expressing concerns about the efficiency adjustment, and if you were a dues-paying member who stood to gain because you were less procedure-focused, you might be wondering whether the AMA is really representing you. That’s one tension: it’s easier to find common ground in a narrow coalition.

Another tension is that larger coalitions are more influential with more money, more resources, and more people singing from the same hymn sheet on the issue. It doesn’t guarantee success or anything, look at how virtually every healthcare industry group came together to advocate for the extension of the enhanced premium tax credits to be extended: the hospitals, the payers, the dialysis groups, etc, and yet!

So, you would expect a narrower coalition, like say the industry group that represents the Medicare Advantage insurers, would hang together in their advocacy for a higher rate increase from CMS. The basic shape of the payoff matrix for the not-quite prisoner dilemma-shaped game, if you’re an MA plan, is:

So for the most part, everyone from the Better Medicare Alliance, to the Alliance of Community Health Plans, to individual insurers described the rates as grossly inadequate. The coalition wasn’t totally on the same page. ACHP welcomed the changes to chart reviews; probably Elevance and CVS, and UnitedHealth Group would rather keep them, but generally, folks were on the same page.

But not everyone! Alignment Health and Clover reported earnings last week, and they have the view that while, of course, they would prefer more money than less, they don’t need it. You can imagine this is annoying to the rest of the coalition! The industry groups and other companies are all hanging together despite some asymmetries, and Alignment and Clover are defecting. The basic logic here is not, I think, trying to curry favor with CMS. Rather, Alignment and Clover think that they have lower costs, are less exposed to the risk adjustment changes, and cetera. The lower-than-expected rate increases are existential to their peers but merely annoying to them, so they’re pressing their advantage.

It’s a bold strategy, and not one that makes you particularly popular at industry functions. The Better Medicare Alliance summit happened this week, and AHIP’s MMDC is end of the month, and you can imagine things being a little icy between them. But it is helpful for CMS, which is, right now, preparing the final rate notice for 2027 and, in so doing, responding to industry comments. I imagine some CMS analyst is collecting snippets from the Alignment and Clover comment letters, which were, in essence, big shrugs, to throw back at the Humanas and Elevances and UnitedHealthcares of the world. I also have to wonder to what degree CMS orchestrated this outcome. They can see the coalition’s pressure points and push on them and get defections; it makes it easier to do something bigger and dramatic like this.

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