Original Medicare as Policy Choice
ACOs, Medigap, and the Case for Fee-for-Service in 2026
MCR-00.02 — Series 0: The Structural Baseline#
Medicare Policy Analysis | March 2026#
The dominant assumption in Medicare policy discourse has been, for more than a decade, that Medicare Advantage is the direction of travel. Enrollment crossed 50 percent of beneficiaries in 2024. The 2025 Trustees Report projects MA will cover 57.8 percent of Medicare beneficiaries by 2034. Supplemental benefits, dental, vision, over-the-counter allowances, transportation, have been powerful enrollment drivers. The political consensus across administrations has treated MA growth as a durable feature of the program’s architecture.
That assumption is worth examining carefully in 2026. The environment is materially different from any prior enrollment cycle in the MA era. Benefits are contracting, not expanding. Plan exits are accelerating. Prior authorization is being introduced into Original Medicare for the first time. Medigap’s underwriting structure creates exit barriers that beneficiaries may not have understood when they first enrolled in MA. And ACOs have converted Original Medicare into a meaningfully different product than it was ten years ago, more coordinated, more accountable, and in many markets competitive on both access and quality.
For policy analysts, plan strategists, and SHIP counselors, understanding why a beneficiary might rationally choose Original Medicare in 2026 is as analytically important as understanding why 54 percent chose MA.
What Original Medicare Actually Is#
Original Medicare is Parts A and B: federal fee-for-service coverage with no enrollment intermediary between the beneficiary and the provider. Part A covers inpatient hospital care, skilled nursing facility stays, home health, and hospice. Part B covers physician services, outpatient care, preventive services, and physician-administered drugs. Together they cover the core medical benefits guaranteed to Medicare-eligible Americans since 1965.
Original Medicare has no annual out-of-pocket maximum. It has no network. It covers any provider or facility that accepts Medicare assignment, roughly 93 percent of active physicians. It does not require referrals. It does not require prior authorization for most services. It is portable: a beneficiary enrolled in Original Medicare and a Medigap policy can receive care anywhere in the country without concern for network coverage. It does not change coverage terms on January 1.
What Original Medicare does not provide, without supplemental coverage, is financial protection against high cost-sharing. The Part A deductible in 2026 is $1,676 per benefit period with no cap on the number of benefit periods in a year. Part B cost-sharing is 20 percent of allowed charges with no annual limit. A beneficiary with multiple hospitalizations and complex outpatient treatment can face tens of thousands of dollars in Medicare cost-sharing in a single year with no ceiling.
This is why the decision architecture for Original Medicare is a three-part choice: Original Medicare alone, which is viable primarily for very low utilizers or dual eligibles with Medicaid cost-sharing protection; Original Medicare plus Medigap, which provides comprehensive financial protection and maximum provider access; or Original Medicare plus Medigap plus a standalone Part D plan, the full traditional coverage stack.
The Financial Comparison in 2026#
The MA side of the ledger is familiar. The average MA plan premium in 2026 is approximately $14 per month, with roughly 76 percent of MA enrollees in plans with $0 additional premium beyond the Part B premium. The Part B premium is $202.90 per month in 2026 for most beneficiaries. MA plans have in-network out-of-pocket maximums averaging around $4,500 to $5,000, with statutory caps set by CMS at higher levels. For a beneficiary who uses primarily in-network services, stays healthy, and does not require specialist care or complex procedures, annual out-of-pocket exposure is modest. The supplemental benefits, though contracting, add visible value for beneficiaries who use them.
The Original Medicare plus Medigap side looks different. Plan G, now the most comprehensive Medigap plan available to newly enrolling beneficiaries after Plans C and F were closed to new eligibles in 2020, covers the Part A deductible, Part A coinsurance, Part B coinsurance and copayments, skilled nursing coinsurance, and foreign travel emergency coverage. It does not cover the Part B deductible ($283 in 2026). At age 65, Plan G premiums average approximately $189 to $220 per month, varying substantially by location and insurer. A 70-year-old beneficiary will pay more, typically in the $200 to $260 range. Added to the $202.90 Part B premium and a standalone Part D plan averaging approximately $35 to $45 per month for standard coverage, the total monthly premium commitment for the full Original Medicare stack runs roughly $430 to $510 at age 65, compared to the Part B premium alone with a $0 MA plan.
The comparison that matters is not monthly premium. It is total annual out-of-pocket including premiums, cost-sharing, and the financial risk of a high-utilization year.
For a beneficiary with predictable, moderate utilization, two or three specialist visits, one outpatient procedure, a manageable chronic condition, the MA financial profile is likely lower. For a beneficiary with a major illness, a hospitalization, an oncology diagnosis, or sustained high utilization, the calculus shifts. A 2022 study found that 23 percent of MA enrollees spent more than 10 percent of their income on health care costs, compared to 17 percent of Medigap beneficiaries. The insulation that Medigap provides against catastrophic cost exposure is real and quantifiable. MA’s out-of-pocket maximums protect against total financial ruin but do not prevent substantial year-over-year accumulation of cost-sharing for chronically ill beneficiaries.
The hidden asymmetry is exit. A beneficiary who enrolled in MA at 65 and develops a serious condition at 72 cannot typically move to Medigap with guaranteed issue rights. In most states, medical underwriting applies, and a beneficiary with diabetes, heart disease, cancer, or a recent hospitalization may be declined or charged substantially higher premiums. The exceptions are Connecticut, Massachusetts, New York, and Minnesota starting in 2026: four states out of fifty. Everywhere else, the decision made at 65 is sticky in ways that are systematically underexplained during Open Enrollment.
Network vs. No Network#
MA plans restrict access to in-network providers for most non-emergency care. HMO-structured plans require referrals to access specialists and do not cover out-of-network care except in emergencies. PPO plans allow out-of-network access but at substantially higher cost-sharing. The average beneficiary in 2026 has access to 42 MA plans, but the variation in provider network composition, prior authorization intensity, and Star Ratings performance is enormous.
For most beneficiaries with stable health and an established primary care relationship, network restrictions are a manageable trade-off. For beneficiaries with complex conditions requiring subspecialty care, rare cancers, complex cardiac cases, neurological conditions, pediatric hospitals for adult beneficiaries with disabilities, network access can determine whether they can reach the providers most qualified to treat them. Academic medical centers and major cancer centers are not universally in-network across MA plans. NCI-designated cancer centers, in particular, have been systematically more available under Original Medicare than under MA plans that have narrowed networks in high-cost markets.
A 2024 Commonwealth Fund survey found that 22 percent of MA beneficiaries experienced delays in care, compared to 13 percent of Original Medicare beneficiaries. That difference reflects the combined effect of network constraints, prior authorization requirements, and the administrative friction that attends managed care. For most beneficiaries, these delays are inconveniences. For a subset, particularly those with time-sensitive diagnoses, they are clinically material.
The Prior Authorization Asymmetry#
MA’s prior authorization burden has been a persistent policy controversy. The Medicare Payment Advisory Commission, the HHS Office of Inspector General, and multiple congressional investigations have documented high rates of inappropriate denial and delayed care under MA prior authorization, denials for care that Original Medicare would have covered without review. CMS Administrator Oz’s own confirmation hearing comments acknowledged MA upcoding practices as a structural problem requiring attention.
For most of MA’s history, this asymmetry was stark: Original Medicare had no prior authorization for most services. MA did.
That asymmetry is now more complicated. The WISeR model, launched in 2025, introduces AI-powered prior authorization into Original Medicare FFS for the first time. Six states, New Jersey, Ohio, Oklahoma, Texas, Arizona, and Washington, are included in the initial WISeR footprint, with targeted services including skin substitutes, spinal procedures, nerve stimulators, and knee arthroscopy. The $5.8 billion in estimated annual unnecessary or inappropriate Medicare spending that WISeR is designed to address is real. The model produces 72-hour authorization decisions and gold-carding for high-performing providers by mid-2026.
But WISeR’s footprint is narrow and targeted. It covers specific high-spend service categories in six states. MA prior authorization covers a vastly broader range of services across all 50 states, with an incentive structure, prospective denial reduces plan cost, that is structurally different from WISeR’s contractor incentive design. In 44 states and across the full service spectrum, Original Medicare still offers substantially less prior authorization exposure than MA plans with aggressive utilization management programs.
ACOs and the Coordinated Care Argument#
The strongest historical argument for MA over Original Medicare has been care coordination. MA plans have the contractual authority to wrap around the Medicare benefit, creating care management programs, disease management supports, care transitions infrastructure, and closed-loop referral systems that are difficult to replicate in FFS. For beneficiaries with complex conditions, this coordination infrastructure has measurable value.
That advantage is now contested. As of 2025, more than 53 percent of Traditional Medicare beneficiaries are attributed to an accountable care organization: 511 MSSP ACOs covering 12.6 million beneficiaries, ACO REACH’s 74 ACOs covering 1.7 million, and 24 ACO PC Flex participants covering 349,000 beneficiaries added in 2025.
An Original Medicare beneficiary attributed to an MSSP ENHANCED track ACO is receiving care from a provider organization with financial incentives to coordinate, prevent hospitalizations, manage chronic conditions proactively, and close care gaps. The infrastructure for doing so, care managers, patient engagement platforms, post-acute care networks, is increasingly present in high-performing ACOs. MSSP ACOs generated $4.1 billion in gross shared savings in PY2024, with $2.5 billion in net Medicare savings after shared savings payments. The performance of high-achieving ACOs in chronic disease management, preventable hospitalization reduction, and specialist utilization management is competitive with comparable MA plans in many markets.
For a beneficiary in a county with high ACO penetration and a primary care physician in a high-performing MSSP ACO, the coordination argument for MA over Original Medicare is weaker than it was five years ago.
Who Should Choose Original Medicare in 2026#
The case for Original Medicare plus Medigap is strongest along four axes.
Complex medical history or high utilization. Beneficiaries with serious chronic conditions, active cancer, rare diseases, or a pattern of high-cost care should carefully evaluate whether MA’s out-of-pocket maximum provides adequate protection relative to Medigap’s near-zero cost-sharing at point of service. For a beneficiary undergoing chemotherapy, managing end-stage renal disease, or living with multiple complex comorbidities, the Medigap insulation against cumulative cost-sharing is often financially superior to MA’s MOOP structure.
Provider access requirements. Beneficiaries with established relationships with subspecialists, particularly at academic medical centers, NCI-designated cancer centers, or specialized care facilities, should verify network participation before enrolling in MA. A provider who is out-of-network under MA is in-network under Original Medicare. For some beneficiaries, that distinction determines whether they can maintain continuity with the providers managing their most serious conditions.
Geographic mobility. Beneficiaries who travel frequently, divide time between residences in different states, or live near a state border should evaluate whether MA’s network geography creates coverage complications. Medigap is portable nationwide. MA is not.
Long planning horizon with concern for future lock-in. Beneficiaries who are healthy at 65 but have family histories suggesting future complex illness, oncological, neurological, cardiovascular, face a strategic exit problem if they enroll in MA. In most states, they cannot return to Medigap with guaranteed issue rights if they develop those conditions later. The beneficiary who chooses Original Medicare at 65 preserves future optionality. The one who chooses MA and develops a serious illness at 72 may find the door to Medigap functionally closed.
The case for Medicare Advantage remains genuine for beneficiaries who value supplemental benefits, have budget constraints that make Medigap premiums prohibitive, have predictable and moderate utilization patterns, live in markets with high-quality MA plan options, and have primary care relationships within MA networks. The zero-premium entry point and the OTC and transportation benefits are real and meaningful for beneficiaries with limited incomes and transportation barriers.
What has changed in 2026 is the quality of the MA product being delivered. Benefit contraction, market exits, network narrowing, and elevated prior authorization scrutiny have altered the value proposition in ways that were not present in 2022 or 2023. A decision framework that was accurate for the MA market three years ago may not be accurate for the MA market today.
The Policy Horizon#
The long-standing policy trajectory has been toward TM-MA convergence: importing managed care tools into FFS through care coordination, risk stratification, and performance accountability, while expanding fee-for-service coverage of the supplemental benefits that drove MA enrollment growth. WISeR continues that convergence. AHEAD creates geographic budget accountability without managed care intermediaries. ACOs create care coordination within FFS without plan enrollment.
At the same time, the MA market is contracting in ways that are pushing some beneficiaries back toward the TM path. MA plan exits in 2025 and projected exits for 2026 will displace beneficiaries who receive guaranteed-issue Medigap rights when their MA plan withdraws from their county. CMS projects MA enrollment may decrease for the first time in nearly two decades in 2026. Benefit reductions in supplemental areas are removing the most visible consumer-facing MA advantages.
Whether this represents a permanent inflection or a temporary correction depends on how the CY 2027 final rate announcement and the ongoing risk adjustment reform trajectory resolve. If MA plans recover financial sustainability through rate normalization and cost management, the growth trajectory may resume. If rate and payment reform continues at the pace implied by the CY 2027 advance notice, a sustained recalibration of MA enrollment is possible.
The right frame for analysts and plan strategists is not which coverage option is generically superior. It is which coverage option is superior for which beneficiary at which life stage in which market, and whether beneficiaries are receiving the information they need to make that judgment accurately. The evidence from KFF, Commonwealth Fund, and the OIG suggests they often are not. In a period when the choice between MA and Original Medicare has become more consequential than at any point in the program’s history, SHIP capacity and beneficiary education quality are underappreciated policy levers.
Related Reading#
MCR-01_03 WISeR: Prior Authorization Comes to Traditional Medicare MCR-05_03 ACOs at Scale: The 2025-2026 Participation Surge and What It Signals MCR-04_02 Benefit Design 2026-2027: What Plans Will (and Won’t) Offer MCR-07_01 Your Medicare Plan Is Changing: What to Expect in 2026 and 2027