Medicare Has Changed This Year, and Not Everyone Will Be Happy About It

Medicare beneficiaries will face higher out-of-pocket costs in 2026 with the Part A deductible rising $60 to $1,736 and the Part B deductible rising $26 to $283, while the Part B premium increases $17.90 to $202.90; Part A premiums also rise for those with fewer than 40 quarters of work (30–39 quarters: $311, up $26; under 30 quarters: $565, up $47). Income-related surcharges (IRMAA) remain relevant for higher earners (thresholds $109,000 single / $218,000 joint) with potential surcharges up to $487 (Part B) and $91 (Part D). Policy changes also tighten telehealth coverage (effective Jan. 31 requiring beneficiaries to be in a physical rural facility except for specific services) and introduce the WISeR preauthorization pilot in six states (AZ, NJ, OH, OK, TX, WA), raising operational and revenue risks for providers and telehealth vendors due to greater utilization hurdles and delays.

Analysis

Market structure: Medicare tightening (higher Part A/B deductibles, telehealth site-of-service restriction, WISeR preauth pilots) shifts pricing power to payers and in-person providers. Winners are large managed-care/benefit managers (e.g., UNH) and hospital chains (e.g., HCA) that capture incremental in-person visits; losers are pure-play telehealth (TDOC, AMWL) and elective device/imaging vendors reliant on outpatient volume. Expect Medicare-driven utilization among beneficiaries to retrace 20–40% of pandemic-era telehealth gains over 6–12 months, pressuring revenue mix for out-of-network/virtual-first models.

Risk assessment: Tail risks include rapid national roll-out of WISeR within 12–24 months (material for device makers and imaging centers), aggressive IRMAA collections reducing utilization among income brackets >$109k, or legal/regulatory reversals that restore telehealth coverage. Immediate (days) risk is a headline-driven selloff in telehealth; short-term (weeks–months) is earnings guidance cuts; long-term (quarters–years) is secular payer-driven utilization management. Hidden dependencies: firms with >40% Medicare exposure or state concentration in AZ/NJ/OH/OK/TX/WA face outsized downside; software vendors automating prior-auth stand to gain.

Trade implications: Direct plays are tactical short exposure to TDOC/AMWL and long exposure to UNH/HCA and RPA/EHR automation vendors (UiPath PATH, Oracle ORCL/CERN legacy exposure) to capture workflow TAM. Use options to express conviction given uncertain timing: 3–9 month puts on telehealth and call spreads on automation/insurers. Pair trades (long HCA, short TDOC) and rotation from growth telehealth into defensive healthcare names reduce beta while capturing policy-driven flows.

Contrarian angles: Consensus may overstate permanent demand loss—employers and international markets offset some Medicare weakness, so full-capitulation shorts are risky; partial-sized positions or option structures are preferable. Historical parallel: prior-authorization expansions in the 2010s compressed device margins initially but created software/service adjacencies that later expanded TAM; consider selective longs in vendors that integrate preauth into product suites.

Key Decisions for Investors

• Establish a 2–3% portfolio short position in Teladoc (TDOC) within 7 trading days; target 30% downside over 3–6 months if FY guidance is cut, set a hard stop-loss at +20% and size puts to limit absolute drawdown.
• Allocate 2–3% long split equally into UnitedHealth (UNH) and HCA Healthcare (HCA); horizon 6–12 months, target 5–10% relative outperformance versus healthcare ETF (XLV) as in-person visit mix and care-management margin expand.
• Buy a 6-month call spread on UiPath (PATH): buy ATM call / sell 30% OTM call (size 1% of portfolio) to capture workflow automation upside from increased prior-auth volumes; adjust to a 9-month tenor if WISeR expands to >12 states.
• Initiate a 1–2% pair trade: long HCA (1%) and short TDOC (1%) to express relative value; increase short leg by 50% if CMS publishes WISeR expansion into more than 12 states or if quarterly Medicare revenue exposure >20% is disclosed by the target within 30–60 days.