Bob’s Journal 8/7

Turmoil in Medicare Advantage Plans Continues

Significant changes occurred in Medicare Advantage plans the last couple of years, and more changes are on the way in 2026.

In 2024, I documented the factors that would cause higher costs and fewer benefits in Advantage plans in 2025. Those changes happened.

For example, in the September 19, 2024, Bob’s Journal, I reported that major Advantage plan sponsors were offering fewer plans in 2025, and some sponsors were completely withdrawing from the market. Also, medical providers were declining to be in the networks of some Advantage plans.

Unfortunately, for Advantage plan members, more of the same is likely when the 2026 plans are announced later this year.

Insurers continue to say in their earnings reports that they’re incurring higher costs than expected in Advantage plans because plan members are receiving more medical services, and the services cost more than estimated. In addition, government subsidies to the plans are lower.

The changes in Part D prescription drug coverage also are hurting Advantage plan sponsors in addition to insurers offering Part D policies.

For several years, Advantage plan sponsors prioritized increasing enrollment in their plans. They did this by offering more benefits and lower costs.

Now, Advantage plan sponsors are emphasizing profitability over higher enrollment numbers.

CVS and Humana responded to the changing market earlier, cutting plans and benefits offered for 2025. They now are more profitable than some competitors, and their stock prices are higher, The Wall Street Journal reported.

United HealthGroup, on the other hand, continued to emphasize higher enrollment for 2025 and is in much worse shape. It changed its CEO earlier this year and announced it is overhauling its Advantage plan strategy for next year.

The company is likely to reduce benefits, as well as stop offering some plans. It recently estimated that plans with about 600,000 members won’t be offered next year.

Medicare Advantage plans still will be good options for many beneficiaries. But the race among insurers to offer more benefits and lower costs is over. The major Advantage plan sponsors will continue to offer plans, but they will ensure the plans are profitable.

This means beneficiaries must study changes in plan terms when they are received for Open Enrollment Season in October. They also should review the alternatives offered in their areas.

Thoughts on the Firing of a Key Government Data Provider

Last week after the monthly Employment Situation reports were issued, President Trump fired the head of the agency that prepares and issues the reports.

The head of the Bureau of Labor Statistics (BLS) was terminated allegedly because the data were inaccurate and, as the President put it, “RIGGED” for political purposes.

Not only were the job numbers for July worse than anticipated, there were significant and negative revisions in the numbers for previous months, as I discuss below. I was planning to write about the BLS and other government data providers before this kerfuffle, but not for the reasons the President gave.

Economists and others have been warning for months that there have been and will continue to be problems with the government data collection.

The offices that compile and issue the economic data traditionally have been understaffed. That’s a problem for agencies that compile data through the labor-intensive process of surveying consumers and businesses. More recently, hiring freezes were imposed on the offices.

In recent years, there’s been a decline in the number of businesses and individuals responding to surveys on time. Fewer respond at all, and the number of late responses is higher. Late responses are one reason for significant revisions.

In June, The Wall Street Journal reported that the BLS itself warned outside economists that the quality of the monthly inflation reports was suspect because of these issues. Estimates have been replacing hard data more often.

In July, Reuters polled what it called “top policy experts.” The experts overwhelmingly said they were worried about the quality of U.S. government economic data and believed not enough was being done to address the issues.

The estimates and other problems mean the data might not be as reliable. I’ve cautioned against relying too much on government data in the past because even in the best of times the data contained estimates and was revised months later. The situation is worse now. In addition, a lot of the data is issued well after the events it is measuring, making it less than timely.

This is an important issue because government data has significant effects.

Private businesses and investors rely on government-issued data to make decisions. Government officials, including the Federal Reserve, rely on the data to make policies.

There also are immediate consequences to people. For example, Social Security benefits are indexed to inflation data issued by BLS. Tax rate tables and other parts of the tax code also change with the inflation reports each year.

Problems with the government data have been known to policy nerds for a while. Now, the problems are major news. But there’s no sign that more funding or other resources will be provided to improve the data. Indeed, there’s a good chance more people will believe the data is manipulated for political purposes.

How to Protect the Deceased from Identity Theft

Identity thieves and other scammers spend time scouring obituaries and death notices. The period after someone dies is a good opportunity for them to steal vital personal data and obtain credit in the deceased’s name.

Survivors can take simple steps to reduce the probability a deceased person’s identity and credit record will be stolen, according to the credit reporting firm Equifax.

The first step is to be sure the death is reported to the Social Security Administration (SSA). Funeral homes usually handle this task, but survivors are responsible for ensuring it is done.

The SSA usually reports the death to the major credit reporting bureaus. They then place death notices in the deceased’s credit files, blocking their use for new credit applications.

Again, the survivors are responsible for ensuring this happens. They can do this by contacting one of the credit firms to ensure a notice is in the file. Equifax says only one credit reporting firm has to be contacted, because the firms share the data.

In addition, the surviving spouse or estate administrator might want to ask credit firms for the deceased’s credit reports. The reports help process the estate, because they list the debts and obligations of the deceased. Requesting credit reports also ensures identity theft isn’t occurring or attempted.

The Data

Personal income increased 0.3% in June after falling 0.4% in May. Most of the increase was from government transfers, which rose 1.0% in June. Employee compensation increased 0.2% in June while income from assets was unchanged.

Personal consumption expenditures (PCE) rose 0.3% in June after being unchanged in May. Spending on goods increased 0.5%, including a 0.7% increase in spending on nondurable goods. Spending on services increased 0.3% in June.

After adjusting for inflation, PCE increased 0.1% in June and declined 0.2% in May.

The PCE Price Index rose 0.3% in June after a 0.2% rise in May. The 12-month increase in the PCE Price Index was 2.6% through June and 2.4% through May.

The core PCE Price Index, which is the Fed’s preferred measure of inflation and excludes food and energy prices, was 0.3% higher in June and 0.2% higher in May.

The 12-month increase in the core PCE Price Index was 2.8% through both June and May.

The Consumer Sentiment Index from the University of Michigan rose to 61.7 at the end of July from 60.7 at the end of June and 61.8 in mid-July.

Consumer assessments of current conditions increased while expectations declined. The final July number is the highest since February 2025.

The ISM Manufacturing Index fell to 48.0 in July from 49.0 in June. July is the fifth consecutive month the index was below 50.0. Readings below 50.0 indicate the sector is contracting.

The ISM Services Index fell to 50.1 in July from 50.8 in June.

The PMI Services Index was 55.7 at the end of July, up from 52.9 at the end of June and 55.2 at mid-July.

The PMI Manufacturing Index was 49.8 in July, its lowest reading since December, compared to 52.9 in June.

The PMI Composite Index rose to 55.1 at the end of July from 52.9 at the end of June and 54.6 in mid-July.

Factory orders tumbled 4.8% in June after increasing 8.3% in May. Much of the recent changes in factory orders were due to transportation orders, especially civilian aircraft. Transportation orders increased 48.5% in May and fell 22.4% in June.

Excluding transportation, factory orders increased 0.4% in June and 0.3% in May.

The Employment Cost Index increased 0.9% in the second quarter of 2025. That included a 1.0% rise in compensation and a 0.7% rise in benefit costs. Over 12 months, the Employment Cost Index rose 3.6% through both the first and second quarters.

Last week’s Employment Situation reports became controversial as discussed above, partly because the number of new jobs reported was below expectations and partly because the numbers issued in recent months were revised to much lower levels.

There were 73,000 new jobs created in July. Most of the new jobs created were in health care and social services. Other industries had little change in employment while the federal government lost 12,000 jobs.

In addition, revisions reduced the number of new jobs in June from 147,000 to 14,000. The May number was reduced by 125,000 jobs. That’s a total reduction of 258,000 jobs for May and June.

The unemployment rate increased to 4.2% in July from 4.1% in June.

Average hourly earnings were 0.3% higher in July after rising 0.2% in June. The 12-month increase in average hourly earnings was 3.9% through July and 3.8% through June.

New unemployment claims increased by 1,000 to 218,000 in the latest week.

Continuing claims, which lag a week behind new claims, were unchanged at 1.946 million.

The Markets

The S&P 500 lost 1.15% for the week ended with Tuesday’s close. The Dow Jones Industrial Average fell 1.20%. The Russell 2000 dropped 0.83%. The All-Country World Index (excluding U.S. stocks) declined 0.57%. Emerging market equities decreased by 0.73%.

Long-term treasuries rose 1.54% for the week. Investment-grade bonds increased 0.78%. Treasury Inflation-Protected Securities (TIP) added 0.34%. High-yield bonds gained 0.14%.

In the currency sector, the U.S. dollar declined 0.04%.

Energy-based commodities lost 3.35%. Broader-based commodities fell 3.99%. Gold rose 1.60%.

Bob’s News & Updates

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