The capstone: traditional Medicare is shrinking as a share of enrollment while the part that remains becomes steadily more accountable for total cost.
Two trends are running at once, and they point in different directions. Traditional Medicare is losing enrollment share to Medicare Advantage. At the same time, the beneficiaries who remain in it are increasingly cared for by organizations accountable for their total cost.
The enrollment trend
Medicare Advantage enrollment “as a share of the eligible Medicare population has jumped from 19% in 2007 to 55% in 2026.” Payments to plans are projected to reach 59 percent of total Part A and Part B spending by 2035. On current trajectory, traditional Medicare becomes the minority route.
The accountability trend
Inside the shrinking program, the direction is toward risk. As of January 2026, 14.3 million Medicare beneficiaries are estimated to receive care coordinated by Accountable Care Organizations, up from 13.7 million in 2025, a 4.4 percent increase.
The Shared Savings Program specifically grew to 511 ACOs for performance year 2026, up from 476 in 2025, comprising “more than 700,000 health care providers and organizations” serving 12.6 million people with Traditional Medicare, a 12.3% increase from 2025 and the largest number ever served by the program. The ACO REACH Model adds “74 ACOs with 125,909 health care providers and organizations providing care to an estimated 1.7 million people with Traditional Medicare.”
The depth of risk is also increasing. In 2026, 82.8 percent of Shared Savings Program ACOs are in Level E of the BASIC track or the ENHANCED track, both of which qualify as Advanced Alternative Payment Models. CMS notes this is “the highest percentage since 2012, the inception of the Shared Savings Program.”
What this means for practice
A clinician or executive working in traditional Medicare today faces a different environment than a decade ago:
| Then | Now |
|---|---|
| Fee-for-service with quality reporting attached | Fee-for-service with a growing probability of total-cost accountability |
| One conversion factor for all clinicians | A permanently higher update for qualifying APM participants |
| Accountable care as a demonstration | 14.3 million beneficiaries, most ACOs in two-sided risk |
Worth remembering: the common framing is that value-based care is replacing fee-for-service. What the numbers show is something more specific. Fee-for-service payment systems remain fully intact, and they still determine most individual transactions. What has changed is that a layer of total-cost accountability now sits on top of them for a large and growing share of beneficiaries, and the fee schedule itself now pays participants in that layer more. The underlying machinery of administered prices was not replaced. It was made into the substrate for something else, which is why understanding it remains a prerequisite rather than a historical curiosity.
The through-line
This course covered how Medicare is built, how it pays, what beneficiaries owe, how it measures quality, and who decides. Every other course in this curriculum operates against this baseline. Accountable care organizations are benchmarked against traditional Medicare spending. Medicare Advantage plans are paid relative to traditional Medicare costs. Contracts, actuarial models, and evaluations all use these payment systems as their reference point. Understanding the baseline is what makes the rest legible.
Key takeaways
- Medicare Advantage reached 55 percent of eligible beneficiaries in 2026 and is projected to reach 59 percent of Part A and B spending by 2035.
- 14.3 million beneficiaries were in ACO arrangements as of January 2026.
- The Shared Savings Program grew to 511 ACOs serving 12.6 million people, its largest ever.
- 82.8 percent of Shared Savings Program ACOs are now in Advanced APM tracks, the highest share since 2012.
Sources
- CMS, 2026 Medicare Accountable Care Organization Initiatives Participation Highlights (opens in a new tab)
- KFF, Medicare Advantage in 2026: Enrollment Update and Key Trends (opens in a new tab)
- KFF, Key Facts About Medicare Spending Trends and Projections from the 2026 Medicare Trustees Report (opens in a new tab)
Check your understanding
What is happening to traditional Medicare as Medicare Advantage grows?
Medicare Advantage reached 55 percent of eligible beneficiaries in 2026, so traditional Medicare covers a shrinking share. At the same time 14.3 million beneficiaries were in ACO arrangements as of January 2026, so accountability within traditional Medicare continues to expand.