The payment reductions proposed yesterday are subject to negotiations with the industry and aren't expected to become final until April 7. Insurers have predicted total cuts to the program, including additional adjustments, will be as much as 7 percent. A lobbying campaign to minimize the cuts had begun already, including a Feb. 14 letter to the administration from 40 senators urging the government to freeze Advantage rates.

"The final cut may be bigger, as the proposed rate doesn't take into account adjustments required by the Affordable Care Act," Michael Manns, a Bloomberg Industries analyst, said in a telephone interview.

About 15.9 million people, or about 30 percent of Medicare beneficiaries, are enrolled in Advantage plans this year, according to February data from the government. Next year may mark a turning point: Medicare's actuaries estimate that enrollment will decline for the first time since 2004 because payment cuts will cause plans to drop out or reduce benefits.