Faced with higher utilization and changes to risk adjustment, insurers seem to be pulling back on Medicare Advantage — and this could cause significant disruption for seniors, especially given how most seniors are enrolled in Medicare Advantage plans compared with traditional Medicare.
UnitedHealthcare — the largest MA insurer — announced that more than 600,000 Medicare members will be affected by 2026 product exits, “primarily in less managed products such as [Preferred Provider Organization] offerings,” CEO Tim Noel said during its recent earnings call. PPO is a type of insurance plan in which patients can receive care from providers in or out of network. Contrast this with Health Maintenance Organization (HMO) plans, in which members mostly get care inside the network.
Generally “less managed” refers to plans which are less actively managed by insurance companies and typically have fewer restrictions on provider choice — for instance, people can see specialists without referrals — or fewer restrictions on prior authorizations.
Similarly, Humana expects to shed up to 500,000 MA members by the end of the year as it exits unprofitable plans and markets.
Aetna, meanwhile, may drop up to 10% of its MA members, representing about 420,000 people.
Cigna may have set the precedent by announcing in 2024 that it is exiting the MA market altogether.
Insurers aren’t just exiting unprofitable regions and plans. They’re also reducing benefits, increasing premiums and eliminating broker commissions in order to reduce growth in certain products, according to Brooks Conway, principal of actuarial consulting at Oliver Wyman.
So what does this all mean for patients?
“It’s extremely disruptive. … If you’ve been on an insurance plan, and the insurance plan gets canceled, [you now have] to re-enroll in another insurance plan,” said Dr. Adam Brown, an emergency physician and founder of ABIG Health. “That could mean they could lose their doctors. They could have a change in where they have to go to get care.”
He added that going into enrollment season in the fall, some patients may be scrambling for a new plan, where networks may be smaller and their supplemental benefits may be different. Some may even need to switch to traditional Medicare, where they may lose some of their supplemental benefits like eye care, dental care or gym memberships.
Why insurers are pulling back on MA
The single biggest factor causing insurers to retreat from Medicare Advantage “is the unexpected increase in medical utilization costs experienced by most insurers in 2024,” said Michael Abrams, managing partner of Numerof & Associates, a healthcare consulting firm. In addition, following insurers’ missed earnings this year, investors have sold off stocks. So, this is purely a financial move to protect their bottom lines.
“In order to repair their balance sheets and restore the faith of investors, the big five have pivoted from pursuing scale and margin to pursuing margin before scale,” he added. “The result is that insurers like UnitedHealthcare, Humana, and CVS Health (via Aetna) are exiting unprofitable markets, cutting low-margin offerings and trimming supplemental benefits to improve margins. Smaller insurers are exiting MA completely.”
Examples of smaller insurers leaving MA include Blue Cross and Blue Shield of Kansas City, Premera Blue Cross and Michigan Medicine, according to Abrams.
Brown echoed Abrams’ comments on increased utilization. Medicare Advantage insurers receive a lump sum of money from U.S. taxpayers through Medicare in order to care for patients. When patients receive care, the cost of that care is taken out of that lump sum. Therefore, MA insurers have an incentive to reduce utilization as much as possible to boost their margins.
In other words, “utilization is a liability” for insurers, Brown said.
“As patients go and receive care, that money is leveraged or that money is utilized, and therefore the amount of money they have sitting in the bank at the end of the day goes down. When I say that utilization is a liability for these companies, I’m talking about it from an accounting perspective,” Brown explained.
Insurers are also struggling to adapt to the new risk adjustment model, according to Conway. This model has been phased in over the last few years and changed how CMS calculates payments to health plans by updating the way diagnosis codes are linked to risk scores. As a result, many plans received lower risk scores, which meant lower payments.
Conway added that it’s been more common for nationwide insurers to pull back on MA versus regional insurers. However, this could change in the near future. Regional insurers have been slower to make major adjustments, but may become more inclined to scale back their MA business next year to prioritize margin over membership — especially in light of recent moves by larger insurers.
What will happen to patients?
With projections of a million seniors losing coverage, patients will have to make decisions on whether to switch back to traditional Medicare. However, while some might, it may not be a wholesale switch given how popular supplemental benefits like vision and dental coverage are.
It’s more likely that they’ll move to remaining MA plans that exist in their region, according to Conway.
“These exits continue to generate significant shopping among seniors,” he said. “It has been common in 2025 for a regional insurer to take on an influx of membership as the nationwide insurers exit their geography and they become the last, or one of the last, options in town. While some regions have more sparse competition, there generally continues to be multiple MA options for seniors in most areas.”
Brown had less of a rosy view on these exits. He’s concerned that this will start a trend in which insurers exit areas that have higher utilization and are less profitable, leaving multiple markets in which there are limited choices for patients.
“Private insurers are more than happy to care for patients under a Medicare Advantage plan when these profits are rolling in, but when challenges arise, they tend to discard these patients. They tend to say, ‘These patients are not profitable anymore,’” Brown said.
To Brown, this is especially concerning considering MA is funded by the people.
He accused the large health insurance companies of “abandoning” seniors who are dependent on the plans for healthcare and for putting profits over patients.
“These are not Wall Street dollars that are rolling into Medicare Advantage plans,” he said. “These are taxpayer dollars, and their profits are coming directly from taxpayers to care for people eligible for Medicare. … What we’re seeing happen now is that a business model where there was purported loyalty for patients is only lasting as long as the profits do.”
Insurers exiting MA also hurts providers, Brown added. Physicians may lose patients and revenue if new insurance plans are out of network. It also creates administrative burdens — such as re-credentialing to complex billing — that strain practice resources and threaten the stability of independent providers.
Photo: sdecoret, Getty Images
