Medicare Advantage enrollment has surged over the past two decades, but insurers' enthusiasm for the program is waning as they shift from expansion to profitability, cutting benefits and leaving unprofitable markets amid rising costs and lower government payments. Experts warn the changes could significantly impact older Americans who rely on Medicare Advantage -- the private coverage sometimes called Medicare Part C -- with considerable implications for retirement planning.
Major insurers, including Humana, CVS Health Aetna and UnitedHealthcare, have all announced plans to scale back their Medicare Advantage operations in 2025 and 2026.
Last May, CVS CFO Tom Cowhey said that the insurer could drop 1 in 10 -- or roughly 600,000 -- of its Medicare Advantage members by the end of 2025 in an effort to improve margins.
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"The goal for next year is margin over membership," Cowhey said. "Could we lose up to 10% of our existing Medicare members next year? That's entirely possible. And that's OK, because we need to get this business back on track."
Humana has followed suit, announcing plans earlier this year to drop approximately 550,000 Medicare Advantage members by the end of 2025.
UnitedHealthcare, which until recently has pushed to expand its Medicare Advantage membership, announced plans last month to drop more than 600,000 members by the end of 2026.
"We are seeing higher-than-expected medical cost increases, particularly in outpatient care," UnitedHealthcare CEO Tim Noel said on the company's second-quarter earnings call. "The American health system's long-standing cost problem is accelerating."
Together, Humana, CVS Health Aetna and UnitedHealthcare provide coverage to 58% of all Medicare Advantage beneficiaries, nearly 20 million people in total, according to KFF, a nonprofit health policy research, polling and news organization.
Medicare Advantage plans gained popularity through $0 monthly premiums and expanded benefits compared to traditional Medicare. The program appealed to healthy beneficiaries and, until recently, delivered strong profits for insurers through generous government payments and upcoding practices. But rising medical costs and tighter oversight are pressuring margins, prompting some insurers to rethink their approach.