Medicare Advantage 2027: Drug Deductibles Up 30%, Benefits Cut

Low premiums hide higher costs

On the headline number, Medicare Advantage looks cheaper for 2027. The plan details underneath point the other way. The Centers for Medicare & Medicaid Services (CMS) projects that the average monthly Medicare Advantage premium will fall about 16.5%, from $14.37 to $12.00.4 Analysts who went through plan-level filings found that out-of-pocket maximums rose about 10% on average and that drug deductibles in plans that include Part D coverage rose about 30%.48 In other words, plans kept the monthly price low by raising the most an enrollee can owe in a bad year.

STAT's analysis of the federal data reached the same conclusion. Insurers are raising enrollee cost sharing, cutting money for dental work and other extras, and dropping plans with broad hospital and physician networks.1 STAT ties the changes to Wall Street. UnitedHealth Group, Humana and other large carriers are trimming benefits to rebuild profit margins that investors judged too thin, and they are doing it even after winning a payment increase and delayed reforms from the Trump administration in April.1 CMS is paying plans 2.48% more for 2027.8 So the cuts are not a response to falling federal payments. They are a choice to protect margins.

Open enrollment runs from October 15 through December 7, 2026, and changes take effect January 1.2 That leaves little time for seniors to work out what their plans will actually cost.

Two readings of the same data

The main disagreement in the coverage is over how much has changed. CMS calls 2027 stable. It says roughly 8 in 10 members can keep their plan at the same or a lower premium, and it expects dental, vision and hearing benefits to hold steady.10 Its average premium, though, includes Special Needs Plans. Leerink's analysts found that for most standard plans, premiums are flat or up about 1%.10

The numbers that matter most for sick patients show less stability. One review of the CMS landscape file found that the unweighted average drug deductible in Medicare Advantage plans with Part D coverage rose from about $434 to $525.2 That is roughly a 21% increase, smaller than the 30% figure analysts give but moving the same way. Insurers themselves expect more cuts: nearly 70% of health plan leaders surveyed by HealthScape Advisors expect less generous benefits in 2027, up from 40% a year earlier, and none expected richer ones.10

The federal ceilings are also rising. The 2027 cap on in-network out-of-pocket spending is $9,850, and the cap on combined in- and out-of-network spending is $14,800.5 Premiums and Part D drug costs do not count toward the medical limit.7 The bottom line is that the CMS premium figure understates what 2027 will cost. Total annual exposure is the number to watch, and it is rising.

Fewer extras and fewer plans

The coverage agrees on the details of the cuts. Plans are reducing dental, transportation and over-the-counter allowances.3 Many are also cutting vision and fitness benefits, limiting enrollment in some plans, and leaving some service areas altogether. Rural enrollees will have the fewest options left.7 One industry write-up calls it benefit "shrinkflation": a plan still lists dental or vision coverage, but the allowance is worth less than it was.8 Early broker reports also said plans that had been paying some or all of members' Part B premiums were likely to scale back or end that practice.9

Estimates of how many people will lose their plan vary. The Wall Street Journal estimates that about 3.2 million beneficiaries will need new coverage because insurers are ending plans or leaving markets.3 Another estimate puts it at roughly one in ten current members.5 Among carriers, Humana is exiting plans that cover about 600,000 members, and Molina is discontinuing its Medicare Advantage drug-plan product entirely.40 Blue Cross and Blue Shield of Texas will stop offering Medicare Advantage plans after this year.39 CMS data show that 18 plans are exiting the market for 2027, and 10 of them are insurers affiliated with health systems, including CHRISTUS Health Plan and Memorial Hermann Health Plan.36

Hospitals are leaving networks

Network changes may hit patients harder than benefit cuts, and they are getting less attention. Becker's Hospital Review counts 34 health systems that have dropped Medicare Advantage contracts this year.38 Newsweek, citing the same publication, puts the figure at 35.36 Several exits take effect January 1. Kettering Health in Ohio and Sentara Health in Virginia are leaving Anthem's Medicare Advantage network.33 Fairview Health Services in Minnesota will stop scheduling patients with UnitedHealthcare Medicare Advantage plans.38 BJC HealthCare and WashU Medicine are leaving the Aetna and Anthem networks, affecting about 85,800 members in the St. Louis area.34 In Florida, AdventHealth says UnitedHealthcare terminated its contract, so its hospitals and clinicians across the state will be out of network on January 1 unless the two sides reach a new deal.39

The hospitals' complaints follow a pattern. White River Health in Arkansas cited claim denials, delays in care and extra documentation demands when it announced it was leaving UnitedHealthcare's network.34 One industry analysis says Medicare Advantage plans pay providers roughly 90% of traditional Medicare rates while requiring more administrative work, and that the 2.48% rate increase still trails medical inflation.40 When a hospital leaves, the patient's plan stays in force. What the patient loses is in-network access, and the choice becomes switching plans or paying out-of-network rates.34 A hospital leaving a network does not by itself open a special enrollment period. There is a narrow exception for significant network changes, but members must request it and it is not guaranteed.32

This looks like more than routine contract disputes. Insurers are narrowing networks to cut costs, and hospitals are leaving because they consider the payment terms too poor. Enrollees in the middle are left with less choice and more risk.

Drug prices: lower negotiated prices, higher plan costs

The pharmacy picture is mixed. Negotiated prices for 15 more Part D drugs, including the semaglutide products Ozempic, Wegovy and Rybelsus, take effect January 1, 2027.21 CMS projects that beneficiaries will save $685 million in out-of-pocket costs as a result.26 Semaglutide's negotiated price will be $274 for a 30-day supply, and the cuts across the list range from 38% to 85%.24 Still, federal law bars Part D from covering drugs used for weight loss, so the lower price does not expand coverage.24

At the same time, standard benefit costs are rising. The standard Part D deductible goes to $700 from $615, and the annual out-of-pocket cap goes to $2,400 from $2,100.6 The federal Part D Premium Stabilization Demonstration expires after 2026, so insurers will set stand-alone premiums without that support.22 On how much that matters, the coverage splits sharply. CMS projects the national average stand-alone premium will rise only about $1, to $36.24 KFF, which weights by actual enrollment, estimates the average stand-alone plan premium will jump 50%, from $34 to $51, if enrollees stay in their current plans.30 For example, KFF finds that premiums for AARP Medicare Rx Saver would nearly double.30 KFF also finds that $0-premium stand-alone plans are gone for anyone without Extra Help, which raises costs for about 4 million people.23 Deductibles are also becoming nearly universal: KFF says 85% of Medicare Advantage drug-plan enrollees and virtually all stand-alone plan enrollees will face one in 2027.30

The KFF figure better reflects what current enrollees will see if they do nothing. CMS's lower number assumes people shop and switch, which many will not.

Medicaid changes add pressure on hospitals

Medicare's changes coincide with major Medicaid changes under the 2025 budget law known as H.R. 1. Starting January 1, 2027, many adults ages 19 to 64 covered through Medicaid expansion must log 80 hours a month of work, school, volunteering or job training, or earn at least $580 a month, unless they qualify for an exemption.11 Affected adults will also have to renew coverage every six months instead of every year.12 Retroactive coverage, which can now reach back up to three months, shrinks to one month for expansion adults and two months for most other applicants.13

Critics argue that eligible people will lose coverage over missed paperwork. Rural hospitals, which keep treating uninsured patients, would absorb those costs.14 The law includes a five-year, $50 billion Rural Health Transformation Program. Chartis cautions that much of that money may not reach hospital operating budgets, because direct provider payments are capped at 15% of a state's funds in any given year.14

What it adds up to

The premium is still the number most people compare, but it is the wrong one this year. Older Americans face higher cost-sharing ceilings, smaller extras, shrinking hospital networks and higher drug deductibles, partly offset by negotiated prices on specific drugs. Hospitals face more uninsured patients as Medicaid rules tighten in January. The cost of care is not falling; it is moving onto patients through deductibles, copays and network gaps. Enrollees who compare plans before December 7, checking total annual cost and whether their hospital is in network, can limit the damage. Those who stay in their current plans are likely to see higher bills.