Medicare Advantage Cuts Force 3.2 Million Into New Plans for 2027

The third straight year of upheaval

Medicare open enrollment started on October 15, and for millions of older Americans the job this year goes well beyond a routine plan check. Private insurers that run Medicare Advantage plans are closing policies, leaving counties and moving more of the cost of care onto enrollees. About 3.2 million people in individual Medicare Advantage plans, close to 11% of that group, will have to pick new coverage for 2027 because their current plans are ending. That figure comes from Medicare Market Insights founder Jared Strock, who reviewed federal data.31 For comparison, about 2.9 million enrollees lost their plans going into 2026 and about 2 million going into 2025.31

The New York Times reports that insurers including UnitedHealth, Centene and state Blue Cross plans have closed plans they considered unprofitable. In some rural counties, from Oregon to New Hampshire, the choices have shrunk to a handful or disappeared.32 The insurers are not hiding their reasons. Healthcare Dive reports that carriers are willing to lose members in order to rebuild margins, for the second year running, after several years of medical spending that came in higher than expected.33

This article argues that the official description of a "stable" market is technically defensible but misses what most enrollees will experience. The plan count has barely moved. The protection those plans offer has gotten noticeably weaker.

Different counts of the same problem

The outlets do not agree on how many people are affected, and the gap is large enough to matter. Strock's 3.2 million figure is the one CNN and other outlets have used most.3136 One roundup citing KFF puts the number of enrollees needing new coverage at no fewer than 3.8 million.39 NPR says it has seen estimates of 4 to 5 million and found that roughly a third of Medicare Advantage plans in the Twin Cities area are closing, along with more than a quarter in Dallas–Fort Worth, Houston and Seattle.34

Counts of counties with no Medicare Advantage plans also vary. The Times reports 187.32 CNN, using KFF data, says 193 counties will have none, affecting 638,000 people, compared with 399,000 people in 123 counties this year.31 A Modern Healthcare tally puts it at 181, compared with 67 in 2026.39 The differences come from how each analysis defines plan availability. Every count points the same way, and the losses fall hardest on rural areas with small populations, few hospitals and high costs.3239

Some of the company-level figures are firmer. A UnitedHealth spokesperson confirmed that about 390,000 members are in plans that are being discontinued. Humana has announced cuts that affect about 600,000 enrollees.35 An analysis by the investment bank Stephens found that every major insurer reduced its number of individual plans. Centene cut the most, with roughly 3,000 fewer plans, and is leaving 344 counties. Humana is cutting about 2,400 plans.33 Humana is also expanding into 39 counties, and smaller carriers such as Devoted Health are expanding as well.33

Why the official numbers look calm

The Centers for Medicare & Medicaid Services says the market is healthy. It points out that more than 99% of beneficiaries can get at least one Medicare Advantage plan, that 97% can choose from ten or more, and that the average premium will drop more than 16%, from $14.37 to $12.00.33 The total number of plans changes very little, from 5,553 to 5,532.33

The headline numbers hold steady because of special needs plans. These plans cover people with chronic illnesses, people who also qualify for Medicaid, and people in institutional care. They have low premiums, which pulls the average down.33 Chronic-condition plans have grown from 376 in 2025 to 744 for next year. Insurers have a reason to offer them, because the federal government pays more for sicker enrollees.31 If those plans are left out, premiums for ordinary Medicare Advantage plans go up 23%, to $14.80 a month, by Strock's count.31 The analyses do not all match. Leerink Partners estimates the industry-weighted average premium will rise only about 1%. J.P. Morgan says premiums for plans that include drug coverage will rise by several dollars, partly because fewer $0-premium plans are on offer.33

The larger costs show up in what enrollees pay when they use care. Strock finds the enrollment-weighted in-network out-of-pocket maximum rises 9%, to $6,603. Seventy percent of enrollees face a higher cap, compared with 35% last year.31 The average drug deductible in Medicare Advantage plans rises 23%, to $509. Only 12% of enrollees are expected to be in plans with no deductible, down from 60% in 2024.31 Leerink's figures are higher still: out-of-pocket limits up 10% and Part D deductibles up 30%.33 Benefits are also likely to shrink. Close to 70% of health plan leaders surveyed by HealthScape Advisors expect less generous benefit packages, including higher specialist co-pays and less dental coverage.33

Even the industry's main advocacy group accepts the critics' basic point. Mary Beth Donahue of the Better Medicare Alliance said more funding brought premiums down, but a record number of seniors must find new coverage and many will pay more when they need care.37

The payment fight behind the cuts

Insurers say federal payments have not kept up with medical costs. Critics say the companies overbill for patient care.31 Yahoo Finance, citing Bloomberg and Reuters, reports that CMS finalized a 2.48% average payment increase for 2027, which adds up to more than $13 billion. That is much more than the nearly flat 0.09% increase proposed in January, but carriers still say it does not cover their rising costs.35 Insurers expect Medicare Advantage enrollment to fall to about 34 million, or 47.4% of Medicare. CMS expects the actual number to be higher.31

The timing has political weight. The disruption is happening just before the midterm elections. President Trump has announced a $90 payment toward Medicare premiums for about 20 million seniors, and Medicare Advantage enrollees cannot receive it.31

Drug prices: falling list prices, rising out-of-pocket costs

Prescription drugs show the clearest gap between lower prices and what enrollees pay. On January 1, negotiated Medicare prices take effect for 15 more drugs, bringing the total to 25. The semaglutide drugs Ozempic, Wegovy and Rybelsus will cost $274 for a 30-day supply, compared with a 2024 list price of $959.1 CMS estimates Part D enrollees will save about $685 million out of pocket in 2027.1 However, the negotiated price is what Medicare pays the drugmaker. It is not the patient's copay, which still depends on the plan's tiers and rules.2

The standard Part D benefit also becomes less generous. The deductible goes from $615 to $700, and the annual out-of-pocket cap goes from $2,100 to $2,400.1 The Biden-era Part D Premium Stabilization Demonstration ends after 2026. It was worth about $9.8 billion and reduced stand-alone plan premiums by $10 a month.1 Without it, insurers' average bid jumped about 24%.2 CMS still projects that the average stand-alone premium will rise less than $1, to about $36.4 Some insurers are raising premiums by more than $50 a month, though.37 More than 1 million people are losing their Part D plans, Aetna is leaving the market in about half of states, and no $0-premium plans will be offered.31

Workers and Medicaid enrollees face the same pressure

The problems in Medicare Advantage are one part of a broader shift of health costs onto patients. WTW projects employer health costs will rise 11.1% next year, the largest increase in more than 20 years. A Marsh survey found that 59% of employers plan cost-cutting benefit changes for 2027, such as higher deductibles.14 Insurers have proposed a median 14% premium increase for small-group plans, citing specialty drugs and GLP-1 use.18 New research from the Health Care Cost Institute finds that higher prices, not more use of care, caused 90% of the growth in employer health spending.20 On the ACA marketplaces, enhanced tax credits expired and enrollment fell about 18%, and insurers have proposed a median 15% premium increase for 2027.3614

Medicaid changes are the most likely to reach hospitals directly. Starting in January, about 20 million expansion adults in 44 states must show 80 hours of work, school or volunteering each month, or earnings of $580, and renew their coverage every six months.21 Early results suggest paperwork will cause many of the losses. In one state, 490 of 533 people denied at renewal were turned down for missing documentation, not because they failed the requirement.23 Projections of coverage losses range from 3 million to 7 million people by 2028.26 Hospitals are already feeling the effects. Third Way estimates Connecticut hospitals could lose more than $300 million in revenue.28 New Jersey analysts project about $669 million a year in added uncompensated care.22 Research cited by The Guardian finds that rural and urban hospitals are now closing at the same rate.21

What it adds up to

The pattern is consistent across Medicare Advantage, Part D, employer coverage and Medicaid. Insurers, employers and governments are holding down visible prices such as premiums and list prices, and patients are taking on more of the cost through deductibles, out-of-pocket caps, paperwork and fewer choices. For an older person with a discontinued Medicare Advantage plan, the lower average premium does little to offset a higher cost when they actually get care. Anyone affected has until December 7 to compare plans.40