Medicare Advantage Cuts Leave 3 Million Seeking New 2027 Plans

Fewer plans as enrollment opens

Medicare's annual enrollment period opened on October 15 and runs through December 7, with new coverage starting January 1, 2027. Shoppers will find fewer private Medicare Advantage plans this year than last. KFF counts 28 Medicare Advantage plans with drug coverage available to the typical beneficiary, down from 32 in 2026. Including plans without drug coverage, the average falls from 39 options to 35.11 The drug-plan figure peaked at 36 in 2024, so this is the second year in a row that choices have narrowed.13

The national plan count changes very little. CMS expects about 5,532 Medicare Advantage plans in 2027, compared with 5,553 this year. The agency says more than 99% of beneficiaries will have at least one plan available and 97% will have ten or more.20 Those figures are accurate, but they understate how much is changing. Plans are being closed in some places and opened in others, and many of the new ones target specific groups of patients. The overall total barely moves while individual enrollees see real change.

How many people have to switch

Coverage generally agrees on the direction of the change. It differs on the size. Jared Strock of the newsletter Medicare Market Insights, working from CMS data, estimates that nearly 3.2 million Medicare Advantage enrollees, close to 11%, are in plans that are ending. The comparable figures were roughly 2.9 million for 2026 and 2 million for 2025.13 MarketWatch, citing Modern Healthcare, reports a higher floor of at least 3.8 million people who must find new coverage.14

The estimates of areas with no plans also vary. KFF finds 193 counties with no Medicare Advantage drug plan open to general enrollment in 2027, up from 123. Those counties hold about 638,000 people, compared with 399,000 this year.11 Modern Healthcare's count of counties with no Medicare Advantage plans of any kind is 181, up from 67.14 The New York Times puts that number at 187.19 The differences come from what each analysis counts: drug plans or all plans, and individual plans only or special-needs plans too. Every count shows the same thing. More places, most of them rural, have lost private Medicare options entirely, and the number of affected people has risen sharply in a year.

The cuts come mostly from the largest insurers. KFF reports that UnitedHealth is leaving 228 counties and entering 9, Humana is leaving 62 and entering 4, Centene is leaving 359 and entering 15, and Health Care Service Corporation is leaving 498 without entering any.12 Humana says its plan closures affect about 600,000 members. UnitedHealth puts its number at about 390,000.11 Group 1001 and Molina are leaving the Medicare Advantage drug-plan market altogether.11 Eleven insurers, including Wellmark and Providence Health Plan, are dropping individual Medicare Advantage coverage.20

Why insurers are pulling back

The two sides give different reasons. UnitedHealthcare President Bobby Hunter pointed to funding pressure, rising medical and drug costs, and higher use of care.11 Matthew Fiedler of Brookings noted that payments to Medicare Advantage plans have consistently run well above what the law intends. In his view, recent federal efforts to bring them down would be expected to reduce benefits somewhat.14 CNN reports both views: insurers say costs are rising faster than federal payments, and critics say insurers overbill for patient care.13

Both explanations can hold at once. Insurers are dropping less profitable plans. Health economist Vivian Ho summarizes the logic: with lower profits, insurers are less eager to stay in the market.15 The products they are expanding support that reading. Chronic-condition special needs plans rose from 376 in 2025 to 744 for 2027, and those plans bring higher federal payments for sicker members.13 The overall number of special needs plans is expected to grow about 9% even as other Medicare Advantage offerings shrink.20 Insurers have not left Medicare Advantage. They are focusing on the enrollees the federal payment formula pays most for.

PPO plans, which cover care outside the network, make up many of the closures.13 Ho expects the hardest search for replacement coverage in small rural areas. Some people there may have to move to traditional Medicare, which she says can cost more.15

Lower premiums, higher costs when you get care

Many shoppers will see a headline number that looks like good news. CMS projects the weighted average Medicare Advantage premium will drop from $14.37 to $12.00 a month, a 16.5% decrease.11 Other numbers point the opposite way. Medicare Market Insights projects that premiums for standard plans, excluding special needs plans, will rise 23% to an average of $14.80. It also expects the average in-network out-of-pocket maximum to reach $6,603, up 9%, with about 70% of enrollees in plans whose limits are going up.16 The average deductible for drug coverage inside Medicare Advantage plans is expected to rise 23% to $509.16

The two sets of figures measure different things. CMS's falling average includes special needs plans and a market that is moving toward them. The independent analysis tracks the standard plans most seniors use. Both are probably correct. Shoppers who look only at the premium will miss most of the change. Insurers are also expected to reduce extra benefits, including dental allowances and Part B premium "givebacks."20

Drug prices: negotiated discounts and higher deductibles

Part D coverage pulls in two directions in 2027. On January 1, Medicare's negotiated prices take effect for 15 more drugs, bringing the total to 25. Semaglutide, sold as Ozempic, Rybelsus and Wegovy, will have a maximum price of $274 for a 30-day supply. That is about 71% below its 2024 list price.2 CMS estimates the new prices will save Part D enrollees about $685 million in out-of-pocket costs in 2027.1 The negotiated price is what Medicare pays the manufacturer. Each plan still sets the tier, prior authorization rules and coinsurance, so it may not match what a patient pays at the pharmacy.8

The basic cost of Part D coverage is going up. The deductible rises from $615 to $700, and the annual out-of-pocket cap rises from $2,100 to $2,400.5 A temporary federal program that cut stand-alone Part D premiums by $10 a month and limited each plan's yearly increase to $50 ends after 2026.1 The national average monthly bid for 2027 jumped about 24%, to $296.05.7 CMS still expects the average stand-alone premium to rise by less than $1, to $36.3 KFF reports that no stand-alone plan will have a $0 premium for people without the Extra Help low-income subsidy.3 Some enrollees face increases of $50 to $100 a month.18 The average again conceals a wide range. Medicare's drug-price negotiation lowers costs for some drugs, but enrollees still pay more through deductibles and premiums.

Employer plans face the biggest increase in decades

Workers with job-based coverage face the same cost pressure. Preliminary results from Mercer's survey of more than 1,800 employers show health benefit costs per employee rising 8.2% in 2027, the largest increase since 2003. Without planned cost-cutting, the increase would be 11%.25 Other forecasts agree: Aon projects 9.5%, Business Group on Health 9.2%, PwC 9%, and WTW 11.1% before plan changes.21 Insurers are asking for a median 14% premium increase for small-group plans.21 An eHealth survey found that 73% of small and mid-sized businesses facing increases are considering dropping traditional health coverage.29

Workers will pay more of it. About two-thirds of employers with 500 or more workers expect to raise the share of premiums employees pay, and 59% of all employers plan cost-cutting measures such as higher deductibles.25 Mercer estimates that GLP-1 drugs alone add about one percentage point to the 2027 increase.22

Medicaid changes start the same day

The new Medicare plan year begins on the same day Medicaid's largest changes take effect. Starting January 1, 2027, adults covered through Medicaid expansion must document 80 hours a month of work, school, training or community service, or earn at least $580 a month. They will also have to renew their eligibility every six months instead of once a year.43 CMS's own impact analysis projects Medicaid enrollment will fall by about 2.3 million in fiscal 2027.49 The Congressional Budget Office projects 5.2 million fewer adults covered by 2034.41

The experience in Arkansas suggests what to expect. More than 95% of the people subject to its 2018 work requirement already met it or qualified for an exemption. Even so, 18,000 people lost coverage, and the researchers found no increase in employment.49 The Urban Institute estimates the 2025 law will add $278 billion in uncompensated hospital care by 2034.43

Higher hospital prices tie the trends together

The common thread across these markets is hospital prices. LendingTree puts the average hospital stay at $16,353, which would take about 435 hours of work at the average wage. Hospital costs have risen 26.1% since its last study, while wages rose 11.2%.31 The Health Care Cost Institute finds that rising prices, not more use of care, are driving spending for people with employer coverage. Hospitals account for 46% of that spending.40 STAT reports that hospitals and drugmakers often bill employers more than twice what Medicare pays.33 Hospitals have thin finances of their own: the median operating margin was just 0.7% in June. They are preparing for more uninsured patients as the Medicaid cuts take effect.37

The outlook, in our reading, is that more cost will move onto patients. Insurers are shrinking Medicare Advantage while raising out-of-pocket limits. Employers are passing increases to workers. Medicaid coverage losses will add to hospitals' unpaid bills, and STAT reports that hospitals often cite low public payments when they push for higher commercial rates, an argument the experts it interviewed call weak.33 For seniors, this enrollment period requires a full comparison of plans. The monthly premium alone says little about what next year's coverage will cost.