Medicare Advantage Plan Cuts Hit 990,000 at UnitedHealth, Humana

What happened

The two largest companies in Medicare Advantage are shrinking their footprints for 2027, and older Americans will feel the effects during this year's open enrollment. UnitedHealth Group confirmed that about 390,000 of its members are in plans that are being discontinued. Humana has said its cuts affect about 600,000 enrollees.1 Combined, the two companies are ending plans that cover roughly 990,000 people, and Fortune reported that the moves respond to higher medical costs and pressure to improve profitability.3 Humana's figure is about 8% of its roughly 7.2 million Medicare members.4

The exits are selective. UnitedHealthcare is mainly cutting preferred provider organization (PPO) plans, which let members see doctors outside the network. It is putting more weight on health maintenance organization (HMO) plans and special needs plans.3 Humana CFO Celeste Mellet told investors in July that the company was going after lower-performing plans rather than cutting evenly across its lineup.3 A KFF analysis of federal plan data found that UnitedHealth is leaving 228 counties and entering nine. Humana is leaving 62 counties and entering four.2 Humana expects its 2027 coverage to reach just over 80% of U.S. counties, down from 85% this year.1

The coverage mostly agrees on the numbers. It differs on how the cuts are described. Quartz, relying on CBS News, wrote that UnitedHealthcare is closing a single plan with about 390,000 members.5 Other outlets describe the cuts as several plans plus withdrawals from whole counties, including all of Wyoming.716 KFF's county data favors the broader reading. Whether the number of closed plans is one or many, the change is large.

Profit first, not membership

The raw headline says the exits are about profit, and UnitedHealth's own results support that. On October 13 the company reported third-quarter adjusted earnings of $4.69 per share, up from $2.92 a year earlier. It raised its full-year outlook to at least $20.50.43 Management said Medicare Advantage margins should finish 2026 near the top of the company's 2% to 4% target range. Executives credited "recovery actions," cost management and what they called durable product offerings.45 UnitedHealthcare's operating profit rose to $2.8 billion from $1.8 billion even as revenue fell. Its Medicare Advantage membership is down by 935,000 since the end of 2025 as the company dropped less attractive business.49

In other words, UnitedHealth is giving up enrollment to protect margins, and investors are rewarding it. Zacks-affiliated analysis described the strategy as putting sustainable margins ahead of membership growth. The trade-off is that displaced members may move to competitors.10 Executives explain the shift with sector-wide pressures. UnitedHealthcare president Bobby Hunter pointed to "funding pressures, rising medical costs, rising drug costs, and increased utilization."8 Humana has said less about why. Its statement described a routine review of its Medicare offerings and did not cite cost trends.5

The reimbursement argument is weaker than the industry suggests. CMS finalized an average 2.48% payment increase for Medicare Advantage in 2027, more than $13 billion in additional money and well above the near-flat 0.09% it proposed in January.6 Insurers say that still trails medical cost growth. The quarterly results, however, show margins are recovering even before the 2027 increase arrives.

The new product mix follows the same logic. Insurers are expanding specialized plans for people with serious illnesses because the government pays more for sicker beneficiaries, which helps protect profitability.4 Narrow-network HMOs let insurers control spending through approved providers and referral rules.4 UnitedHealth said 66% of its members will have access to both HMO and PPO plans in 2027, down from 70% in 2026.10

A market-wide contraction

UnitedHealth and Humana are not the only ones pulling back. At least 11 insurers that sold individual Medicare Advantage plans this year are leaving the program for 2027, up from seven a year ago. Almost all of them are owned by health systems.15 Molina, Presbyterian and Providence are among the companies exiting the individual market or winding down.15 Health Care Service Corp. is leaving 498 counties and entering none, and Centene is leaving 359.19

Estimates of how many people are affected vary with the method used. A Medicare Market Insights analysis reported by CNN found nearly 3.2 million enrollees, almost 11%, must find new plans.18 MarketWatch reporting puts the figure at 3.8 million or more, up from 2.9 million forced off their plans for 2026.14 Some industry analysts have suggested it could reach 5 million.17 The direction is the same in every count: a third straight year of growing disruption. KFF counts 193 counties, home to about 638,000 beneficiaries, with no Medicare Advantage drug plan open to general enrollment in 2027. That compares with 123 counties this year.8

Federal officials describe the market as stable. CMS says more than 99% of beneficiaries will still have at least one Medicare Advantage option.8 It projects the average monthly premium will fall from $14.37 to $12.2 Average premiums say little about benefits, though. A Leerink Partners analysis found that UnitedHealthcare's dental cuts affect almost 70% of its members. Humana reduced or removed Part B premium givebacks for about 62% of its members.3 One consultant warned that staying with the same insurer does not guarantee the same level of benefits.4

Drug prices pull in two directions

Prescription drugs show mixed effects. On the positive side, negotiated prices for 15 more drugs take effect January 1, including Ozempic, Wegovy and Rybelsus. CMS estimates $685 million in out-of-pocket savings for 2027.21 Ozempic's negotiated price falls to $274 a month from a list price of about $959.25 That is what Medicare pays, though, not necessarily what patients pay at the pharmacy. Plans still decide tiers and prior authorization rules.25

At the same time, the Part D out-of-pocket cap rises from $2,100 to $2,400, and the maximum deductible rises from $615 to $700.21 The larger change is on premiums. CMS is ending the Part D Premium Stabilization Demonstration, which gave stand-alone plans a $10 monthly subsidy per enrollee and capped yearly increases at $50.26

Projections of the impact differ sharply. CMS expects the average stand-alone premium to rise about $1, to $36.28 KFF estimates the enrollment-weighted average will reach $51, a 50% jump, if enrollees stay in their current plans. KFF also expects the real figure to come in lower as people switch.27 No zero-premium stand-alone drug plans will be available in 2027.27 UnitedHealth's AARP Medicare Rx Preferred will average $204.50 a month, up from $126.27 KFF's figure better reflects what people who don't switch will pay. CMS's figure assumes beneficiaries will shop carefully, and many older people do not.

Hospitals, Medicaid and the cost of care

The pullback also affects relationships with hospitals. AdventHealth says UnitedHealthcare terminated its Florida contract effective December 31. Without a new agreement, its hospitals would be out of network for UnitedHealthcare Medicare Advantage members starting January 1. Lee Health and Sarasota Memorial are also in disputes with the insurer.19 Doctors and hospitals can leave a network at any point in the year, but members generally cannot leave their plan, with few exceptions.17 That leaves patients with most of the risk when contracts fall apart.

Medicaid changes arriving at the same time raise the pressure on hospitals. Starting January 1, 2027, many expansion adults aged 19 to 64 must document 80 hours a month of work, school, volunteering or job training, or earn at least $580 a month.32 CMS's own analysis projects Medicaid enrollment will fall by 2.3 million in fiscal 2027.40 The Urban Institute estimates the law will produce $278 billion in uncompensated care by 2034.34 UnitedHealth itself expects its Medicaid margins to be slightly better than negative 1% this year, which it treats as the low point.47

The takeaway

This looks less like insurers retreating in distress and more like a deliberate repricing of Medicare Advantage at beneficiaries' expense. UnitedHealth's margin recovery is real, and plan exits are one of the main ways it is getting there. For the roughly one million people whose plans are ending, the immediate concern is timing. Open enrollment ends December 7. People whose plans are closing get a special enrollment period through February 28.16 Anyone who does nothing goes back to Original Medicare and loses drug coverage unless they join a separate Part D plan.18 They would then face higher stand-alone drug premiums and a higher out-of-pocket cap.