The multi-year contraction trend of insurance companies for Medicare Advantage ( MA ) will continue in 2027.
The Centers for Medicare & Medicaid Services (CMS) describes the plan options for 2027 as “stable,” with lower average premiums. However, experts interviewed by Healthcare Brew stated that insurance companies are increasing the out-of-pocket costs for participants, transferring them to narrower networks, and cutting back on supplementary benefits in order to cope with the surge in utilization and medical costs over the past few years.
HealthScape Advisors, a senior partner of consulting firm Alexis Levy, stated to Healthcare Brew: "Elderly people may still be able to maintain their own plans, but this does not mean they will enjoy the same level of benefits as in the previous year. In many cases, they may not."
CMS did not respond to the request for a comment before the deadline.
Welfare cuts, rising costsAn analysis by the healthcare investment bank Leerink Partners on October 1st found that many large insurance providers cut dental benefits in their MA plans for 2027 and increased the cost-sharing requirements for insured individuals, although they generally maintained the costs of primary care unchanged.
The report states that Clover Health, UnitedHealthcare ( UHC), Humana, and Centene are the most evident in prioritizing profits over growth. Among these four, only Humana did not reduce the dental subsidy amount. The maximum out-of-pocket cost for all sample members of Clover increased by $1,144, which is the largest increase among the listed insurance providers.
Healthcare Brew contacted Centene and Humana, but no response was received by the deadline.
The CEO of Medicare Advantage, Jamie Reynoso, informed Healthcare Brew via email: "Simply looking at the percentage change in benefits from one year to the next does not tell the whole story. Equally important is how these benefits compare to other optional plans, as well as the overall value they continue to provide." He added that at many preferred healthcare provider organizations (PPO), the deductible for prescription drugs is lower than at many other leading plans.
According to the analysis of KFF, last year, 4 million independent Part D drug plan participants were entitled to a $0 premium, which is no longer available. However, participants who qualify for low-income subsidies may still receive a $0 premium. These plans are separate from MA, but are usually managed by the same large companies.
The head of the actuarial consulting firm, Oliver Wyman, told Healthcare Brew that the planned premium of $0 is also decreasing this year.
Conway said, "In most regions, for a long time, if you wanted to become a competitive Medicare Advantage insurance company, you needed to have a $0 product. By 2026, and continuing into 2027... either you won't see $0 products anymore, or the benefits related to $0 products are becoming fewer and fewer."
Plans are to be cut backIn addition to withdrawing benefits, some underwriting institutions are exiting MA, while others have canceled certain programs.
Calculated by the number of insured individuals, the plans being terminated by the two largest MA providers, Humana and UHC, will affect nearly 1 million people in total.
UnitedHealth Group ( UHG ) Spokesperson Eric Hausman confirmed via email to Healthcare Brew that approximately 390,000 members will be affected by the planned closure. The high MA utilization rate and costs caught the company off guard and dragged down its stock price in 2025. Since then, the company has reduced its MA membership base and disclosed that it had 7.6 million members as of the end of the third quarter.
Humana Chief Financial Officer Celeste Mellet stated during the July earnings conference call that Humana MA, which encompasses approximately 600,000 people, is planned to be discontinued in 2027, accounting for about 8% of the company's nearly 7.2 million MA members.
Why terminate the plan? Conway says that when an underwriting institution terminates a plan, they either hope to completely lose these customers or they hope that these customers will switch to another plan that is usually more streamlined and more profitable.
Taking Humana as an example, Mellet stated during the July teleconference that the company hopes to “re-attract a considerable portion” of the 600,000 people affected by the planned withdrawal. She mentioned that the company has adopted a “targeted” approach, mainly terminating plans with lower returns while retaining those with higher returns, rather than a “comprehensive and uniform reduction.”
UHC's focus on cuts in 2027 is on the PPO plan, continuing its multi-year strategy of prioritizing the development of health maintenance organizations ( HMO ) and special needs programs ( SNP ), said Bobby Hunter , the president, during the company's third-quarter 2026 financial report conference call on October 13.
SNP and HMO have grown.According to a report from HealthScape for 2026, during the planning years of 2025 and 2026, underwriting institutions generally reduced their planned supply of PPO, while maintaining or increasing HMO and SNP. Levy and Forrester, a research and consulting firm, its chief analyst Arielle Trzcinski told Healthcare Brew, that this trend continues this year as well.
Trzcinski indicates that the plan to switch to HMO is due to the fact that, compared to PPO, HMO usually has more restricted networks and higher distribution costs. This allows the planners to have better control over utilization rates. She mentioned that SNP also has a higher profit margin and can provide personalized benefits for patients with more complex medical needs, thereby contributing to more proactive nursing management.
Levy says that the growth of the Chronic Special Needs Program (C-SNP) is still "accelerating" this year. Previously, experts told us that part of the growth in C-SNP may stem from new requirements related to D-SNP, which is aimed at people who meet both the qualifications of Medicare and Medicaid.
Levy said, "We still regard the chronic disease program as the growth engine for the MA market."
This report was originally published by Healthcare Brew.
