Medicare Advantage Plans Are Shrinking

Medicare Advantage plans are facing a significant challenge as several major providers, including Humana and UnitedHealthcare, announce plans to cut back on their coverage. This move affects over half a million seniors who will need to find a new health plan for the upcoming year.

The main reason behind this decision is the high costs and slimmer profit margins in certain markets. According to Humana’s CFO, Celeste Mellet, the company’s primary goal is to make the necessary progress to remain on track to deliver on its 2028 commitment of returning to a sustainable margin of at least 3%.

This is not the first time Humana has downsized its Medicare Advantage plans. Last year, the company exited three states and 194 counties, affecting around 500,000 members. UnitedHealthcare also jettisoned Medicare Advantage plans that served more than 600,000 seniors.

The issue of plan terminations is particularly concerning in certain states, such as Wyoming, South Dakota, New Hampshire, North Dakota, and Vermont, where the percentage of Medicare Advantage enrollees who faced terminated plans this year reached 60% or higher.

Medicare Advantage is a popular choice among seniors, with over 35 million people enrolled in the plans, which account for about 55% of all eligible Medicare beneficiaries nationwide. These plans typically cover benefits not included in traditional Medicare, such as prescription drugs, eyeglasses, dental care, and fitness classes. Additionally, they often have very low or even no premiums.

However, as enrollment in these plans has increased, provider costs have also ballooned. Insurers have been steadily shuttering plans, trimming some benefits, and increasing deductibles. This has led to criticism that the healthcare system is overly reliant on private, for-profit insurance companies.