By Marc Gilman
📞 (800) 927-9326 |
This is Part 1 of a 3-part series on Medicare Advantage market disruption. Part 2 covers what happened in New Hampshire for 2026. Part 3 covers what may happen in New Hampshire for 2027 and what to do before December 7th.
If you’ve heard that Medicare Advantage plans are cutting benefits, raising premiums, or leaving certain areas entirely — you’ve heard correctly. And it’s not a local or temporary problem. It reflects a structural shift in how one of the largest insurance programs in the country is financed.
Understanding the national trend helps explain why New Hampshire has experienced so much disruption specifically — and why more may be coming.
Key Takeaways
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Medicare Advantage has grown from covering 24% of Medicare enrollees in 2010 to more than 54% today — driven largely by $0 premiums and supplemental benefits that Original Medicare doesn’t offer.
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The business model that fueled that growth required CMS rate increases to keep pace with rising medical costs. That’s no longer happening.
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In 2027, CMS raised rates by only 2.48% — below medical cost inflation for the third consecutive year.
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Major carriers — including CVS/Aetna, Humana, and UnitedHealthcare — have explicitly stated they are prioritizing profit margins over membership growth for 2027.
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The result: selective market exits, benefit reductions, premium increases, and network narrowing across the country.
How Medicare Advantage Became the Dominant Form of Medicare
Medicare Advantage (also called Medicare Part C) is an alternative to Original Medicare. Private insurance companies contract with the federal government to deliver Medicare benefits — and are paid a fixed monthly capitated rate per enrollee by CMS, adjusted for age, health status, and geography.
For years, this was a winning proposition for both sides. Insurers competed aggressively for enrollees by offering $0 monthly premiums, dental and vision benefits, gym memberships, grocery allowances, and OTC cards — none of which Original Medicare covers. Enrollees got more perceived value. Insurers got growing membership.
The model worked as long as CMS payments kept pace with the cost of delivering care. For much of the 2010s, they did. Medicare Advantage enrollment grew steadily. By 2024, more than half of all Medicare beneficiaries chose a Medicare Advantage plan.
What Changed
Three forces converged to break the financial model:
1. Post-pandemic utilization surged. Patients who deferred care during COVID-19 in 2020 and 2021 returned to the healthcare system in 2022 and 2023 — with conditions that had progressed and accumulated. Claims costs were significantly higher than actuaries had projected. Insurers absorbed those losses.
2. CMS tightened the revenue mechanisms insurers relied on. Medicare Advantage plans are paid more for sicker members — a system designed to encourage plans to serve high-need populations. CMS tightened its oversight of how insurers calculated these “risk scores,” reducing favorable adjustments that plans had previously used to boost revenue. Additionally, regulatory and legislative pressure on prior authorization practices reduced plans’ ability to control costs.
3. CMS rate increases fell behind medical cost inflation.
The gap between what insurers are paid and what care actually costs has widened three years in a row:
A 2.48% rate increase sounds positive — but when medical costs are rising 5–7% annually in many markets, a 2.48% payment increase means plans are receiving less real value per member than the year before. Plans that can’t make the math work in a given county have a straightforward choice: reduce benefits or leave.
How Insurers Are Responding
Different carriers have taken different approaches, but the direction is consistent:
CVS/Aetna has publicly stated it is shifting from membership growth to margin improvement for the 2027 plan year. In 2026, the company closed nearly 90 Medicare Advantage plans across 34 states, reducing its national footprint by more than 100 counties. Selective exits from unprofitable markets are continuing.
Humana exited significant markets in 2025 and 2026, largely in the Southeast. In August 2026, Humana confirmed additional market exits for 2027, with an estimated 600,000 members nationally expected to need to switch plans. The company has explicitly stated it is targeting a return to a sustainable Medicare Advantage margin, accepting membership losses to achieve it.
UnitedHealthcare is also facing medical cost pressures and has reduced its footprint in some geographies, though it remains the largest Medicare Advantage insurer nationally.
Cigna/Evernorth largely exited the Medicare Advantage market in 2024, divesting most of its MA business.
Elevance Health and Centene/WellCare have bucked the trend modestly — both maintained or slightly expanded their footprints for 2026 — but have made selective adjustments in specific markets.
What This Means for Beneficiaries
When an insurer’s financial model fails in a county, one of six things typically happens to enrollees:
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The plan exits the county entirely — most disruptive; triggers a Special Enrollment Period
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Supplemental benefits are cut — dental allowances, OTC cards, grocery benefits reduced or eliminated
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Premiums increase — previously $0 plans introduce monthly premiums of $20–$50
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Networks narrow — hospitals, specialists, or pharmacies are dropped
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Prior authorization requirements expand — more procedures require advance approval
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Formularies change — drug tier placements shift, increasing cost for existing medications
Any of these changes can significantly affect what a plan actually costs you — even when the premium itself appears unchanged. A plan that eliminates a $75/month grocery allowance has effectively increased your cost by $900 per year without touching the premium line.
The Broader Question Medicare Advantage Is Raising
Medicare Advantage has delivered genuine value to many beneficiaries — lower upfront premiums, supplemental benefits, and coordinated care that Original Medicare alone doesn’t provide. That value proposition is not going away entirely.
But the current turbulence is raising a legitimate question: Is the Medicare Advantage market structure built for long-term stability, or was it built on assumptions about CMS payment growth that no longer hold?
For beneficiaries, the practical implication is straightforward: the Medicare Advantage plan you have today is not guaranteed to exist in the same form — or at all — next year. Annual review is not optional. It’s essential.
The next post in this series covers what actually happened in New Hampshire for 2026 — which provides a specific, county-by-county picture of how this national trend has already affected Granite State residents.
📞 (800) 927-9326 | ✉️ | gilmanagency.com
📰 Part 2: What Happened in New Hampshire for 2026 · Part 3: What May Happen in New Hampshire for 2027
