On July 25, 2023, advocates gathered in front of the U.S. Capitol, holding signs to voice their concerns over Medicare Advantage plans. This event coincided with a troubling forecast from the Centers for Medicare & Medicaid Services (CMS), which predicts a significant decline in Medicare Advantage enrollment for the first time in nearly two decades. According to estimates, enrollment is expected to drop to 34 million by 2025, meaning that fewer than half of seniors will participate in the program, down from nearly 35 million this year.
The implications of this decline are profound. For health insurers who have aggressively pursued growth in the Medicare market over the past decade, recent years have brought shrinking profits in their Medicare Advantage programs. Higher-than-expected medical costs, coupled with new regulations impacting government reimbursement rates, have led to challenging financial landscapes for these companies. As a result, many insurers are reassessing their strategies, cutting back on unprofitable plans, and exiting certain markets altogether.
Cobi Blumenfeld-Gantz, CEO of Chapter, a brokerage that assists Medicare members, noted a significant shift in focus among carriers: “Most Medicare Advantage carriers are now prioritizing profitability over growth,” he stated, warning that the benefits offered by these plans may not be as robust as in previous years. This trend aligns with recent studies that show a growing concern among insurers regarding the sustainability of their Medicare Advantage offerings.
Looking ahead to 2026, CMS projects a decrease in the average monthly premium across Medicare Advantage plans, dropping from $16.40 this year to $14. However, preliminary analyses from financial experts indicate that many large insurers, including UnitedHealth Group and CVS Health’s Aetna, are likely to implement higher pricing strategies for their plans. Elizabeth Anderson from Evercore ISI pointed out that insurers are taking measures to improve margins, which include reducing benefits and implementing higher premiums and deductibles.
A particular focus on health maintenance organization (HMO) plans has emerged, as these typically feature more limited provider networks. While some offerings may still come with $0 premiums, analysts like Brooks Conway from Oliver Wyman emphasize that insurers are hesitant to increase premiums on these plans, instead opting to cut benefits to maintain attractiveness.
The current environment is forcing seniors to navigate a complex landscape during the open enrollment period, which begins on October 15 and runs until December 7. With 15% to 20% of plans reportedly decommissioned across the country, older adults are advised to consult with insurance brokers who can guide them through their options. Michael Antoine, an independent agent, highlighted this challenge, noting that many carriers are eliminating commissions for less profitable plans, which complicates the enrollment process further.
This tumultuous market is exacerbated by the uncertainty surrounding a potential government shutdown, which could occur on October 1. While a former CMS official reassured that a brief shutdown should not impact the open enrollment process—since funding for contractors has already been allocated—seniors are still advised to be vigilant. Whitney Stidom from eHealth echoed this sentiment, emphasizing the importance of comparison shopping during this enrollment period, as it could save seniors over $1,800 in out-of-pocket costs.
As the opening of the Medicare enrollment period approaches, the call to action for seniors is clear: Take the time to assess options, seek assistance, and stay informed. The shifting landscape of Medicare Advantage plans presents both challenges and opportunities, making it essential for older adults to engage actively in their healthcare choices.
