Insurers Cut Benefits, Increase Costs in Medicare Advantage 2027 Plans
TL/DR –
Despite the CMS describing MA 2027 plan options as “stable” with lower premiums, experts point that payers are increasing cost sharing for enrollees and cutting supplemental benefits in response to rising utilization and medical costs. Major carriers have reportedly cut dental benefits and raised enrollees’ cost-sharing requirements, with Clover Health’s maximum out-of-pocket cost increasing the most. Additionally, many $0 premium offerings have disappeared, and the largest MA providers, Humana and UHC, are ending plans impacting approximately 1 million people.
Changes to Medicare Advantage 2027: Higher Costs and Shrinking Benefits
The Centers for Medicare and Medicaid Services (CMS) has labeled the MA 2027 plan options “stable,” despite increased cost-sharing measures and reduced benefits. Reports suggest insurers are resorting to these strategies in response to a surge in utilization and medical costs in recent years.
Despite maintaining their plans, many senior citizens may see a reduction in the level of benefits compared to previous years, warns Alexis Levy from consulting firm HealthScape Advisors.
Rising Costs, Shrinking Benefits
An October 1 analysis from Leerink Partners revealed significant cuts in dental benefits and increasing cost-sharing requirements for many major carriers, including Humana and Centene. However, primary care costs remained consistent. Humana stood out as the only payer maintaining dental allowances while Clover Health’s out-of-pocket cost rose by $1,144, the highest increase among represented payers.
Medicare Advantage Providers Ending Certain Plans
Major Medicare Advantage providers, Humana and UnitedHealthcare (UHC), are set to end their plans, affecting approximately one million people collectively. Eric Hausman, spokesperson for UHC, confirmed that plan closures will impact about 390,000 members due to high MA utilization and costs.
Simultaneously, Humana is ending a MA plan in 2027, impacting 600,000 people, which equates to about 8% of the payer’s almost 7.2 million MA members, as explained by Humana CFO Celeste Mellet.
Why are Medicare Advantage Plans Ending?
The decision to end a plan usually stems from insurers wanting customers to switch to a more profitable plan, typically with reduced benefits. Humana aims to retain a significant portion of the 600,000 people affected by plan exits through this strategy. Similarly, UHC, in 2027, will focus its cuts on PPO plans, favoring health maintenance organization (HMO) and special needs plans (SNPs).
Growth of HMOs and SNPs
Healthcare providers are increasingly adopting HMOs due to their more limited networks and higher cost-sharing, enabling better control over utilization. SNPs are also gaining traction as they offer higher margins and personalized care for patients with intensive needs, according to Arielle Trzcinski, Principal Analyst at Forrester. The trend towards chronic special needs plans (C-SNPs) will likely continue in 2027 due to new requirements related to D-SNPs for people eligible for both Medicare and Medicaid.
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