Laura Skopec and Carrie Graham
News reports have suggested that the Medicare Advantage (MA) market is in turmoil with MA plans exiting some markets and enrollment poised to fall. For their part, UnitedHealth estimates they will lose 1 million MA enrollees in 2026, and other health insurers have announced plans to exit the MA market entirely. In contrast, the Centers for Medicare & Medicaid Services (CMS) predicted that MA enrollment would remain stable in 2026, despite MA plans projecting a drop in enrollment. Similarly, beneficiaries will still have access to an average of 39 MA plans in 2026, down from 42 in 2025, and there were not significant changes in supplemental benefits between 2025 and 2026.
So which is it – is the MA market stable, or is the sky falling?
What are plans saying about the MA market?
After many years of substantial enrollment growth in MA, Medicare Advantage Organizations (MAOs) have announced market exits and a reduced emphasis on marketing, citing “headwinds” in the MA market. MA plans suggest that rising claims costs, reduced MA quality bonuses, Part D changes under the Inflation Reduction Act, and MA risk adjustment changes have made the market less attractive and profitable.
The Better Medicare Alliance, a lobbying group for MA plans, has urged Congress and CMS to “reject further cuts or policy changes” to MA, citing the “impact of cuts and regulatory actions during the previous administration.”
What does the evidence say about the MA market?
There are several pieces of evidence that support the MAO’s contention that the MA market is shifting. Data from the National Association of Insurance Commissioners (NAIC) indicates that there has been some financial tightening in the MA market driven by increasing health care use. For example, medical loss ratios in MA rose from 85.6% in the second quarter of 2024 to 86.8% in the second quarter of 2025. However, average gross profit margins in MA increased from $192 per member per month to $194 over this time period and remain higher than any other health insurance market (e.g., commercial insurance, Medicaid, employer-based insurance) that NAIC tracks.
In recent years, CMS has also made adjustments to the quality bonus program, reducing average star ratings and resulting in lawsuits from MAOs over lost revenue. CMS has also adjusted the MA risk adjustment model to reduce opportunities to game the system by coding more diagnoses, further reducing plan revenue. These CMS steps were taken, in part, based on longstanding criticism from MedPAC and others of overpayment to MA plans.
Medicare Advantage plans received regulatory and financial relief in 2025. For example, CMS had previously projected that MA payment would increase by 3.70 percent on net. However, the Trump administration actually increased payment to an estimated 5.06 percent, more than double what CMS initially proposed. Overall, changes to star ratings and risk adjustment were more than made up for by increases in payment benchmarks and risk scores. MA plans have also won significant victories over CMS in the courts, vacating regulations about agent and broker compensation and risk adjustment audits. A 2024 rule requiring MA plans to notify enrollees about unused supplemental benefits has been delayed, and CMS also decided not to enforce rules requiring MA plans to produce more comprehensive reports on prior authorization and rates of care denials. In addition, while Congress has been considering legislation to rein in MA upcoding and prior authorization, these bills have not been voted on.
Finally, analyses of premiums and benefits for 2026 find that the reality is not as grim as some industry lobbyists have claimed. The average Medicare beneficiary will still have a choice of 39 MA plans in 2026, down from 42 in 2025. Further, CMS indicates that average premiums in MA will fall from $16.40 per month to $14.00 in 2026, and that supplemental benefit offerings will be stable. The Better Medicare Alliance estimates that 59% of MA plans will have $0 premium in 2026, and another analysis found that nearly all MA plans will continue to offer vision, hearing, and dental benefits. Taken together, these facts suggest that the MA market remains robust, and that the “cuts” decried by the MA industry have, in fact, simply been lower-than-desired payment increases, rather than reductions in payment.
What are Medicare beneficiaries experiencing during 2026 Open Enrollment?
As noted above, beneficiaries have somewhat fewer MA plans to choose from during 2026 open enrollment than last year, particularly in some areas of the country. In addition, some large health systems have ended relationships with certain MA plans, so beneficiaries need to look carefully to ensure their doctors are still covered. And in a few counties, particularly in Vermont, MA plans may no longer be available at all.
Reporters and MA plan associations have also pointed to increases in MA out-of-pocket costs and declines in supplemental benefits, but CMS has said supplemental benefit offerings remain stable. One analysis found the share of MA plans offering vision and hearing coverage remained the same between 2025 and 2026 (99% and 97% respectively), though somewhat fewer plans are offering benefits like home-delivered meals or non-emergency transportation in 2026. In addition, an industry analysis found that 59% of MA plans have $0 premiums in 2026.
Predictions of MA market doom have been wrong before
Both the Congressional Budget Office and the CMS Office of the Actuary predicted that the Affordable Care Act’s changes to the MA payment system would result in steep declines in MA enrollment. The opposite occurred. Between 2010 and 2025, MA grew from 25 percent of Medicare enrollment to 54 percent, despite increased financial pressure.
Where might MA be headed?
Some recent research suggests that after a big enrollment boom that resulted in over half of Medicare beneficiaries enrolled in MA in 2025, the predicted slowing in MA enrollment in 2026 is indicative of a market saturation, a point above which growth naturally plateaus. It is not clear whether MA has reached that point at a national level, but MA penetration growth has slowed a bit in recent years. This may not reflect a problem in the MA market, but instead be evidence that MA and traditional Medicare are reaching an equilibrium.
It is likely that the MAOs that can compete on price and benefit packages will continue to generate enrollment and profits in the MA market, while less competitive MAOs will continue to exit their less-profitable markets, adjust benefits, or close their less-profitable plans. In a functioning market, plan entries, exits, and shifts in strategy are a sign of healthy competition, not a sign the market is failing.