On August 9, 2025, UnitedHealthcare, the nation’s largest health insurer, announced it would drop Medicare Advantage plans serving more than 600,000 users in response to surging medical costs—especially in outpatient care. This move, revealed during the company’s second quarter earnings call, is the latest in a series of shakeups across the Medicare Advantage (MA) landscape, signaling a period of uncertainty and adjustment for millions of seniors nationwide. The announcement comes as the broader health insurance industry faces mounting pressure from rising health care expenses and heightened scrutiny over how private insurers manage government-backed Medicare plans.
“We are seeing higher-than-expected medical cost increases, particularly in outpatient care,” said Tim Noel, UnitedHealthcare CEO, during the earnings call, as reported by Yahoo Finance. “The American health system’s long-standing cost problem is accelerating.” The company’s decision follows similar moves by other major insurers, including Humana, which expects a decline of roughly 550,000 Medicare Advantage members this year due to exits from certain unprofitable plans and counties. According to KFF, UnitedHealthcare and Humana together account for nearly half of all Medicare Advantage enrollees nationwide, making their decisions especially impactful.
Medicare Advantage, which now covers 34.1 million people—more than half the eligible Medicare population—has long been a profitable sector for insurers. Yet, as enrollment ballooned in recent years, so too did the costs for providers. Private companies administer these plans, offering additional benefits not found in traditional Medicare, such as prescription drug coverage, dental and vision care, and even gym memberships, often at little or no extra cost to beneficiaries. But the sustainability of these perks is increasingly in question.
“Medicare Advantage has been extremely profitable for most insurers for a very long time,” David Lipschutz, associate director of the nonprofit Center for Medicare Advocacy, told Yahoo Finance. “But in recent years, insurers have complained about people using more healthcare services than they anticipated and the rising cost of healthcare across the board.”
Despite the wave of plan terminations and benefit reductions, experts clarify that major insurers are not abandoning Medicare Advantage altogether. Instead, they are “getting leaner,” trimming less profitable offerings while retaining a significant presence in the market. “Nearly every Medicare Advantage insurer has either exited the business, such as Cigna, or is retrenching,” said Philip Moeller, a Medicare and Social Security expert who writes the Aging in America newsletter. “UnitedHealthcare is the largest, and its reappraisal could have the biggest impact.”
Humana’s recent moves reflect this trend: while it expects to lose about 550,000 members, approximately 40% of those seniors are likely to join other Humana MA plans. For the average Medicare beneficiary, the changes mean navigating a shifting landscape. In 2025, the average beneficiary has access to about 42 different Medicare Advantage plans, though the choices may feel more limited as insurers consolidate and cut back.
One major factor driving these changes is the financial structure of Medicare Advantage. In 2025, MA plans received an additional $2,255 per enrollee above the estimated costs of providing Medicare-covered services, a portion of plan payments known as the rebate. This figure has more than doubled since 2018, according to KFF. While these rebates have allowed plans to offer extra benefits, they also incentivize insurers to use cost management tools like prior authorization, which can make it harder for seniors to access care without jumping through bureaucratic hoops. Provider networks are also often limited and subject to frequent change, further complicating access to preferred doctors and hospitals.
Looking ahead to 2026, industry experts warn that more benefit reductions may be on the horizon. Dental and vision coverage could be scaled back, co-pays for specialists might rise, and popular perks like gym memberships could disappear. “Consumers should pay extra attention to how these things play out when costs and coverage features for 2026 are announced this fall,” Moeller advised.
For those affected by plan terminations or significant benefit changes, the upcoming Medicare Open Enrollment period—from October 15 to December 7, 2025—will be critical. During this window, beneficiaries can switch to a different Medicare Advantage plan or return to traditional Medicare. If an insurer terminates a plan but offers another of the same type in the same county, enrollees may be automatically “crosswalked” into the replacement plan. However, it’s essential to verify whether current doctors participate in the new network. “The key will be to check if your doctors are going to be in the new one you’re being folded into,” Jeannie Fuglesten Biniek, associate director of the program on Medicare policy at KFF, told Yahoo Finance.
Lipschutz also urged vigilance: “People should be really on the lookout for any notifications from their Medicare Advantage plan this year. Even if your plan isn't going anywhere, providers do change their benefits annually and are obligated to send an annual notice of change that outlines some of the changes and the benefits and cost sharing.” He recommends contacting doctors directly to confirm their participation in your plan for 2026 or the new plan you might be moved into. Helpful resources include the Medicare Rights Center’s free consumer helpline (800-333-4114) and Medicare’s own hotline (800-633-4227). The Medicare Plan Finder tool can also help compare plan options and coverage for specific prescription drugs.
For those considering a switch to traditional Medicare, Medigap policies—supplemental insurance plans sold by private companies—can help cover costs not paid by Medicare, such as deductibles, coinsurance, and co-payments. Some even cover medical care received abroad. However, Medigap plans often reject applicants with preexisting conditions unless they sign up when first eligible for Medicare. Those who have not had a Medigap policy for more than six months may face coverage restrictions, and these plans are typically not part of open enrollment. Still, if your Medicare Advantage plan is terminated, you may qualify for a special enrollment period to obtain Medigap coverage.
Meanwhile, the broader health insurance industry is experiencing its own wave of change. On August 11, 2025, Chicago-based GoHealth announced a $115 million senior secured superpriority term loan—$80 million in new funds and $35 million in roll-up loans—along with amendments to its credit agreement that delay principal payments until 2026. These moves are expected to provide GoHealth with enough liquidity to fund operations for at least the next year and create $250 million in potential debt capacity for future transactions. The company also issued nearly 4.8 million shares of Class A common stock to lenders and reshaped its board, appointing three new directors. CEO Vijay Kotte and CFO Brendan Shanahan said these actions equip GoHealth to grow in a consolidating health insurance marketplace, especially as the Medicare annual enrollment period approaches.
Industry observers are also closely watching the influence of UnitedHealth Group in shaping the Medicare Advantage market and related research. As highlighted in a STAT newsletter published on August 11, 2025, UnitedHealth’s role—both in business and in the research sphere—remains a subject of ongoing scrutiny and debate. The newsletter referenced a recent conference by America’s Physician Groups in San Diego, underscoring the persistent challenges and changes in the health care system.
With medical costs climbing, plan offerings shifting, and financial strategies evolving, seniors and their families will need to stay informed and proactive. The coming months promise further developments as insurers, policymakers, and beneficiaries navigate the ever-changing landscape of Medicare Advantage and supplemental health coverage.
