Medicare Advantage 2027: Insurers Ditch PPOs to Protect Profits

UnitedHealth Group and Humana are terminating Medicare Advantage coverage for nearly 1 million enrollees next year, accelerating an industry-wide retreat from flexible provider networks that defined the program’s explosive growth over the past decade. The cancellations signal a structural pivot in how private insurers manage government-funded senior healthcare.

The two largest Medicare Advantage providers by enrollment disclosed the scale of their retrenchment during recent financial reporting periods. UnitedHealth Group spokesperson Eric Hausman confirmed via email that plan closures will impact about 390,000 members. Humana CFO Celeste Mellet stated during a July earnings call that approximately 600,000 people are enrolled in plans ending in 2027, representing roughly 8% of the payer’s nearly 7.2 million Medicare Advantage members.

These exits are not random. They target specific plan architectures that proved financially volatile when medical utilization spiked unexpectedly. UnitedHealth Group acknowledged that high costs caught the company off guard, tanking its stock in 2025. The insurer has since shrunk its Medicare Advantage membership, reporting 7.6 million members at the end of the third quarter.

Insurers are systematically abandoning preferred provider organization (PPO) plans. UHC President Bobby Hunter said during the company’s Oct. 13 Q3 2026 earnings call that the firm focused its 2027 cuts on PPOs, continuing a yearslong strategy prioritizing health maintenance organization (HMO) and special needs plans (SNPs). A 2026 HealthScape report found that payers generally decreased PPO offerings while maintaining or adding HMOs and SNPs for the 2025 and 2026 plan years. Alexis Levy, senior partner at consulting firm HealthScape Advisors, told Healthcare Brew that the trend continued this year.

The logic is strictly financial. HMOs enforce narrower provider networks and typically impose higher cost-sharing requirements than PPOs, granting insurers tighter control over where and how care is delivered, according to Arielle Trzcinski, principal analyst at research and advisory company Forrester. SNPs offer even higher margins by targeting patients with intensive medical needs, enabling more active care management.

Chronic special needs plans (C-SNPs) have emerged as the primary growth vehicle replacing canceled PPOs. Levy noted that C-SNP expansion is continuing to “ramp up” this year, driven partly by new regulatory requirements affecting dual-eligible special needs plans (D-SNPs) intended for beneficiaries qualifying for both Medicare and Medicaid. “We’re still seeing the chronic condition plans as the growth engine for the MA market,” Levy said.

Mellet indicated Humana intends to “recapture a significant portion” of the 600,000 displaced members. The company employed a “targeted” approach, eliminating low-return contracts while preserving profitable ones rather than cutting “uniformly across the board.” Brooks Conway, a principal at Oliver Wyman actuarial consulting, told Healthcare Brew that when payers terminate plans, they either intend to shed those customers entirely or force them into leaner, more profitable alternatives.

An Oct. 1 analysis of the Medicare Plan Finder by healthcare investment bank Leerink Partners found that major carriers raised cost-sharing requirements and cut dental benefits for 2027, though primary care costs were generally preserved. Clover Health, UnitedHealthcare, Humana, and Centene demonstrated the sharpest “prioritization of margin over growth,” the report said. Clover’s maximum out-of-pocket cost increased by $1,144 for sampled members, the highest among the analyzed payers. Humana was the only carrier in the group that did not decrease dental allowances.

Clover Health CEO of Medicare Advantage Jamie Reynoso told Healthcare Brew via email that “looking only at how much the benefits have changed from one year to the next doesn’t tell the full story. What’s equally important is how those benefits compare with other available plans and the overall value they continue to provide,” noting that many of Clover’s PPO prescription drug deductibles remain lower than competing plans.

Zero-premium options are evaporating across the broader Medicare landscape. Plans with $0 premiums dropped for 2026 and continued declining into 2027, Conway said. “In most regions, for a long period of time, if you wanted to be a competitive Medicare Advantage insurer, you needed a $0 product,” he said. “In 2026 and continuing into 2027…you’re either seeing no options for a $0 product or the benefits that are associated with that $0 product becoming leaner.” A KFF analysis found that 4 million standalone Part D drug plan enrollees who received $0 premiums last year no longer have access to them, except for those qualifying for low-income subsidies.

This report was originally published by Healthcare Brew.