UnitedHealth Scales Back Medicare Advantage Plans Amid Cost Pressures
UnitedHealth Group Incorporated (UNH) is scaling back parts of its Medicare Advantage (MA) business for 2027, citing elevated medical costs and utilization pressures that are hurting profitability. According to Bloomberg, UnitedHealthcare will discontinue plans covering about 390,000 members next year. This move reflects a more selective approach to improve the economics of its Medicare business.
The insurer plans to exit locations with a higher concentration of preferred provider organization (PPO) plans, which offer broader out-of-network access but come with higher costs. UnitedHealthcare aims to shift toward narrower-network offerings, with 66% of members having access to both health maintenance organization (HMO) and PPO plans in 2027, down from 70% in 2026.
Beyond portfolio changes, UNH plans to invest nearly $1.5 billion in AI-related initiatives in 2026 to improve productivity and reduce administrative burdens. The strategy, however, comes with a membership trade-off, as some displaced members may move to competitors. Prioritizing sustainable margins over membership growth could support UNH’s earnings recovery.
Competitors Humana Inc. (HUM) and Centene Corporation (CNC) are also making adjustments. Humana is pruning its Medicare Advantage portfolio, affecting roughly 600,000 members, while Centene’s Wellcare is reducing its plan lineup and exiting certain states.