US Insurers Limit Provider Networks for Medicare Advantage Users Amid Rising Costs
US health insurers UnitedHealthcare and Aetna have announced plans to offer more limited provider networks for their Medicare Advantage users in 2027. The shift is in response to rising medical costs, funding pressures, and increased utilization, according to Bobby Hunter, president at UnitedHealthcare.
In a statement, Hunter said that the companies 'can't ignore the realities facing the healthcare system.' As a result, they will be exiting locations where they currently offer higher-proportion preferred provider organizations (PPOs), which allow members to see providers outside of the plan network. These plans are more expensive for insurers to operate.
Aetna is also expanding its health maintenance organization (HMO) plans, which limit coverage to a small network of typically low-cost providers. This move will result in Aetna withdrawing from some states and shedding an estimated 950,000 enrollees next year. By 2027, the company will offer plans in 41 states, down from 43 this year.
UnitedHealthcare manages the largest Medicare Advantage business, with Humana and CVS Health's Aetna coming in second and third, respectively. The US government has been cutting back payments to companies operating the plans since 2024 to reduce spending. In response, insurers are shifting their strategies to adapt to these changes.
Despite these shifts, Medicare Advantage premiums are expected to drop by more than 16% next year, with an average price of $12 from $14.37. This is according to the Centers for Medicare and Medicaid Services (CMS). The CMS also expects about 34 million people will be covered by Medicare Advantage plans in 2027, a decline of 6% from this year.