UnitedHealth Group Inc.’s (NYSE:UNH) UnitedHealthcare and CVS Health Corp.’s (NYSE:CVS) Aetna said on Thursday they plan to offer more Medicare Advantage plans with tighter provider networks by 2027 as medical spending climbs and insurers face pressure from rising costs.
The shift lands as Medicare Advantage premiums are set to fall 16% in 2027, according to the Centers for Medicare & Medicaid Services, even as beneficiaries are told to compare options during open enrollment.
UnitedHealthcare President Bobby Hunter framed the move as a response to systemwide strain, saying, “We can’t ignore the realities facing the healthcare system.” Reuters reported that Hunter pointed to financing pressure, higher medical and drug bills, and heavier use of care.
Why Medicare Advantage Plans Are Evolving
CMS said Monday it expects the average Medicare Advantage premium to slide to $12 in 2027 from $14.37 in 2026, and it projected a 16.5% drop in Medicare Advantage premiums overall. CMS also forecast standalone Part D premiums edging up by less than $1 a month, to $36 in 2027 from $35.09 in 2026.
The tradeoff for seniors is straightforward: lower monthly premiums can come with changes in which doctors and hospitals are considered in-network and what out-of-network care costs. In that context, CMS Administrator Dr. Mehmet Oz said the agency is keeping premiums stable while urging people to review coverage and compare choices during open enrollment.
Insurers have been arguing on earnings calls that reimbursement has lagged the pace of rising medical costs, and insurers have argued on earnings calls that reimbursement has lagged the pace of rising medical costs and utilization, according to Reuters. The agency also said more than 99% of Medicare beneficiaries should still have at least one Medicare Advantage option in 2027, and 97% should have at least 10 plan choices.
Are Seniors Losing Provider Flexibility?
UnitedHealthcare said it will pull back next year in areas where it has leaned more heavily on preferred provider organization offerings, which allow some out-of-network use but tend to cost insurers more. A company spokesperson said 66% of members are expected to be able to choose either an HMO or a PPO, down from 70% in 2026.
Aetna said it is expanding health maintenance organization plans, which typically keep coverage inside a smaller set of providers that are often lower cost. The key issue here is member access: both the insurer strategy and CMS’s plan-shopping push affect whether beneficiaries can keep seeing the same clinicians without paying more.
Open enrollment runs from Oct. 15 through Dec. 7, and CMS said beneficiaries can use Medicare.gov to compare 2027 premiums, out-of-pocket costs, benefits, and coverage details. Oz and John Brooks, director of the Center for Medicare, also discussed the 2027 updates in a CMS video shared Tuesday.
Other carriers are also narrowing footprints, with Humana saying it will offer plans in more than 80% of U.S. counties next year, down from 85% in 2026. UnitedHealthcare runs the largest Medicare Advantage operation, followed by Humana and Aetna, based on KFF data cited by Reuters.
Projected Premium Drops Signal Market Shift
CMS also projected that Medicare Advantage plans that bundle drug coverage will see the average monthly Part D premium fall about 38%, from $11.32 in 2026 to $7 in 2027. Separately, CMS said 93% of non-low-income beneficiaries are expected to have access to an enhanced Part D plan costing under $6 a month in 2027.
On the enrollment side, CMS expects about 34 million people to be in Medicare Advantage in 2027, representing approximately 47.4% of all Medicare enrollees. TD Cowen analyst Ryan Langston estimated Aetna will lose about 950,000 members next year as it exits some states, leaving it offering plans in 41 states in 2027 versus 43 this year.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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