Medicare Advantage offers a privatized alternative to traditional Medicare, generally providing lower monthly premiums and added perks like vision and dental coverage. However, this fall, a significant number of seniors are facing the challenge of finding new plans due to recent cuts made by private insurers in response to changes from the Inflation Reduction Act (IRA).
The IRA has impacted providers by lowering reimbursement rates, prompting some insurers to withdraw from markets where they find it no longer economically feasible to operate. For instance, Humana announced that they would be discontinuing plans for hundreds of thousands of customers following a substantial profit drop—just $679 million in the second quarter, marking a 29% fall from the previous year. This change will affect around 560,000 members across 13 markets.
HealthPartners will also end its UnitedHealthcare Medicare Advantage plans next year, affecting about 30,000 patients due to challenges like payment delays and coverage denials. Similarly, Centene Corp plans to halt plans in at least six states, including Alabama and New Mexico, impacting around 40,000 seniors. Centene’s CFO mentioned a planned contraction as the company adjusts to financial pressures.
Even smaller initiatives, such as the MVP Medicare Advantage plan through Vermont’s UVM Health Network, are facing cuts, with about 25,000 seniors affected in Vermont alone. Current Medicare Advantage plans remain valid until December 31, but those impacted who do not enroll in a new plan by then will be automatically transitioned to traditional Medicare, which often provides less comprehensive coverage.
Open enrollment kicks off tomorrow, October 15. According to finance expert Michael Ryan, the loss of these Medicare Advantage plans represents a “perfect storm” of rising healthcare costs and shifting federal policies. Although the IRA has lowered drug costs and expanded benefits for many, it has also put pressure on insurers to maintain profitability, leading to the cuts.
“This is a significant issue for seniors, not just an inconvenience,” Ryan cautioned, highlighting that many rely on these plans for essential services like dental and vision care. He encourages those affected to make the most of the open enrollment period and consult state health insurance programs for support.
Chris Fong, CEO of Smile Insurance Group, noted the widespread impact of the terminating plans, but there are some positives. Normally, seniors outside specific enrollment periods must undergo medical underwriting to qualify for Medicare Supplement plans, but losing coverage grants them guaranteed acceptance.
According to Louise Norris from healthinsurance.org, about 2 million individuals may need to switch from their current Medicare Advantage plans, which affects a small fraction of the 34 million enrolled in such plans overall.