CMS Near-Flat Medicare Advantage Payment Proposal Could Trim Plans; UnitedHealth (UNH) Warns

CMS Payment Proposal Puts Medicare Advantage at a Crossroads

CMS is proposing to hold Medicare Advantage (MA) payment rates largely flat, increasing them by just 0.9% from 2026 to 2027 — roughly $700 million in additional payments to plans — in a move it says aims to improve payment accuracy. The Centers for Medicare and Medicaid Services pairs that rate proposal with other Part D and MA policy changes intended to align payments with beneficiaries’ health needs, and insurers are assessing how those rules will affect plan design and market participation ahead of the short annual open-enrollment window.

The payment proposal is prompting immediate operational decisions at major insurers, with UnitedHealth Group warning on an earnings call that it could lose an estimated 1.3 million to 1.4 million MA members in 2026 as beneficiaries shop plans more aggressively. Because CMS rates set the baseline for how insurers can structure premiums, benefits and provider networks, a near-flat rate increase pressures margins and can lead insurers to narrow networks, trim benefits or exit less profitable markets, which in turn affects enrollee access and plan choice.

Industry executives and consumer advocates note the decision has real-world implications for patients rather than investors. UnitedHealth’s comments underscore how federal payment policy ripples into member access and care coordination, and insurers signal they may adjust benefits or pull back in certain geographies if reimbursement does not keep pace with costs. The policy shift arrives as MA enrolment grows, increasing the stakes for policymakers seeking both fiscal prudence and stable beneficiary coverage.

Beneficiary choice and coverage risks

Advocates and experts urge beneficiaries to use the current open-enrollment window to review networks, drug formularies and premiums, saying this year’s changes make comparisons particularly important. Reporting by CNBC, which quotes experts including Philip Moeller, highlights concern that reduced plan offerings or benefit changes could leave some enrollees with fewer options or higher out‑of‑pocket costs.

Regulatory context and market signals

KFF reports that about 54% of Medicare beneficiaries — roughly 34.1 million people — are enrolled in Medicare Advantage, versus 62.8 million in traditional Medicare Parts A and B, underscoring MA’s growing footprint. With CMS proposing additional Part D and MA adjustments and insurers publicly weighing benefit changes or market exits, regulators and plans are now navigating how to balance payment accuracy, program sustainability and beneficiary access during the enrollment period.