Flat Medicare Advantage Payment Proposal Heightens Insurer Pressure During Open Enrollment; UnitedHealth Group Warns

Medicare Advantage payment proposal increases pressure on insurers during open enrollment

UnitedHealth Group and other large insurers face renewed uncertainty as Medicare Advantage enrollees enter a brief annual open-enrollment window to reassess coverage, after the Centers for Medicare and Medicaid Services (CMS) in late January proposes largely flat payment updates for 2027. CMS sets Medicare Advantage payment rates up 0.9% year over year, amounting to roughly $700 million in additional payments to plans, a figure that is significantly below many industry expectations and prompts insurers to signal possible benefit reductions or market exits.

UnitedHealth warns of membership risk as policy ripples through plans

UnitedHealth Group’s managed-care unit, UnitedHealthcare, flags the payment proposal as a potential driver of substantial membership churn. In a late-January earnings call, CEO Tim Noel warns the insurer could lose an estimated 1.3 million to 1.4 million Medicare Advantage members in 2026 as beneficiaries shop plans amid heightened competition. Insurers say lower-than-expected rates constrain their ability to offer generous benefits and competitive premiums, which can translate into narrower networks, reduced drug formularies or plan withdrawals in some local markets — all of which affect beneficiary access and continuity of care.

The proposal’s timing and scope magnify its impact because Medicare Advantage enrollment continues to grow. KFF reports that in 2025 about 54% of Medicare beneficiaries — roughly 34.1 million people — are enrolled in Medicare Advantage, underscoring the program’s central role in the private-insurer market. CMS also proposes other Part D and MA policy changes this cycle, and industry observers say final decisions will shape insurer benefit design and market participation for 2027. UnitedHealth’s warning illustrates how federal payment policy can quickly ripple through insurer finances, provider arrangements and patient choices.

Consumers urged to compare plans during short enrollment window

Experts and consumer advocates stress that beneficiaries should use the limited open-enrollment period to compare plan networks, drug formularies and premiums, because insurers may modify benefits or exit markets in response to CMS’s proposals. Media outlets such as CNBC highlight the need for heightened scrutiny this year, citing industry analysts and consumer advocates.

Regulatory process and industry responses to follow

CMS is moving through a formal comment period before finalizing the payment rule, and insurers continue signaling strategic responses, including benefit redesigns and targeted market exits. How CMS finalizes Part D and MA policies will determine plan offerings and consumer choice for the coming year.