For years, payers tried to grow their Medicare Advantage membership at all costs, pulling potential enrollees in with flashy benefits and low rates.
That changed this annual open enrollment period (AEP).
Amid heightened utilization post-pandemic and regulatory scrutiny, Medicare Advantage (MA) became less of a game of Monopoly and more of a game of hot potato: No insurer wanted to end up with too many high-utilization members because the government pays MA plans a fixed amount per enrollee rather than per service.
Companies upped deductibles, reduced benefits, pulled plans from unprofitable markets and states, and stopped paying brokers commissions for certain plans to shrink enrollment.
The result: During the 2024–25 AEP, MA drew in only 1.3 million new members, compared to 2+ million in each of the five years prior, according to a March 25 report by consulting firm HealthScape Advisors. Traditional fee-for-service Medicare grew by about 200,000 after years of losing hundreds of thousands of members, according to HealthScape. During the 2023–24 AEP, it lost about 800,000.
Alexis Levy, senior partner at HealthScape Advisors and one of the report’s authors, told Healthcare Brew the market is correcting itself.
“It’s still an attractive market, but we need to be able to create a more financially sustainable platform for that growth,” she said.
The deets
Total MA plan options decreased by 240 to reach 3,719 this year, according to nonprofit health policy research organization KFF. More than 60% of plans reduced benefits, HealthScape calculated.
The second-largest MA provider, Humana, retreated the most, exiting a net 58 counties this AEP, according to KFF. The company expects to lose 550,000 MA members by year’s end, according to its April 30 earnings call.
Aetna, Elevance, and Cigna also eliminated MA broker commissions for new enrollees in some plans in November 2024, Becker’s reported. This is “a big decision” that can “disrupt” the plans’ relationships with brokers, but it’s likely something insurers feel they have to do if enrollment exceeds expectations, Levy said.
Cigna later got out of the Medicare game entirely, completing a sale of its Medicare business to HCSC on March 19.
UnitedHealth struggles
As plans shrunk enrollment, many people turned to UnitedHealth Group, the country’s largest MA provider.
As of March 31, United had 8.2 million MA members, according to its most recent earnings report, up 485,000 from a year prior.
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The group’s health services business, Optum Health, expects to add 650,000 new members to reach 5.4 million by the end of 2025, United leaders said during the company’s April 17 earnings call.
These new members had medical costs way higher than it had priced for, according to its Q1 2025 earnings report, which execs said contributed to a reduction in the MA leader’s full-year earnings forecast.
Despite this, John Boylan, senior healthcare analyst at financial services firm Edward Jones, told us he still rates United’s stock as a buy.
“It does seem that United had a little bit more of an issue…predicting trends, at least at this early stage. We think that’s something that’s fixable,” Boylan said.
Regulatory challenges and high utilization seem to be sticking around, but the MA industry is “resilient,” Boylan added.
“We think that as more companies get experience with what is seemingly a lasting trend, they should be able to more adequately price for it in future years,” he said.
Looking ahead
Levy predicts the next AEP won’t be as chaotic as this one. For the most part, she thinks companies will try to retain their new MA members.
“You’re making investments in the member from a care management perspective and a risk adjustment perspective. If that member just switches to another plan next year, all those investments go out the window,” Levy said.
In general, MA providers still have high hopes for the industry, according to a March 4 HealthScape survey, though some have given mixed signals.
Elevance, for instance, added 238,000 MA members from 2024 to 2025. CFO Mark Kaye reassured investors in an April 22 earnings call that the company was “carefully managing that new volume.”
But on May 1, Elevance removed all MA plan offerings except dual-eligible special needs plans from broker-accessible platforms, according to a statement provided by the insurer’s spokesperson Janey Kiryluik.
Though people can still enroll in all Elevance MA plans on its online store and Medicare.gov, this is a move that will make it harder for customers to learn about and select these plans, according to an April 25 statement from trade group the National Association of Benefits and Insurance Professionals.