Insurers embrace special needs plans, even as they move away from Medicare Advantage

It might seem like health insurance companies’ top priority lately is to shrink Medicare Advantage (MA) member numbers, but that’s not the full story.

UnitedHealthcare, Elevance, and CVS’s Aetna all expect lower MA enrollment for 2026 after upping plan prices, reducing benefits, and pulling business out of some areas in response to sky-high medical costs and shrinking margins. Other major payers like Cigna have left MA altogether. (Though Humana unexpectedly grew its MA footprint.)

But even as companies shrink MA as a whole, they’re still going all-in on one particular type: the special needs plan (SNP), which is meant for sicker patients who need extra coverage and benefits.

SNPs accounted for 21% of all MA enrollees and half of the total growth in MA from 2024 to 2025, per a September KFF report. The majority of SNP enrollees—more than 4 out of 5—are in dual-eligible SNPs (D-SNPs), a plan for people eligible for both Medicare and Medicaid.

Bucking the trend. For 2026, Elevance CFO and EVP Mark Kaye vowed an even “greater emphasis on D-SNP” during a January earnings call, reassuring investors that most of the company’s dropped membership was for other plan types, like its PPO and HMO products. Elevance membership accounted for 10% of the approximately 6 million D-SNP enrollees in 2025, per KFF’s report.

Smaller payer Molina’s President and CEO Joseph Zubretsky said during the company’s Feb. 6 earnings call the managed care provider is exiting traditional MA in 2027 and will “focus exclusively” on dual-eligible members.

It seems like a smart money move: In 2022, MA providers reported D-SNP margins (7.5%) were double their overall MA margins (3.6%), per independent congressional agency the Medicare Payment Advisory Commission (MedPAC).

“The growth that we’re seeing [in SNPs] is a contrast compared to the overall pullback that you’re seeing in the general MA market,” HealthScape Advisors Senior Partner Alexis Levy told us. “It’s signaling from plans that they’re focused on a more targeted growth strategy rather than this grow-across-the-board strategy.”

Since SNPs became a permanent part of the Medicare program in 2018, enrollment in all three types (D-SNPs, chronic condition SNPs, and institutional SNPs) has tripled from 2.6 million to 7.3 million, per KFF.

“SNPs are taking on a larger and larger role in driving overall growth in Medicare Advantage,” Jeannie Fuglesten Biniek, associate director for the Program on Medicare Policy at KFF, told Healthcare Brew.

Show me the money. “But wait,” a loyal Healthcare Brew reader might say. “The whole reason insurers said they’re dropping MA members is because of unexpectedly high medical costs! Why would they want more plans meant for sick members?”

Great question, dear reader. 

For one, dual-eligible members are typically able to get cost-sharing covered by Medicaid. Many dual-eligible enrollees are also eligible for Medicare’s low-income subsidy for drug coverage, Fuglesten Biniek said.

Further, the margin pressure in MA isn’t just because of high medical costs but also because payers struggle to accurately predict those medical costs and sometimes don’t price their premiums high enough to make up for them, Levy said. With D-SNPs, payers know what they’re getting and can price appropriately.

“Yes, the D-SNPs are going to have a sicker population, but in a D-SNP model, plans are expecting that, and they’ve designed very specific programs and models of care around those populations,” Levy said.

That being said, D-SNPs aren’t “easy money,” Levy added. It’s a more complicated population to care for, requiring more investment in services beyond the average MA plan, like transportation help and specialized provider networks.

“There’s certainly an opportunity because the revenue is larger, but it’s not just, if you get an SNP, you’re going to get more money,” she said.