As Medicare Advantage options shrink, Minnesota is hit hard

Medicare Advantage (MA) beneficiaries have fewer choices in 2027. But Minnesota’s 1.2 million Medicare enrollees have fewer than most.

MA providers are pulling back plan offerings and benefits nationwide following high medical utilization and regulatory reform that is curbing payment growth. Minnesota demonstrates some states are struggling more than others to maintain a strong MA market amid consolidation and cost pressures.

The average Minnesota beneficiary only has nine MA prescription drug plan (MA-PD) options. That’s a 44% decline from last year’s average of 16—the highest percentage decline of any state. And it’s far fewer than the average US beneficiary’s 28 MA-PD options, according to an Oct. 1 analysis of Centers for Medicare and Medicaid Services data by health policy research nonprofit KFF.

In past years, other state MA markets have shrunk so dramatically that MA coverage became virtually or completely nonexistent. Heading into 2026 in Vermont, 92% of people were forcibly disenrolled after insurers exited their counties. Meanwhile, Alaska has no individual MA plans at all.

What happened in Minnesota. About one-third of Minnesotans on Medicare—390,000—will lose their MA or Part D plan in 2027, according to the governor-appointed Minnesota Board on Aging.

The bulk of plan terminations—250,000—come from nonprofit payer Blue Cross Blue Shield (BCBS) of Minnesota, which is ending all 26 of its MA-PD plans and introducing new options, company spokesperson Jim McManus told Healthcare Brew. The payer is also exiting 31 counties.

The new options have new deductibles, premiums, and pared-down benefits, according to a FAQ section of the company’s announcement.

An Oct. 1 message from President and CEO Dana Erickson on the company’s website said BCBS Minnesota lost over $500 million on Medicare over the last three years due to “multiple systemic cost issues.”

In 2022, BCBS of Minnesota had the highest share of the state’s MA enrollment (34%) followed by UCare (23%), Minnesota’s department of health reported. UCare shuttered its MA business for plan year 2026 amid broad financial challenges, making 2027 the second year in a row that a single insurer’s exodus will impact a large portion of the Medicare pool.

“To some degree, [Minnesota] highlights the fact that in many parts of our healthcare system, one or two insurers have a large part of the market, and so when that insurer exits, it can really disrupt care for people,” Gretchen Jacobson, VP of Medicare at nonprofit research org the Commonwealth Fund, told Healthcare Brew.

A 2025 study by KFF found that in most MA markets, one or two insurers control most of the market.

The MA pullback also comes amid a federal crackdown on suspected Medicaid fraud in Minnesota. As part of that crackdown, the Trump administration has frozen over $550 million of the state’s Medicaid funding since February, Politico reported on Oct. 14.

A sign of the times. Payers’ reasons for leaving an area vary, KFF researchers found in an Oct. 9 analysis. Rural counties with few Medicare-eligible individuals are seeing exits, but so are urban counties.

“The different decisions of insurers to exit certain counties suggest a combination of factors are at play, including local market characteristics, cost pressures, shifts in firm-level strategies, and ultimately the insurers’ assessment of profitability,” the researchers wrote.

Broadly, however, payers’ financial strain is due, in part, to crackdowns related to the MA risk adjustment model that aim to slow growth in payments to payers with higher coding intensity, report coauthor and deputy director of KFF’s Medicare policy program Jeannie Fuglesten Biniek told Healthcare Brew.

Past research has suggested that MA costs the government billions more than traditional Medicare without improving outcomes.

Plans’ decisions to shrink benefits or leave certain areas is a sign that these reforms are turning up the pressure, potentially making the program more sustainable, Biniek said.