Washington, D.C. — For decades, Medicare Advantage promised seniors the best of both worlds: the security of Medicare with extra benefits like dental coverage, gym memberships, and vision care. But this year, millions of older Americans learned a hard truth about that promise. When profit margins shrink, insurers can walk away — and they did.
Nearly 3 million seniors were involuntarily dropped from their Medicare Advantage plans for 2026 after carriers pulled out of counties they deemed unprofitable, according to an analysis published in the Journal of the American Medical Association. That figure represents roughly 10 percent of all Medicare Advantage beneficiaries enrolled in individual plans — a staggering jump from the 2018 to 2024 period, when involuntary termination rates held below 2 percent each year.
Rural communities absorbed the worst of it. States like New Hampshire saw tens of thousands of seniors scramble for alternatives after UnitedHealthcare — the nation’s largest Medicare Advantage carrier — announced it would exit counties where it covered some 600,000 beneficiaries. Some seniors had no other Medicare Advantage options available at all. About 30,000 people nationally ended up in that position, according to a separate analysis by the health research organization KFF.
“Medicare Advantage has been growing without stop for the last two decades. A large part of that is it has been extremely profitable for insurers,” said Mark Meiselbach, an assistant professor at the Johns Hopkins Bloomberg School of Public Health and co-author of the JAMA study. “That story of profitability and growth has kind of shifted.”
What This Means for Long-Term Care
For nursing homes, the Medicare Advantage shakeout isn’t just background noise. Nearly half of all Medicare beneficiaries are enrolled in Advantage plans, and those plans have become a dominant payer in post-acute care. When insurers exit markets — or tighten authorization criteria — skilled nursing facilities and their residents bear the consequences.
Seniors who get pushed into traditional Medicare may face different coverage gaps when they need short-term rehabilitation after a hospital stay. Those without supplemental “Medigap” coverage can face thousands of dollars in out-of-pocket costs — money many on fixed incomes simply don’t have. The disruption can delay discharges, complicate transitions into post-acute care, and shift financial pressure directly onto facilities.
The deeper issue is structural. CMS has been working to reduce overpayments to Medicare Advantage plans, which government advisers estimate will cost taxpayers $76 billion in excess reimbursements in 2026 compared to traditional Medicare. That pressure on insurer margins is one reason carriers have started retreating from markets that don’t pencil out — and there’s little sign that dynamic will reverse.
Searching for Alternatives
Most displaced seniors managed to find another Advantage plan, but the options were often more limited — particularly in rural areas where the privatized Medicare market was thin to begin with. Some ended up in traditional Medicare, relying on the program’s standard 80-percent coverage of outpatient costs and hoping they won’t face a serious illness without a supplemental plan.
For those running or working in skilled nursing facilities, the message is clear: the Medicare Advantage landscape is no longer stable, and the payer mix that nursing homes have built their financial models around is in flux. The next round of insurer contract negotiations — and the next open enrollment cycle — could look very different from the last.
Source: Boston Globe | Photo: Pexels
