THE largest healthcare provider in the US has officially unveiled its plans to reduce coverage for hundreds of thousands of Americans by 2026.
As UnitedHealth makes a major switch-up in its Medicare Advantage offerings for next year, consumers will be forced to shell out more cash for out-of-pocket expenses.
UnitedHealth is the largest private health insurer in the US[/caption]
UnitedHealth is rolling out a major switch-up in its Medicare Advantage offerings in 2026[/caption]
UnitedHealth offers a variety of health insurance and healthcare services and is a subsidiary of UnitedHealth Group, the largest healthcare company in the US and one of the biggest in the world.
The health giant revealed on Wednesday that it is plotting to drop more than 100 Medicare Advantage plans in 2026, a move that will affect roughly 600,000 members across 109 US counties.
The federal government pays private insurers like UnitedHealth to operate the Medicare Advantage plans for Americans age 65 and older or with disabilities, providing enrollees capped out-of-pocket costs, extra benefits not covered by Original Medicare, and lower premiums in many cases.
As UnitedHealth pulls back on its Medicare Advantage plan coverage, the cuts will mainly affect preferred provider organization, or PPO, plans, which permit patients to visit providers outside of the plan’s network.
This move is expected to push impacted members toward health maintenance organization, or HMO, plans, which require more frequent referrals and limit Medicare Advantage plan subscribers to a specific network of providers.
Patients who lose their coverage next year will automatically be covered under Original Medicare, which does not include prescription drug coverage or other benefits of Medicare Advantage plans.
“You still have some insurance. You just won’t have prescription drug coverage, and your deductibles change, your co-pays change,” Tim Jopp, an agent at Waconia-based Legacy Health Insurance, told Fox affiliate KMSP-TV.
Other insurance companies have similarly revealed plans to scale back Medicare Advantage plans, such as UCare, HealthPartners, and Aetna.
INSURANCE SHAKE-UP
UnitedHealth’s decision to drop over 100 Medicare Advantage plans next year, effective on January 1, comes amid Medicare funding cuts and increased expenses.
“The combination of (Centers for Medicare and Medicaid Services) funding cuts, rising healthcare costs and increased utilization have created headwinds that no organization can ignore,” Bobby Hunter, who runs the company’s government programs, told Reuters.
Federal funding cuts to the CMS as well as tighter reimbursement rules from the agency make it tougher to sustain coverage in certain areas.
The majority of the dropped Medicare Advantage plans will be for members in rural counties where costs are harder to control and UnitedHealth is still working to streamline operations.
“We need a model that is sustainable and allows us to bring care to folks in those areas in a cost-effective way,” Hunter told Reuters.
A spike emergency room visits, prescription drugs being more expensive, and a higher use of medical services have all increased medical costs for UnitedHealth, making it harder to be profitable.
UnitedHealth halted its full-year financial outlook after its profits fell short for the first time since 2008, mainly because Medicare Advantage members bumped up their use of medical services, raising costs for the company.
Additionally, regulatory changes that will decrease the payments that UnitedHealth receives for certain conditions would hurt the company’s profits by $4 billion next year, the company said in a second-quarter earnings release.
It expects government funding to drop by roughly 20% in 2026 compared to 2023, pushing the shift toward more cost-effective plan models like HMO plans over PPO plans.
UnitedHealth noted in its second-quarter earnings release that closing certain Medicare Advantage plans could help mitigate the impact.
While the company will stop offering the plans in 109 counties, it will continue to operate in most states.
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