Medicare Advantage: 1 in 10 Affected by Insurer Exits | KFF Analysis

More than 2.6 million Americans who rely on Medicare Advantage plans for prescription drug coverage faced potential disruption at the end of 2025, as insurers terminated coverage in certain markets. A new analysis by the Kaiser Family Foundation (KFF) reveals that this affected over 1 in 10 beneficiaries enrolled in Medicare Advantage plans with drug coverage. But, the vast majority – 98.9% – have access to at least one alternative Medicare Advantage plan in 2026, offering a degree of stability for those navigating the changes.

Navigating Plan Terminations and Enrollment Options

The terminations, impacting a significant portion of the Medicare Advantage population, prompted concerns about access to care and potential increases in healthcare costs. Medicare Advantage plans, offered by private insurers, have become increasingly popular, enrolling more than half (54%) of eligible Medicare beneficiaries in 2025, according to KFF research published in July 2025. This growth has been fueled by supplemental benefits like vision, dental and hearing coverage, often not included in traditional Medicare.

The KFF analysis found that a substantial 68.7% of those affected by plan terminations have the option of staying with the same insurer by enrolling in a different plan offered by that company. This continuity could ease the transition for beneficiaries familiar with their existing provider networks and formularies. The remaining 31.3% will necessitate to select a plan from a different insurer.

The Financial Implications of Medicare Advantage

The growth of Medicare Advantage has significant financial implications for the federal government. According to the Medicare Payment Advisory Commission (MedPAC), Medicare payments to private plans are, on average, 20% higher per person than spending for beneficiaries in traditional Medicare. This translates to an additional $84 billion in federal spending in 2025, a substantial increase from the $18 billion in higher spending a decade ago when fewer beneficiaries were enrolled in Medicare Advantage.

This higher spending has drawn scrutiny from policymakers, leading to proposals to adjust reimbursement rates. In January 2026, the Centers for Medicare & Medicaid Services (CMS) proposed keeping Medicare Advantage reimbursement rates essentially flat for 2027, a move that insurers have publicly opposed. Insurers argue that inadequate reimbursement could lead to reduced benefits or increased premiums for beneficiaries. CMS is expected to finalize its rate proposal in early March 2026.

Industry Pushback and Advocacy Efforts

The insurance industry has actively lobbied against the proposed rate changes, employing a multi-pronged approach that includes public comments and advertising campaigns. A group called Medicare Advantage Majority has spent over $3.1 million on Facebook ads since September 2024, according to Facebook’s Ad Library. KFF Health News reported that a data analysis revealed 82% of the 16,400+ comments submitted to CMS were identical to a letter originating from this group, raising questions about the authenticity of public input.

Medicare Advantage Majority describes itself as “dedicated to protecting and strengthening Medicare Advantage” and claims to be “powered by hundreds of thousands of local advocates nationwide.” However, the group does not disclose its funders, operating as a “dark money” organization. This lack of transparency has fueled criticism from consumer advocates who argue that the industry’s lobbying efforts are designed to protect profits at the expense of beneficiaries.

Impact on Beneficiaries and Access to Care

Although most beneficiaries affected by plan terminations have alternative options, the transition can still be challenging. Medicare Advantage plans often restrict provider networks and require prior authorization for certain procedures, which can create barriers to access to care. Beneficiaries may need to find new doctors or hospitals, or navigate the prior authorization process to obtain necessary treatments. The availability of alternative plans also varies by geographic location, with some areas having limited options.

The shift in enrollment also impacts the broader healthcare landscape. As more beneficiaries enroll in Medicare Advantage, a larger share of healthcare dollars flows through private insurers, potentially influencing care delivery and payment models. This trend has raised concerns about the potential for underpayment of providers and the impact on quality of care.

Looking Ahead: Rate Finalization and Enrollment Dynamics

The finalization of the CMS rate proposal for 2027 will be a critical event for the Medicare Advantage program. A lower reimbursement rate could lead to further plan terminations or benefit reductions, while a higher rate could exacerbate concerns about federal spending. The agency’s decision will likely shape the competitive landscape and influence enrollment trends in the coming years.

Beneficiaries are encouraged to carefully review their options during the annual enrollment period, which runs from October 15 to December 7 each year. Resources are available from Medicare.gov and KFF to facilitate beneficiaries compare plans and understand their coverage options. The KFF website offers detailed information on Medicare Advantage enrollment, premiums, and benefits. Further research and data on Medicare Advantage can be found on KFF’s dedicated page.

The ongoing debate over Medicare Advantage reimbursement rates highlights the complex challenges of balancing cost containment, beneficiary access, and the role of private insurers in the Medicare program. The coming months will be crucial in determining the future direction of this vital healthcare program.