The federal government has finalized how much it will pay private Medicare Advantage insurers for next year, and the total is bigger than most of the plans it funds. That increase is landing at the same time several of the country’s largest insurers are pulling Medicare Advantage plans out of counties across the country, shrinking the choices available to the people the program is supposed to serve. The contrast is stark: more money is flowing to the companies that run Medicare Advantage, even as some of those same companies pull back from the market.
The CY 2027 Rate Announcement, By the Numbers
On April 6, the Centers for Medicare & Medicaid Services released its final Announcement of Calendar Year (CY) 2027 Medicare Advantage Capitation Rates and Part C and Part D Payment Policies, the document insurers use to build the bids they submit each year for their private Medicare plans. It landed friendlier to insurers than the preliminary version had suggested months earlier.
CMS’s own fact sheet on the announcement states that the finalized policies are projected to raise Medicare Advantage payments by 2.48%, or more than $13 billion, across the industry in calendar year 2027. That is a smaller bump than the 5.06%, or over $25 billion, increase insurers received for 2026, but it is well above the 0.09% overall change CMS had floated in its preliminary January Advance Notice, before industry comments pushed the final number higher.
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Why the Real Increase Is Closer to 5%
The 2.48% headline number is not the whole story. CMS separately tracks how much more detailed, and more costly to Medicare, insurers’ records of member diagnoses tend to get each year, largely because Medicare Advantage plans document conditions more thoroughly than doctors treating people in traditional Medicare do. CMS expects that “risk score” trend to add about 2.50% on its own. Once it is folded in, CMS puts the real 2027 increase at 4.98%, built on an effective growth rate that rose from 4.97% in the January proposal to 5.33% in the final version as the agency incorporated more recent Original Medicare cost data through the fourth quarter of 2025.
None of that money is guaranteed to reach members as richer benefits. Insurers decide how much of a higher rate goes toward keeping premiums low, funding dental and vision extras, or simply protecting their own margins — and this year, several of the largest insurers have been telling investors they are choosing margins.
Humana’s 600,000-Member Retreat Shows the Other Side
While CMS was finalizing a bigger check for the industry, Humana — the second-largest Medicare Advantage insurer — was telling investors it plans to eliminate more plans for 2027. On a July 29 earnings call, Humana CFO Celeste Mellet said the company is shuttering plans with lower financial returns to protect its long-term margin target, affecting roughly 600,000 seniors, about 8% of its 7.2 million Medicare Advantage members. It is the second consecutive year Humana has cut back; the insurer already trimmed its footprint by three states and 194 counties heading into 2026. Humana said it expects to move about 40% of those affected, roughly 240,000 people, into other Humana plans rather than lose them outright.
Humana is not acting alone. UnitedHealthcare, the largest Medicare Advantage insurer, has told investors it expects enrollment to decline in 2026 and is weighing more county exits for 2027, and other major insurers have said they are prioritizing profit margins over adding new members this cycle. Presbyterian Health Plan has said it will exit most of its markets for 2027, affecting roughly 30,000 policyholders.
35 Million Enrollees, and a Program That Already Costs More
The stakes are large because Medicare Advantage is no longer a niche alternative to traditional Medicare. More than half of everyone eligible for Medicare, 55%, or 35.2 million people, was enrolled in a Medicare Advantage plan as of March 2026, up from just 19% in 2007. That scale is also why the payment figures matter to the federal budget: Medicare Advantage plans are already paid more per enrollee than the government spends on a comparable person in traditional Medicare, a gap that KFF’s analysis of Medicare Payment Advisory Commission data put at 14% for 2026, or roughly $76 billion in additional federal spending this year.
If a Non-Renewal Letter Arrives This Fall, You Have a Window to Act
Anyone whose Medicare Advantage plan is not being renewed for 2027 does not have to scramble during the standard Medicare Open Enrollment period. Federal rules give people whose plan’s contract with Medicare isn’t renewed a dedicated Special Enrollment Period running from December 8 through the last day of February the following year, letting them pick a new Medicare Advantage plan, a stand-alone drug plan, or move to Original Medicare. That window is separate from, and longer than, the general October 15–December 7 enrollment period everyone else uses, because losing a plan involuntarily is treated differently than simply wanting to switch.
For most affected members, the practical step will be comparing what is actually left in their county rather than assuming their old coverage comes back automatically. Even Humana, the insurer doing the cutting, says only about 40% of the members it drops end up in another one of its own plans — the rest have to find coverage elsewhere.
This article was produced with AI assistance and reviewed by a human editor. Figures are linked to their primary sources; where a claim could not be verified from the public record, we say so.
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