Major Changes in Medicare Advantage Enrollment and Market Dynamics

Medicare Advantage is entering a recalibration phase that could reshape competitive strategy, profitability, and distribution relationships heading into 2026.

A recent analysis of newly released federal data reveals that insurers are pulling back in key Medicare Advantage markets after years of aggressive expansion. For agents, agencies, and carriers, this is not simply a story about enrollment shifts. It signals a broader reset driven by regulatory pressure, rising utilization, and tightening margins.

Enrollment in Medicare Advantage reached roughly 35.5 million beneficiaries in February, reflecting about 3% year over year growth. While growth is still positive, the slowdown is significant compared to prior cycles when annual increases approached 10%. After a decade of rapid expansion, the market is maturing and becoming more financially complex.

Why Growth Is Slowing

Three forces are converging at once: regulatory changes, medical cost inflation, and heightened scrutiny of plan payment practices. The Centers for Medicare and Medicaid Services has continued to refine risk adjustment models and tighten oversight around coding intensity. At the same time, utilization has risen as delayed care from prior years moves back into the system.

Medical loss ratios have climbed across the industry. Hospital costs, physician reimbursement pressures, prescription drug trends, and supplemental benefit usage are all weighing on plan performance. In response, insurers are redesigning benefits, narrowing networks, exiting underperforming counties, and adjusting distribution compensation structures.

“We are seeing a normalization of utilization patterns combined with elevated cost trends,”

Health plan executive, quarterly earnings call

For agents, this means plan stability cannot be assumed. Portfolio reviews and annual reassessments are becoming more critical than ever.

Major Carriers Are Taking Different Paths

The most striking shift is the enrollment pullback among several national players. UnitedHealthcare, the largest MA carrier, reported a 9% reduction in membership, falling from roughly 10.3 million to just under 9.4 million. Elevance saw a 14% drop in prescription drug MA enrollment. Centene and CVS Health reported declines of 4% and 3%, respectively.

These reductions are not accidental. Many carriers made deliberate decisions to exit unprofitable geographies or streamline plan offerings. In several markets, carriers reduced supplemental benefits or adjusted broker commissions to manage margin pressure.

Meanwhile, Humana moved in the opposite direction, adding more than 1 million members to exceed 7 million total enrollees. That expansion could reposition Humana as the largest MA carrier by enrollment, but growth at scale carries its own risk. Increased membership means higher exposure to medical trend volatility.

Regional carriers and newer entrants are also gaining ground. Kaiser Permanente expanded its footprint, while companies like Devoted Health and Alignment Health posted significant membership gains. In fact, Devoted more than doubled its enrollment base, and Alignment reported growth exceeding 20%.

Market Snapshot

The shifts in enrollment illustrate how differently carriers are responding to the same regulatory and cost environment.

Regulatory Pressure Is Not Going Away

Payment methodology continues to be a focal point in Washington. Policymakers are debating whether MA plans are being overpaid relative to traditional Medicare. At the same time, carriers argue that higher payments are necessary to offset rising hospital and pharmacy costs.

Risk adjustment audits and tighter coding oversight are influencing financial projections for 2026 and beyond. Plans that previously relied heavily on coding intensity improvements may find those levers constrained. This increases reliance on operational efficiency and medical management.

“The conversation has shifted from rapid expansion to disciplined execution,”

Industry policy analyst

For carriers, that means measured growth. For agencies, it means volatility in product portfolios.

What This Means for Agents and Agencies

The Medicare Advantage environment heading into 2026 demands adaptability. Agents who built books around a single dominant carrier may face unexpected plan terminations or benefit redesigns. Agencies that diversified carrier relationships are likely better positioned.

Key Considerations Moving Forward

• Portfolio diversification: Avoid over concentration in one carrier or county.
• Annual client reviews: Proactively reassess benefits and provider networks.
• Carrier stability analysis: Evaluate financial guidance and market exit history.
• Compliance vigilance: Stay aligned with evolving CMS marketing regulations.

The extended open enrollment period, which allows beneficiary changes into March, could still reshape final enrollment counts. Late season switching activity may amplify volatility in certain markets.

Carrier Strategy Is Shifting from Growth to Discipline

For over a decade, Medicare Advantage represented a growth engine for publicly traded insurers. Investors rewarded membership expansion and market share gains. The current cycle signals a pivot. Profitability and medical cost containment are taking center stage.

This does not indicate structural weakness in the MA program. Enrollment remains historically high, and beneficiary preference for coordinated care and supplemental benefits continues to drive demand. However, margin compression is forcing strategic recalibration.

For the insurance industry, the takeaway is clear. The Medicare Advantage market is evolving from expansion mode to operational optimization. Agencies that anticipate carrier shifts, stay close to compliance changes, and focus on long term client relationships will navigate the transition successfully.

The competitive landscape is not shrinking. It is becoming more selective, more disciplined, and more strategically complex. That shift creates both pressure and opportunity for those prepared to respond.