UnitedHealth to Exit Medicare Advantage Plans in 16 Counties Amid Cost and Reimbursement Challenges

UnitedHealth plans to exit Medicare Advantage offerings in 16 U.S. counties by 2026, affecting approximately 180,000 members as it confronts increased costs and reduced government reimbursements.

The company attributes this strategic withdrawal to a combination of Centers for Medicare and Medicaid Services (CMS) funding cuts, rising healthcare utilization, and escalating medical expenses, which create unsustainable financial pressures within the Medicare Advantage segment. Despite this pullback in specific areas, UnitedHealth will continue its operations in most other states, maintaining a significant presence among Medicare Advantage providers. As the largest insurer by member enrollment in Medicare Advantage, UnitedHealth faces competitive pressures from rivals like CVS Health and Humana. Earlier in the year, UnitedHealth suspended its full-year earnings guidance after missing first-quarter expectations, primarily due to unforeseen expense surges driven by increased member healthcare usage.

Furthermore, anticipated regulatory changes in 2026 threaten a $4 billion reduction in insurance profits by decreasing risk-adjusted payments for certain conditions, intensifying financial challenges. To mitigate these impacts, the insurer plans to close over 100 Medicare Advantage plans encompassing around 600,000 members, mostly preferred provider organization (PPO) plans that offer broader provider access but often at higher costs.

This reduction will likely shift many affected members toward health maintenance organizations (HMOs), which typically require referrals and restrict care to a network of providers, aiming to control costs more effectively.

The majority of plan exits are expected in rural areas, where UnitedHealth is focusing on operational efficiencies and sustainable care delivery models.

This strategic realignment reflects broader trends in balancing healthcare delivery and payer reimbursement within the Medicare Advantage landscape, emphasizing cost containment and network management amid evolving regulatory and market dynamics.