Medicare Advantage: Market Corrections & Impact | Mark Meiselbach, PhD

Medicare Advantage, a popular alternative to traditional Medicare, is undergoing significant shifts, leading to increased instability and potential disruptions for millions of beneficiaries. A growing number of health plans are exiting the Medicare Advantage market and a substantial portion of enrollees may face forced disenrollment in 2026. These changes stem from a complex interplay of factors, including market corrections, pressures related to the Star Rating System, and financial challenges for plans operating in certain areas, particularly rural communities.

Understanding Market Corrections

The current situation isn’t necessarily indicative of a failing system, but rather a period of “market correction,” according to Mark Meiselbach, PhD, an assistant professor at Johns Hopkins Bloomberg School of Public Health. For years, Medicare Advantage plans have benefited from favorable risk adjustment policies and relatively stable enrollment. However, recent changes in how the Centers for Medicare & Medicaid Services (CMS) calculates risk scores – which determine how much funding plans receive based on the health of their enrollees – have led to reduced payments for some plans. This is particularly impacting plans that previously overestimated the health risks of their members.

These adjustments are intended to ensure fairer competition and prevent plans from receiving excessive payments. However, the resulting financial pressures are prompting some plans to reassess their participation in the Medicare Advantage program, especially in markets where profitability is marginal.

The Role of Star Ratings

The Star Rating System, used by CMS to evaluate plan performance, also plays a crucial role in these market dynamics. Plans with lower Star Ratings receive reduced bonus payments, making it more difficult to compete effectively. Maintaining a high Star Rating requires significant investment in quality improvement initiatives and member satisfaction. Plans struggling to achieve and maintain high ratings may find it financially unsustainable to continue operating in the Medicare Advantage market.

Rural Plan Exits and Access to Care

The impact of these market corrections is disproportionately felt in rural areas. Several plans have announced their withdrawal from rural markets, citing financial challenges and the difficulty of providing affordable care in these regions. This creates significant access-to-care concerns for beneficiaries who rely on Medicare Advantage for their health insurance. When a plan exits a market, enrollees are typically automatically reassigned to another plan, but this may not always be the best option for their individual needs.

The loss of plans in rural areas can lead to narrower provider networks, higher out-of-pocket costs, and reduced access to specialized care. Beneficiaries may be forced to travel longer distances to see their doctors or seek care at facilities that are not familiar to them. This disruption can be particularly challenging for individuals with chronic conditions or complex healthcare needs.

Forced Disenrollment on the Rise

The number of Medicare Advantage enrollees facing forced disenrollment is expected to reach unprecedented levels in 2026. Approximately one in ten enrollees – representing a substantial number of seniors and individuals with disabilities – may be required to switch plans due to plan exits or changes in coverage. This disruption can be stressful and confusing for beneficiaries, and it may lead to gaps in coverage or delays in care.

Historically, beneficiaries have had relatively stable enrollment experiences in Medicare Advantage. As Dr. Meiselbach notes, “During that time, enrollees have rarely been forced to disenroll from their plans if they wanted to keep them.” The current wave of plan exits represents a significant departure from this trend and underscores the growing instability in the Medicare Advantage market.

Implications for Beneficiaries

Beneficiaries affected by these changes should carefully review their options and consider their healthcare needs when selecting a new plan. It’s important to compare coverage, costs, and provider networks to ensure that the new plan meets their individual requirements. Resources are available to help beneficiaries navigate the Medicare Advantage landscape, including the Medicare Plan Finder tool on the Medicare.gov website and assistance from State Health Insurance Assistance Programs (SHIPs).

The ongoing market corrections in Medicare Advantage highlight the need for careful monitoring and potential policy adjustments. Ensuring access to affordable and high-quality healthcare for Medicare beneficiaries requires a stable and sustainable Medicare Advantage program. Addressing the financial challenges faced by plans, particularly in rural areas, and strengthening the Star Rating System are crucial steps towards achieving this goal.

The situation is evolving, and further changes in the Medicare Advantage market are likely in the coming months and years. Beneficiaries should stay informed about their options and advocate for policies that protect their access to care.