The MA Plan Landscape Under Pressure

The Medicare Advantage industry entered the 2024–2026 rate cycle in a posture it had not occupied in a decade: retreating. Benefit contraction, county exits, prior authorization tightening, and earnings revisions replaced the supplemental benefit expansion and membership growth that defined the prior decade. The rate compression began with the CY2024 advance notice, which produced an effective rate reduction once coding intensity adjustments, V28 model phase-in, and benchmark changes were combined. What the plans had absorbed individually in prior cycles arrived simultaneously, and the plans that had built growth strategies around supplemental benefit expansion faced the sharpest structural correction.

This article maps the organizational trajectory of each major plan and the regional plans most relevant to the current market. The analysis draws from public financial disclosures, CMS plan benefit data, enrollment filings, and published reporting. It names organizations and documented strategies without speculation about internal operations.

UnitedHealthcare: Scale as Defense

#

UnitedHealthcare’s Medicare and Retirement segment is the largest single Medicare Advantage operation in the country by enrollment, covering approximately 7.8 million MA members as of early 2025. The scale advantage operates in both directions: UHC absorbs rate compression across a broader revenue base than any competitor, but it also carries the largest absolute exposure to aggregate MLR deterioration. The segment’s medical loss ratio increased from approximately 84 percent in 2022 to 87 percent in 2024, with utilization normalization post-pandemic driving the majority of the movement. UHC revised earnings guidance downward twice during 2024, with its MA book identified as the primary source of the revisions.

The 2024 Change Healthcare cyber attack created a second simultaneous pressure entirely separate from the rate environment. The attack disrupted claims processing across the healthcare system for weeks, with UHC bearing the direct operational and financial cost: the company advanced approximately $9 billion to providers to stabilize cash flow, incurred remediation and cybersecurity costs in the hundreds of millions, and faced litigation exposure that was still being quantified through 2025. More consequentially for market structure, the attack demonstrated the degree of claims processing concentration in the healthcare system that the UHC-Optum vertical integration had created. Optum processed roughly 14 billion transactions annually before the attack. The concentration that produced scale efficiencies in normal operations became a systemic fragility under disruption.

The Optum vertical integration remains UHC’s most significant structural differentiator. Optum operates across three verticals with direct relevance to MA financial performance. Optum Rx is the PBM that manages pharmacy costs for UHC’s MA plans, providing formulary control and rebate capture that standalone plans cannot replicate at equivalent scale. Optum Health, which employs or aligns approximately 90,000 physicians, generates the clinical encounter data that risk captures at point of care, and the transition from chart review to encounter-based risk adjustment under V28 reform affects UHC less than competitors because its risk documentation infrastructure operates through physician relationships rather than retrospective audit. Optum’s home health operations, assembled through the acquisitions of LHC Group and the contested acquisition of Amedisys (ultimately completed with divestitures required), make Optum the largest Medicare-certified home health operator in the country by a substantial margin. That vertical connection between the plan and the post-acute care delivery system creates cost management leverage that independent plans cannot access.

The Department of Justice has examined the UHC-Optum integration through multiple angles. The Amedisys acquisition faced antitrust scrutiny sufficient to require divestitures in specific markets before closing. The broader concern, documented in published DOJ statements and academic commentary, is whether a plan that owns the physicians generating HCC codes, the pharmacy benefit manager controlling drug spend, and the home health agencies delivering post-acute care has accumulated structural advantages that are not replicable by competing plans and that function as barriers to entry in concentrated markets.

UHC’s county exit and benefit contraction strategy in 2026 followed the same logic that Humana deployed more aggressively in 2025: prioritize margin over enrollment. UHC exited approximately 300 counties for plan year 2026, concentrated in rural markets where per-beneficiary costs exceeded benchmarks, and contracted supplemental benefits in markets where the prior supplemental package had been loss-generating relative to the enrollees it attracted. The D-SNP strategy remains the growth priority. UHC holds the largest absolute D-SNP enrollment of any payer, and the structural integration of FIDE SNP operations with Optum’s LTSS delivery capability is the most advanced example of the D-SNP vertical integration thesis in practice.

In the six WISeR pilot states (MCR-01.03), UHC’s prior authorization infrastructure in adjacent Original Medicare operations reflects the same risk management logic: reducing inappropriate utilization in high-cost service categories through automated review and clinical criteria standardization.

Humana: The Turnaround Thesis

#

Humana’s situation entering 2026 is structurally distinct from every other major plan. Approximately 95 percent of its revenue derives from individual Medicare, making it the most concentrated of the large plans in MA exposure and, consequently, the most directly affected by the rate compression cycle. No other plan of comparable scale is as dependent on the trajectory of a single line of business.

The 2024 and 2025 loss years resulted from a convergence of factors that individually were known and collectively were catastrophic for Humana’s actuarial assumptions. Utilization normalization post-pandemic arrived faster than Humana’s models predicted. The V28 coding intensity adjustment removed risk score income that had supported premium adequacy calculations in prior years. Supplemental benefits, particularly dental and OTC benefits that Humana had used aggressively for market positioning, attracted higher-acuity enrollees who generated costs above what supplemental benefit marketing strategies had modeled. Humana’s MLR in its Medicare segment reached approximately 91 percent in 2024, generating operating losses in its core business for the first time in the company’s history as a Medicare-focused plan.

The strategic response was documented and deliberate. Humana exited markets and reduced plan offerings in counties where it could not price to profitability given the rate environment. The membership decline from 2024 to 2026 is estimated in the range of 500,000 to 900,000 enrolled beneficiaries depending on the final 2026 enrollment figures, representing a structural reduction of roughly 10 to 15 percent of prior membership. The strategic logic is defensible: accepting enrollment losses in unprofitable markets is less destructive than accepting MLR deterioration at scale. The execution risk is whether the market exits create a negative momentum signal that affects competitive standing in the markets Humana intends to hold.

The CenterWell thesis is central to Humana’s medium-term recovery strategy. CenterWell Primary Care operates senior-focused primary care clinics that generate HCC capture at point of care, reducing avoidable utilization and creating the encounter documentation that supports encounter-based risk adjustment under V28 reform. The model mirrors UHC-Optum’s physician integration logic at smaller scale. As of 2025, CenterWell operated approximately 350 clinics concentrated in Florida, Texas, and the Southeast markets that represent Humana’s densest MA enrollment. The thesis is that CenterWell’s per-member cost structure for attributed MA beneficiaries is measurably lower than Humana’s non-CenterWell MA members, and that expansion of the clinic footprint provides a pathway to margin restoration that is independent of the external rate environment.

The payvider logic for Humana is analyzed in depth in MCR-05.02. The specific question for Series 12 is whether CenterWell can reach the scale necessary to materially affect Humana’s aggregate MLR before the company’s capital position requires a different strategic response. The answer depends on how long the MA rate compression cycle persists and whether Humana’s market exits in 2025 and 2026 were sufficient to eliminate the underwriting losses that have driven the earnings deterioration.

CVS Health/Aetna: The Pharmacy-to-Plan Integration Question

#

The 2018 Aetna acquisition by CVS Health was premised on a specific integration thesis: CVS’s pharmacy relationships and retail footprint would drive MA enrollment through enhanced consumer touchpoints, and Aetna’s clinical programs would close the loop between prescription patterns, care management, and total cost reduction. Five years after completion of the acquisition, the evidence for that thesis is mixed.

Caremark’s position as the PBM within the CVS Health enterprise does provide formulary integration with Aetna’s MA plans. The GLP-1 management question, analyzed in MCR-01.05, is the current test case for whether PBM-plan integration creates durable cost management advantage at the point of a high-cost therapeutic class entering broad utilization. Caremark’s ability to design step therapy protocols, negotiate manufacturer contracts, and integrate clinical criteria across the plan creates a capability that is structurally different from plans using third-party PBMs. The BALANCE model’s coverage parameters for GLP-1s make this integration directly financially relevant: how CVS/Aetna manages GLP-1 formulary placement and utilization management under BALANCE will be among the highest-stakes PBM-plan coordination decisions of the next several years.

The Oak Street Health acquisition in 2023 followed the same payvider logic that Humana deployed with CenterWell and that UHC pursued through Optum physician employment. Oak Street’s value-based primary care model, concentrated in urban and suburban markets with high dual-eligible and MA populations, generates HCC documentation and reduces avoidable utilization through intensive primary care management of high-risk patients. The integration with CVS’s operational infrastructure has proceeded more slowly than projected, according to CVS’s own investor disclosures. Oak Street operated approximately 600 centers at acquisition and has continued expanding, but the operational integration with Aetna’s MA clinical programs has faced the organizational complexity inherent in combining a technology-forward startup culture with a Fortune 4 corporation’s bureaucratic requirements.

Aetna’s MA MLR trajectory has paralleled the industry, with deterioration concentrated in the 2024 and 2025 plan years. CVS has not disclosed Aetna MA MLR separately from the broader Health Services segment in all periods, which makes precise comparison to UHC and Humana more difficult. The plan has contracted benefits and exited select markets consistent with the industry-wide contraction. CVS’s pharmaceutical retail business and Caremark’s PBM operations provide cross-subsidy capacity that pure-play health plans lack, which is both a financial cushion and a strategic complication: the incentive structure across CVS’s business units does not always align in directions that optimize Aetna MA financial performance.

Elevance Health: The BCBS Operator at Scale

#

Elevance Health, formerly Anthem, operates as the dominant Blue Cross Blue Shield licensee across a set of states where BCBS licensure functions as a structural market position: Georgia, Virginia, Ohio, Indiana, and Wisconsin, among others. In these markets, BCBS brand recognition among seniors functions as a durable enrollment advantage that national commercial plans without BCBS affiliation cannot easily replicate.

The Carelon division, formerly Anthem’s health services subsidiary, represents Elevance’s services integration thesis. Carelon operates across behavioral health management, pharmacy services, data analytics, and government program administration. The behavioral health carve-out management function is directly relevant to the coverage gap analysis in Series 8: Carelon is one of the largest managed behavioral health organizations in the country, and its role in MA plan behavioral health benefit design reflects both the coverage gap problem and the organizational constraint that perpetuates it.

Elevance’s dual-exposure position under OBBBA (MCR-03.01) is analytically distinct from UHC, Humana, and CVS/Aetna. Elevance has significant Medicaid managed care revenue in states where it also operates MA plans. The federal Medicaid funding reductions in OBBBA create pressure on the Medicaid segment that pure-play MA plans do not face. The offsetting argument, which Elevance has articulated in investor materials, is that Medicaid disenrollment driven by OBBBA work requirements and eligibility redeterminations will produce a pipeline of newly Medicare-eligible individuals who transition to MA. Plans with dominant positions in both Medicaid and MA in the same states are positioned to capture that transition flow better than plans operating only in MA.

Elevance’s D-SNP and FIDE SNP certification strategy reflects the same logic. In states where Elevance holds dominant Medicaid managed care contracts, the operational infrastructure for LTSS coordination already exists. The integration requirements for FIDE SNP certification, which require demonstrable LTSS benefit coordination between the plan’s MA product and its Medicaid LTSS contract, are less onerous for Elevance in these markets than for plans that must build LTSS coordination infrastructure from scratch.

Regional Plans: The Consolidation Question

#

The national plan contraction is creating market openings for regional plans that can operate profitably at smaller scale in markets where national plans are retreating. Whether regional plans can capture that opening before it closes depends on their capital position, geographic concentration, and the quality of their care management infrastructure.

SCAN Health Plan is the most clearly positioned regional beneficiary of national plan contraction. The California-based nonprofit has operated in Southern California MA markets for decades with disciplined underwriting and benefit design calibrated to financial sustainability rather than enrollment maximization. SCAN’s supplemental benefit strategy was more conservative than the national plans during the expansion era, which meant it did not attract the adverse selection that supplemental benefit excess generated for the nationals. As UHC and Humana contracted California benefit packages and exited specific counties, SCAN has absorbed enrollment growth in its core markets without assuming the risk profiles that generated losses elsewhere.

Highmark BCBS operates in one of the most structurally complicated regional plan environments in the country. Its western Pennsylvania market is defined by the direct competition with UPMC, which operates both the dominant health system and a competing health plan in the same geography. The UPMC-Highmark network exclusion conflict, which has involved litigation, regulatory intervention, and consumer disruption, represents the most documented example of provider-plan market conflict affecting Medicare beneficiaries in a regional market. For MA enrollees in western Pennsylvania, plan selection has network implications that do not exist in most other markets: choosing a Highmark plan means limited access to UPMC facilities, and vice versa. How this dynamic resolves if Pennsylvania enters the AHEAD model will determine whether the existing competitive structure can persist under global budget accountability.

CareOregon represents the most advanced state-level payvider model outside of Kaiser. Operating as both a Medicaid Coordinated Care Organization and a D-SNP sponsor in Oregon, CareOregon has the dual eligibility integration infrastructure that the FIDE SNP requirements demand and the community health orientation that distinguishes regional nonprofits from national commercial plans. The Oregon Health Plan’s CCO structure, which applies global budgets to Medicaid populations at the regional level, gives CareOregon more experience with accountable budgeting than most MA plans of comparable size. The payvider model analysis in MCR-05.02 identifies CareOregon as among the organizations that have built genuine capability rather than theoretical positioning.

Regional plans without vertical integration face the same arithmetic that is compressing national plan margins, without the capital cushion to absorb losses through cross-subsidy or the scale to negotiate provider rates that create underlying cost advantages. The consolidation wave of the prior decade, which saw regional Blue plans merge and independent regional HMOs acquired, has already concentrated the market. What remains is a smaller set of regional plans that either have defensible niches (SCAN’s nonprofit California position, Highmark’s BCBS licensure monopoly, CareOregon’s CCO integration) or are acquisition targets for national plans seeking to enter markets efficiently.

The MA market entering 2027 will be smaller in plan count, denser in concentration, and more differentiated by organizational structure than the market that existed in 2022. The plans that survive with competitive positions are those that have built clinical infrastructure, not those that competed on supplemental benefit generosity.

Related Reading

#

MCR-02_01 The 0.09% Shock: What CMS Actually Proposed for 2027 MCR-04_01 Is MA Still Worth It? The Strategic Recalculation for Insurers MCR-02_02 Unlinked Chart Reviews: The $7.2 Billion Risk Adjustment Reckoning MCR-04_07 Star Ratings in Transition: The Quality Bonus Payment Battlefield