A confluence of factors is leading to a significant shake-up in the Medicare Advantage landscape in 2025. Key elements include the redesign of the Part D benefit due to regulatory changes included in the Inflation Reduction Act, lower-than-expected benchmark rates, the transition to the v28 Risk Adjustment model, and rising medical trends. These warning signs about the financial sustainability of benefit-rich Medicare Advantage plans have prompted several insurers to pull back in 2025, resulting in product closures and exits from markets. Despite these disruptions, consumers will still have a broad range of choices and can shop for alternative products.
Decisions around 2025 offerings notwithstanding, insurers must take a hard look at their Medicare Advantage strategy if they are going to ensure long-term viability. We highlighted a few key factors in this previous Oliver Wyman Health article.
Plan Exits and Closures
More than 1.8 million Medicare Advantage members are enrolled 2024 plans that will not be offered in 2025. A few things jump out from the data:
- Approximately 1.3 million of these members are enrolled in PPO plans, representing 70% of those affected by plan exits
- Humana, CVS Aetna, and UnitedHealthcare collectively impact over 1.2 million members due to their plan closures
- Eighteen marketing brands — including Premera Blue Cross and Blue Cross and Blue Shield of Kansas City — are exiting the market entirely in 2025, affecting tens of thousands of members
Major Enrollment Impacts from Product Closures from National, For-Profit Carriers
The loss of plans offered by Humana, CVS Aetna, and UnitedHealthcare leaves a large hole to fill. Humana will have the most significant impact on its members, with over 500,000 of 2024 members enrolled in products that will be closed in 2025. CVS Aetna follows closely, with an estimated 450,000 members affected, and UnitedHealthcare ranks third, with over 250,000 members enrolled in products that will not be offered in 2025.
It's important to highlight that these plan exits reflect members who will not be automatically moved into other products, even if one was available. While these plan exits may seem alarming, carriers in many of these markets have introduced new products or have other products that members can switch to for 2025. This will enable members affected by the plan closures to potentially choose alternative options within the carrier’s portfolio. However, this still results in disruptions to members' experience and continuity of coverage, and the risk that these members will switch to other carriers.
Consumer-Facing MA Brands Exiting the Medicare Advantage Market Entirely
A total of 18 marketing organizations announced their departure from Medicare Advantage. Notable exits include Premera Blue Cross, affecting over 30,000 members in Washington, and Blue Cross and Blue Shield of Kansas City, impacting a similar number in Missouri and Kansas. Additionally, Harvard Pilgrim Healthcare’s exit will affect over 10,000 members. Despite these closures, the overall impact on the market is expected to remain minimal, with brand exits accounting for less than 1% of total enrollment, approximately 150,000 members. For some of these brands, the parent organization remains in the market under a different marketing name, so the closure is more of a member-facing brand impact than true-scale plan exit.
Disproportionate Exits of PPO Plans
Members enrolled in PPO plans will be more significantly affected than those in HMO/HMO-POS plans, with approximately 1.3 million members (70%) in PPO plans in 2024 enrolled in products that will not be offered in 2025 — and not crosswalked — compared to around 530,000 members (30%) in HMO plans.
Diving into this further, organizations have made specific decisions to eliminate their PPO plan options in certain states and counties. This reflects a broader trend among insurers that are reassessing product offerings and adjusting service areas. Organizations have made surgical decisions to eliminate their PPO plan options in specific states and counties.
For example, of the approximately 250,000 members that will be impacted by UnitedHealthcare’s plan closures in 2025, about 185,000 were in PPO plans in 2024. Around 30,000 of these 185,000 members — about 15% — will have no alternative PPO options in their county because UnitedHealthcare is exiting its PPO plans in 38 counties. For the 85% of members, other UnitedHealthcare PPO options will be available in the counties, but they were not crosswalked.
Organizations have not removed their HMO plans to the same extent. Notable HMO exits include Humana leaving Delaware and South Dakota and CVS exiting Idaho. Centene has also made smaller exits from states like Alabama and Massachusetts, but these changes are far less widespread than those affecting PPO plans.
The closure and exit of more PPO plans compared to HMO plans for 2025 could be driven by financial viability issues, as PPOs tend to have higher costs, with plans that are harder to manage and ensure quality, and overall, less predictable revenue streams.
Keeping a Close Eye on Member Movement
It’s critical that insurers watch how plan switching, and consumer shopping behavior is impacted by this disruption. Will some consumers exit Medicare Advantage entirely? What strategies — if any — will remaining carriers implement to attract members from exiting plans, particularly in the PPO segment? Will the remaining plans end up exceeding growth targets by virtue of being in a market that other brands exited? And how will that impact their business?
We expect this to be the beginning of a two-to-three-year disruption cycle and plans will continue to make significant changes to their product portfolio and service areas in 2026 — especially as we see how the annual enrollment period and 2025 plan profitability shape up.
