Humana will exit Medicare Advantage plans affecting roughly 600,000 seniors in 2027, marking the second consecutive year the insurer is scaling back its coverage footprint to improve profitability, the company announced Wednesday during its second-quarter earnings call.
The exits represent about 8% of Humana’s 7.2 million Medicare Advantage members, according to Healthcare Dive. However, Humana CFO Celeste Mellet said the insurer expects to recapture approximately 240,000 of those members—about 40%—by enrolling them in other, more profitable plans.
Humana’s strategy reflects a broader industry trend of insurers tightening their Medicare Advantage portfolios to shore up margins. The company is shuttering plans with lower capital returns while maintaining benefits in higher-performing plans, executives said. “Our No. 1 priority is to make the necessary progress to remain on track to deliver on our 2028 commitment of returning to a sustainable margin of at least 3%,” Mellet said.
The move comes as Medicare Advantage insurers navigate a complex payment environment. In April 2026, the Centers for Medicare and Medicaid Services finalized a 2.48% rate increase for 2027—a significant improvement over the initially proposed 0.09% hike but still modest given rising medical costs. The Trump administration’s decision to raise rates by over $13 billion helped the industry, yet many insurers remain focused on cutting unprofitable offerings.
Humana has faced additional headwinds from declining star ratings, which determine quality bonus payments from CMS. These ratings measure plan quality and performance, and even small changes can equate to hundreds of millions of dollars in lost revenue for a plan. Humana’s recent star ratings have slipped, dragging down its quality bonus payments. CEO Jim Rechtin said the insurer is on track to reach top-quartile star performance by 2028, though he acknowledged the outcome cannot be guaranteed given the complexity of CMS’s methodology.
Competitors are following similar playbooks. UnitedHealth announced exits affecting 600,000 members, and Aetna and Elevance have also pulled back from unprofitable markets. When UnitedHealthcare exited certain Medicare Advantage PPO plans in 2025, affecting roughly 600,000 members, it signaled the beginning of a wave of industry consolidation driven by cost pressures and thin margins. Humana’s latest announcement suggests that wave will continue through 2027.
Despite the exits, Humana posted stronger-than-expected results in the second quarter, with $40.9 billion in revenue—up 26% year-over-year—and $694 million in profit, up 27%. The insurer benefited from controlled medical costs and higher government rates. However, Humana’s stock fell nearly 8% Wednesday after the company slashed its non-adjusted earnings guidance to at least $6.52 per share, down from $8.36, citing the impact of declining star ratings on quality bonus payments.
Sources
- Healthcare Dive — Humana’s plan exits, membership impact, CFO commentary on margin targets, star ratings decline, and comparison to competitors
- Benzinga — Confirmation of 600,000-member impact and 2027 plan year timing
- Modern Healthcare — Humana’s position as second-largest Medicare Advantage insurer and membership reduction details
- CMS (Centers for Medicare and Medicaid Services) — 2.48% rate increase finalized for 2027, totaling $13 billion in additional payments
- Kaiser Family Foundation (KFF) — Medicare Advantage payment rate increases and comparison to initial proposal
- Wall Street Journal — Trump administration’s 2.48% rate hike versus earlier flat-rate proposal
