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Humana expects Medicare Advantage plan exits next year to affect around 600,000 members as the insurer continues to focus on margin recovery, marking the latest phase of the Medicare Advantage exit 2027 strategy.
How the Insurer Plans to Recapture Members From This Medicare Advantage Exit
“We will work to recapture a significant portion of that volume as we did in 2025,” CFO Celeste Mellet said on the company’s July 29 second quarter earnings call. The company recaptured just over 40% of members affected by its 2025 exits into other plans it offers, and it expects to recapture a similar share following the 2027 exits, she said.
Signs of the Gap Emerged Earlier This Year
On its first-quarter call in April, the company said the gap between Medicare Advantage funding and its medical cost trend was wider heading into the 2027 bid cycle than a year earlier and would require benefit and geographic adjustments, though it didn’t attach a membership figure at the time.
The Growth That Preceded This Medicare Advantage Exit 2027
The pullback follows a year of outsized growth, with the company adding more than 1 million Medicare Advantage members for 2026 coverage. On the earnings call, executives said they still expect individual membership growth of approximately 25% this year within this business line.
This Insurer Stood Out From Other National Peers
The company was an outlier among the national insurers during the last annual enrollment period, with UnitedHealthcare’s membership in this program falling about 9% and Elevance Health’s dropping 14%, while regional plans posted record gains.
Why the Company Is Targeting Specific Plans in This Medicare Advantage Exit
Rather than trimming benefits evenly across its portfolio next year, the company is cutting what Mellet described as the lower tail of profitability and return, and prioritizing plans with greater value-based care penetration. The majority of the exits involve plans rated 3.5 stars or lower for the 2027 bonus year, though Mellet said the decisions were not primarily driven by star ratings.
A Snapshot of Current Star Rating Distribution
Twenty percent of the insurer’s members are in plans rated 4 stars or higher for 2026, offering context for how the broader star ratings portfolio compares to the plans now being targeted for exit.
Financial Goals Behind This Medicare Advantage Exit 2027
“We expect that our approach to 2027 MA bids will drive solid progress against our goal of delivering a sustainable pre-tax margin of at least 3% in 2028,” President and CEO Jim Rechtin said on the earnings call.
Second Quarter Financial Results
Humana posted $40.9 billion in second quarter revenue, up 26% year over year, and adjusted EPS of $7.61, which was ahead of analysts’ expectations. The company affirmed full-year adjusted EPS guidance of at least $9 but lowered its GAAP guidance to at least $6.52 from at least $8.36 as lower star ratings cut into quality bonus payments.
A Multi-Year Pattern of Retrenchment Behind This Medicare Advantage Exit
The 2027 exits follow two consecutive years of retrenchment for the company. It shed roughly 500,000 members in 2025 while exiting unprofitable plans and counties, and its 2026 footprint narrowed to 46 states and 85% of U.S. counties, down from 89% the year prior.
Industry Pushback on CMS Rate Levels
In April, CMS finalized a 2.48% average MA rate increase for 2027. More than 100 organizations had urged the agency to raise rates above its near-flat proposal, citing expected plan exits and instability in the program.
What This Medicare Advantage Exit 2027 Means for the Broader Market
With the exits concentrated among lower-rated plans and the recapture strategy modeled directly on its 2025 approach, the insurer appears to be treating this pullback as a calibrated, repeatable strategy rather than a one-time correction. Given that regional Medicare Advantage plans posted record gains while national insurers pulled back during the last enrollment period, this exit could further shift market share toward smaller, regionally focused competitors.
What to Watch Going Forward
As the organization works toward its stated goal of a sustainable 3% pre-tax margin by 2028, industry observers will likely watch whether the roughly 40% recapture rate from 2025 holds steady following these 2027 exits, and whether continued national insurer pullbacks create further openings for regional Medicare Advantage plans to expand their footprint at this company’s, UnitedHealthcare’s, and Elevance’s expense.
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