{"id":146244,"date":"2025-08-14T22:55:16","date_gmt":"2025-08-14T22:55:16","guid":{"rendered":"https:\/\/www.europesays.com\/us\/146244\/"},"modified":"2025-08-14T22:55:16","modified_gmt":"2025-08-14T22:55:16","slug":"health-plan-leaders-face-the-reality-of-sharply-rising-medical-costs","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/us\/146244\/","title":{"rendered":"Health Plan Leaders Face the Reality of Sharply Rising Medical Costs"},"content":{"rendered":"

Wall Street Journal reporter David Wainer articulated some elements of the current situation around Medicare Advantage in an August 5 analysis, through its headline and deck: \u201cInsurance Companies\u2019 Medicare Pullback Is Here: Insurers are planning to scale back benefits, trim plans, and exit markets. Investors are cheering.\u201d<\/a><\/p>\n

That headline and subhead spoke to the perilous moment that health plan leaders are facing right now, as the U.S. population ages, the explosion in chronic illness intensifies, and, as an inevitable result, utilization and medical costs rise. For some health insurers, the pressures are becoming too great, and they are indeed pulling back.<\/p>\n

As Wainer noted in his analysis, \u201cMany seniors enjoy the perks that come with Medicare Advantage. But those extras\u2014like dental coverage and free gym memberships\u2014are being scaled back. Insurers are cutting benefits and exiting from unprofitable markets, and Wall Street is cheering them on. Once rewarded by investors for rapid expansion in the lucrative privatized Medicare program, companies are now being applauded for showing restraint amid rising medical costs and lower government payments.\u201d<\/p>\n

Wainer noted that that Humana and CVS, which operates Aetna, \u201cboth beat earnings expectations in their most recent quarterly updates and saw their shares rise, bucking a broader downturn in health-insurance stocks. Notably, both moved to retrench their Medicare Advantage businesses this year, with Humana projecting a loss of as many as 500,000 members from its plans sold directly to seniors. In contrast,\u201d he notes, \u201cindustry giant UnitedHealth Group grew more aggressively in Medicare this year\u2014but that growth came with soaring costs and disappointing results. Its stock has lost nearly half its value, and the company is now planning a major pullback of its own for 2026.<\/p>\n

Wainer\u2019s analysis is amplified by a July 29 article by the Minnesota Star Tribune\u2019s Christopher Snowbeck. Under the headline \u201cUnitedHealthcare dropping some Medicare Advantage plans, affecting 600,000,\u201d<\/a> Snowbeck wrote that \u201cUnitedHealth Group\u2019s massive health insurance business will drop Medicare Advantage health plans covering more than 600,000 people as it tries to reverse its financial decline. It\u2019s one of several strategies to shore up finances that executives detailed for investors Tuesday. The company\u2019s insurance arm, UnitedHealthcare, is the nation\u2019s largest provider of Medicare Advantage health plans, a privatized version of the original government health insurance program. The Eden Prairie-based health care giant next year may also exit portions of the \u2018Obamacare\u2019 market where individuals use Affordable Care Act (ACA) tax credits to buy coverage,\u201d he wrote.<\/p>\n

Snowbeck noted that \u201cHealthcare costs are rising and UnitedHealth told investors Tuesday it\u2019s sharpening efforts to restrain them following unprecedented financial woes this spring. The Medicare Advantage pullback will come primarily in health plans where seniors have a broad choice of providers. A UnitedHealth spokesman couldn\u2019t predict the impact in Minnesota, where about 94,000 people carry Medicare Advantage coverage with the company,\u201d he added, noting pointedly that \u201cMedicare Advantage patients have received far more medical care than projected \u2014 including more testing, services by medical specialists and care in emergency rooms \u2014 said Tim Noel, chief executive at UnitedHealthcare, during a call with investors.\u201d<\/p>\n

There are complexities in all this. On May 27, Emma Freer, senior policy analyst for healthcare at the American Economic Liberties Project<\/a>, a non-partisan organization advocating for consumers, wrote on MSBNC.com<\/a> that, \u201cIn mid-May, UnitedHealth Group CEO Andrew Witty suddenly resigned for \u201cpersonal reasons,\u201d and the company withdrew its earnings guidance to Wall Street for 2025 after a disastrous first quarter, claiming it had underestimated its Medicare Advantage costs. Because UnitedHealth is vertically integrated,\u201d she noted, \u201cit simultaneously pays for care through UnitedHealthcare and provides care through its health care services arm Optum, which includes both physician practices and pharmacies. This setup gives the conglomerate enormous leverage to dictate which claims are covered, which physicians patients can see and which medications are prescribed to them. UnitedHealth\u2019s Medicare Advantage strategy has proven very lucrative \u2014 until now,\u201d she noted. \u201cMoreover, UnitedHealth also reimburses its own physician practices and pharmacies much more than competitors. A recent Federal Trade Commission report found the average markup could be more than 7,700%. This systematic under-reimbursement leaves independent physician practices struggling to keep their doors open, and some then sell to Optum, reinforcing UnitedHealth Group\u2019s monopoly power. Disparate payments likewise squeeze independent pharmacies out of business, stranding patients in care deserts.\u201d<\/p>\n

Even so, Freer wrote, \u201cEthics aside, UnitedHealth\u2019s Medicare Advantage strategy has proven very lucrative \u2014 until now. Since 2003, its annual revenue has increased nearly 15 times over \u2014 to $372 billion last year \u2014 and its Fortune ranking has climbed 59 spots, to fourth. This strategy also inspired competitors \u2014 including CVS Health\u2019s Aetna, Elevance Health\u2019s Anthem, and Humana \u2014 to pursue a similarly vertically- business model and Medicare Advantage billing practices.\u201d<\/p>\n

And of course, all of these issues and questions are tremendously important now, as more than 50 percent of Medicare recipients have chosen to be enrolled in Medicare Advantage plans. So what\u2019s happening inside Medicare Advantage\u2014both on the plan side and on the provider side\u2014is now tremendously important for the entire Medicare program\u2014and for the policy leaders in Congress whose responsibility it is to try to manage all the issues at a high policy level.<\/p>\n

Fundamentally, the issue is straightforward: our population is aging, and more and more Americans are living with chronic illnesses\u2014one or multiple diseases. So the challenge will be how to move forward in some strategic, yet also realistic way, while keeping providers and plan members engaged.<\/p>\n

Successful Medicare Advantage (MA) plans, like those offered by UnitedHealthcare and Humana, often prioritize comprehensive coverage, including vision, dental, and hearing benefits, along with additional perks like fitness memberships and allowances for health products. These plans frequently offer $0 monthly premiums and low or no co-pays for doctor visits, especially for primary care. They also tend to have high customer satisfaction ratings and extensive provider networks, making it easier for enrollees to access care.<\/p>\n

And it might seem counterintuitive, but honestly, if health plan leaders want to be successful with Medicare Advantage going forward, they\u2019ll have to resist the immediate instinctual urge to cut back on coverage, and instead, will need to tout comprehensive coverage and a full range of benefits, including vision, dental, and hearing care. It\u2019s those very benefits that have attracted so many consumers to Medicare Advantage plans to begin with. Indeed, the most progressive Medicare Advantage plans have gone so far as to include such benefits as health club memberships, allowances for over-the-counter health products, and access to some telehealth services.<\/p>\n

What\u2019s more, there are many examples of health plans with excellent provider relationships. Some large medical groups have already cemented excellent relationships with the health plans with which they contract under MA; hospitals are just beginning to catch up. But collaboration around improving outcomes is a real thing, and there is great potential going forward.<\/p>\n

It might indeed seem paradoxical for health plan leaders to think of \u201cgoing big\u201d during a time of potential and actual financial retrenchment. But this is also a time of testing for Medicare Advantage overall. And if health plan leaders can show real leadership here, they can actually move the healthcare system\u2019s needle forward into an era of even more robust care management\u2014which is precisely what our entire healthcare system will need to do anyway, as we move from our current $5.63 trillion-ish annual spending on healthcare in this country, to what the Medicare actuaries are predicting will be $8.58 trillion by 2033\u2014in other words, an 54-percent increase in overall U.S. healthcare costs in the next eight years. The challenge is daunting\u2014but cutting back on care management and benefits is simply not the way to fix the problem. And numerous senior health plan leaders know that.<\/p>\n

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