UnitedHealthcare to Exit Medicare Advantage Markets Amid Soaring Medical Costs

Around 600,000 enrollees will be impacted as insurers restructure plans under financial strain.

UnitedHealthcare will exit select Medicare Advantage (MA) markets in response to a steep medical cost rise, which will affect approximately 600,000 beneficiaries. 

The announcement came during UnitedHealth Group’s second-quarter earnings call, during which the insurer detailed a $6.5 billion surge in unanticipated medical expenses.

More than half of the cost spike, about $3.6 billion, has emerged from Medicare plans, while $2.3 billion stems from commercial insurance, evenly divided between Affordable Care Act marketplaces and employer-sponsored coverage.

MA Cost Surge Drives Strategic Exits, Pricing Overhauls

"The pricing assumptions we set were well short of actual medical costs," said UnitedHealthcare CEO Tim Noel. “We know these are serious challenges. They humble us and will carry that sense of humility more deeply into our culture. But we can also resolve our current issues and recapture our earnings growth potential.”

Noel said the company is adjusting its pricing and benefit design in MA to absorb rising costs, which are expected to continue into 2026. The insurer is also reviewing its participation in ACA markets, anticipating a membership decline with the expiry of enhanced premium subsidies.

“While we are prepared to continue to participate in most of the 30 markets we currently serve, we will approach them far more conservatively,” Noel said. “For 2026, we may need to make the difficult decision to exit select markets if we cannot achieve the rates necessary for higher market-wide morbidity.”

Q2 Margins Under Pressure; Broader Financial Outlook Adjusted

UnitedHealth Group posted $3.4 billion in Q2 profit, down from $4.2 billion last year, while revenue rose to $111.6 billion from $98.85 billion. The company now expects full-year revenue between $445.5 billion and $448 billion and reintroduced its 2025 earnings per share guidance at a minimum of $16.

“UnitedHealth Group has embarked on a rigorous path back to being a high-performing company fully serving the health needs of individuals and society broadly,” said CEO Stephen Hemsley. “As we strengthen operating disciplines, positioning us for growth in 2026 and beyond, the people at UnitedHealth Group will continue to support the millions of patients, physicians, and customers who rely on us.”

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