By David Wainer

For big insurers, touting Medicare Advantage growth once signaled strength. These days, reassuring investors means showing you can shrink your exposure to the program.

On Tuesday, UnitedHealth Group Chief Executive Stephen Hemsley told investors the company is "positioning for durable and accelerating growth in 2026 and beyond." One way it is doing that: cutting its Medicare business down to size.

Bobby Hunter, who oversees UnitedHealthcare's government programs, said the insurer expects its Medicare membership to fall by about one million members next year. On Wednesday, CVS Health said it took a $5.7 billion write-down tied mostly to its Oak Street senior clinics and revealed plans to scale back the chain. In Aetna, the health insurer that it owns, CVS said its retail Medicare Advantage enrollment will be roughly flat next year.

For investors, the moves suggest big insurers are prioritizing stability by focusing on margin above all else -- reducing much of the earnings risk that has dogged the sector in recent years. Both firms raised this year's profit forecasts, and signaled an improved growth outlook in coming years.

Shares have rebounded sharply. Both insurers remain down over the past three years amid surging medical costs and regulatory changes, but CVS is up over 85% this year and UnitedHealth has climbed more than 50% from its early-August low.

Changes at the two companies reflect a broader turn across all of health insurance, but particularly in Medicare Advantage. For decades, enrollment in the privatized version of Medicare surged as insurers chased growth with $0-premium plans that bundled in dental, vision and other perks. That streak might be ending: The Centers for Medicare & Medicaid Services expects nation-wide enrollment to slip to about 34 million in 2026 from 34.9 million this year. If that holds, a slightly larger share of seniors -- around 52% -- will be covered by traditional Medicare rather than private plans.

This doesn't mean insurers want out of Medicare Advantage. But for 2026, the playbook has shifted from brute-force growth to surgical precision. They are focusing on patients and plans that reliably generate margins -- and cutting those that don't. UnitedHealth executives underscored the shift, invoking the word "discipline" 10 times on Tuesday's call. "We will ensure we are focused on activities that align with our long-term future and be very disciplined about moving on from those that do not," Hemsley said.

Some of the steps insurers such as UnitedHealth and CVS are taking include eliminating certain plans, trimming benefits, raising out-of-pocket costs and pulling back from offerings such as PPO plans that give members more choice. The same discipline extends to care delivery: Much like CVS is pairing back growth ambitions for its senior clinics, UnitedHealth's Optum Health unit is also retrenching, exiting low-margin contracts and narrowing provider networks.

The pullback means enrollment is getting more complicated for seniors. The Centers for Medicare and Medicaid Services $(CMS)$ says access to Medicare Advantage will remain stable next year, with about 5,600 plans available for 2026 and average monthly premiums dipping to $14 from $16.40.

But those headline numbers hide major shifts. Insurers are piling into Special Needs Plans, which serve chronically ill, frail or dual-eligible patients who qualify for both Medicare and Medicaid benefits. These plans can be more profitable despite serving more vulnerable groups. That is because CMS pays higher rates for sicker patients, and insurers that coordinate their care more efficiently get to keep more of that money. These plans will make up roughly a third of all Medicare Advantage offerings in 2026, up from just over a quarter this year, according to ATI Advisory.

General enrollment plans -- open to all Medicare beneficiaries -- are set to drop nearly 10%, according to ATI. UnitedHealth, Humana and CVS/Aetna are together exiting 41 counties and cutting general enrollment offerings by 11%. Morgan Stanley expects premiums for standard retail plans to rise about 22% next year.

On Wednesday, CVS executives said open enrollment is going according to expectations and should put the company "on the path to returning to target margins on this business."

Medicare Advantage is no longer the profitable business it once was, but insurers are adapting.

Write to David Wainer at david.wainer@wsj.com

(END) Dow Jones Newswires

October 29, 2025 12:00 ET (16:00 GMT)

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