Ready for a raucous yet serious look at Medicare Advantage? Check out HBO’s Last Week Tonight with John Oliver from this past weekend:

- YouTube youtube.com

No need to recap its highlights here, since I’ve written frequently about all of the issues he raises in his half-hour show.

But I did want to highlight what is going on in the Medicare Advantage marketplace now that open enrollment is underway. I reported earlier this month about how most major insurers are cutting back their MA plan offerings, abandoning costly regions and even some states.

Now we’re finally getting some sense of the scale of those cutbacks. After reporting UnitedHealth’s third quarter earnings on Tuesday, CEO Stephen Hemsley told stock analysts the company expects to lose about one million Medicare Advantage members for the 2026 plan year or about 12 percent of the company’s total 2025 MA enrollment.

That’s a stunningly high number. If other companies selling MA plans experience even half that level of decline, the privatized share of the total Medicare market will fall well below half and could wind up as low as 45 percent in 2026.

UnitedHealth blamed rising costs due to greater utilization and higher provider prices for the declining profitability of its MA segment. Its medical loss ratio (the share of revenue spent on actual health care) rose to 89.9 percent in the third quarter, up from 85.2% a year ago. The government requires insurers spend at least 85 percent of their premiums on providing care. The rest gets spent on overhead, marketing and profits, which until this year were quite hefty, largely due to overpriced (to the government, that is) MA plans.

There may be an additional reason for the company’s declining profitability, which fell 61 percent from a year ago despite revenue growing 12 percent in the third quarter. Doctors and nurses are beginning to question the company’s upcoding strategy, where it incentivizes clinicians to diagnose diseases for inclusion in patient charts despite the fact those diseases are not being treated or in need of treatment.

For example, as John Oliver reported in his piece, UnitedHealth documented over a three-year period 246,000 cases of secondary hyperaldosteronism (oversecretion of a blood pressure-regulating hormone in patients with heart, liver and kidney disease), even though they never tested for aldosterone. This single upcoding scheme resulted in $450 million in additional government payouts to UnitedHealth. As a former house calls nurse told Oliver, “In a million years, I wouldn’t have come up with a diagnosis like secondary hyperaldosteronism.”

Why might clinicians be backing away from participating in the schemes? STAT reports this morning that UnitedHealth wants to turn more of its 90,000 affiliated physicians into full-time employees. Currently, nearly 90 percent of those doctors remain in independent practices despite have signed contracts with United that involve some form of “value-based” payment arrangements. Those usually involve some form of shared savings, where the physician practices earn bonuses if they hold down total spending on their patients.

But some of these physician practices (and the nurses they send into homes to document untreated conditions) are balking at a scheme whose only purpose is to inflate Medicare’s per-patient-per-month flat fee for each patient, which is risk adjusted to reflect existing medical conditions. As STAT noted in its report:

“A number of current and former UnitedHealth doctors who complained about the way the company micromanaged their practices and forced them to focus on coding patients above all else. … Documents provided to STAT showed UnitedHealth offered some of them $10,000 bonuses and prepared dashboards showing the top performers.”

It’s possible “they simply want to get rid of physicians who balk at adding untreated diagnoses to patient profiles,” STAT concluded.

Extra fees for hospital systems

Clinicians have other reasons for wanting to back away from treating MA patients. Modern Healthcare reported this morning that Elevance Health (previously known as the for-profit Anthem Blue Cross Blue Shield) will begin tacking on a 10 percent administrative penalty if health systems make referrals to out-of-network specialists and other providers. While the policy will only affect its commercial insurance market at first, it will likely be expanded to include Elevance’s more than two million MA enrollees if they get away with it, which some experts doubt.

“You cannot get away with shoveling billions out the door to your shareholders in the form of share buybacks and then turn around and gouge hospitals facing huge Medicaid payment cuts,” Jeff Goldsmith, president of consultancy Health Futures, told Modern Healthcare. “Expect a gigantic middle finger from the provider community and a lot more leaving Elevance networks.”

Many MA plans are also cutting back on the extra benefits they offer seniors who are in the program.

So here’s the landscape as we head deeper into open enrollment season. Insurers are cutting benefits, squeezing physicians, and narrowing networks. This insurer response to declining profits — and this is even before the Centers for Medicare and Medicaid Services makes serious cuts in the excessive payments to MA plans — ensures MA’s share of Medicare’s total enrollment will fall next year.

The only thing that could stop it now would be for Congress to come up with a bailout. I wouldn’t put it past them to try to include it the reconciliation bill that finally reopens the government, especially if they compromise on the main issues Democrats have put on the table: Restoring the enhanced premiums subsidies for ACA plans and eliminating the Medicaid cuts.

Merrill Goozner, the former editor of Modern Healthcare, writes about health care and politics at GoozNews.substack.com, where this column first appeared. Please consider subscribing to support his work.

Reprinted with permission from Gooz News