Why Is Medicare Advantage Exiting Dozens of Minnesota Counties in 2027?

Health Care + Med Tech Why Is Medicare Advantage Exiting Dozens of Minnesota Counties in 2027? Cuts to Medicare Advantage are taking a bite out of insurers. By Connor O'Neal October 15, 2026 On Oct. 1, six Minnesota health insurance companies announced they would pull their Medicare Advantage (MA) plans from dozens of counties in 2027—leaving hundreds of thousands of Minnesotans searching for a new health insurance plan. On Oct. 15, those people will choose to move to a different MA plan, to Original Medicare (a term that is used to talk about the standard Medicare program), or to a standalone prescription drug plan. MA is a privately administered version of the Medicare program, but with additional benefits to fill the gaps of that Medicare doesn’t cover like dental, vision, and oftentimes, prescription drug coverage. Insurance companies pull MA plans from an entire county—rather than just dropping a single hospital—because MA is regulated, priced, and approved at the county level by the federal government. What caused Minnesota’s largest health insurers to pull its MA plans from six counties altogether next year? (Louisville, Kentucky-based insurer Humana is leaving Minnesota entirely.) The issues are a melting pot of federal reimbursement cuts from the Centers for Medicare and Medicaid Services (CMS), pharmacy costs that are rising faster than inflation, a trend of people utilizing more healthcare services than they did before the Covid-19 pandemic, and the Inflation Reduction Act’s cap on prescription drug prices, which takes an additional bite out of insurers profits. There are other factors at play, like Minnetonka-based Medica, one of Minnesota’s largest insurers, taking on hundreds of thousands of new members after UCare shut down last year. Because of those changes, profits have fallen, and many insurers are exiting their least lucrative markets, leaving people in several counties in the lurch. “Right now, MA generates no profit at all,” says Jason Rein, managing partner at Minnetonka-based Beyond Medicare, which offers older generations consulting services to help navigate Medicare. “I can tell you all [insurers] do is try to manage the losses.” What is Medicare Advantage? Medicare was created in 1965 as a federal program to provide health care coverage for older generations. Historically, health insurers made lots of money from MA because it allowed them to manage a member’s Medicare for them. Medicare only covers some health services, has high deductibles, coinsurance, and co-payments. However, there’s no cap on what a patient ends up paying in a given year (also known as your “out-of-pocket maximum”). It doesn’t provide much coverage beyond standard office visits, because if you need expensive scans, Medicare won’t usually cover your bill completely. Blue Cross Blue Shield of Minnesota’s headquarters in Eagan. When you sign up for MA, CMS reimburses insurance companies to cover a patient’s healthcare costs. Rein says because the insurer, rather than the government, fully manages a person’s healthcare, it incentivizes keeping people healthy to reduce claims. MA members can “add-on” other coverages to their Medicare plan, including coverage for hearing loss and gym memberships. In January, Blue Cross and Blue Shield of Minnesota (BCBS) made the news when it ended its SilverSneakers program, which covered the cost of gym memberships for its Medicare recipients at Life Time Fitness and YMCA gyms. It did so because of rising coverage costs. What led insurance companies to cut Medicare Advantage? Nolan Heppner, president of Eagan-based Heppner Group, an independent insurance agency specializing in Medicare education, says one of the main reasons people choose MA is because Original Medicare does not include prescription drug coverage. But drugs are expensive. If someone is a heavy user of prescription drugs, they are an additional risk for health insurance companies because the insurer absorbs that additional cost due to low coverage reimbursement rates, Rein adds. GLP-1s are the perfect example. RELATED: People Want GLP-1s. Will Employers Adapt? “Yes, they will save money [for insurers] over time, but they are expensive [to buy]. And companies that brought them to market are trying to cover research and development costs,” he says. “It creates the perfect storm.” Rein also points to the collapse of UCare last year, a nonprofit health insurer, as another big part of the snowball effect of what has become MA’s struggle in Minnesota. “UCare was an Advantage plan and had 150K members,” he explains. “It went from making to losing money. It had to disenroll.” When that happened, other insurance companies absorbed that membership. The UCare transition forced members to individually choose and enroll in new plans from various competing insurers. That could be a benefit when the program is working for insurers, but in an environment with difficult economics, more customers can mean worse performance. More members create more claims, and with them more opportunities for low reimbursement rates that hurts profitability. “It didn’t fix the problem, but transferred them,” Rein says. “Companies now say ‘we can’t kick the problem down the street; we need to recalibrate.’” RELATED: Merger Dominoes Fall as HealthPartners and Essentia Combine Dana Erickson, President and CEO, Blue Cross and Blue Shield of Minnesota. BCBS lost more than $500 million on Original Medicare expenses alone in the past three years. Next year, it will offer new MA choices for more than