It's been a rough ride for Humana lately. If you've been watching the headlines, or maybe you're one of the half-million people who got a letter saying your coverage is ending, you know something is up. The insurance giant, which basically built its entire identity around Medicare Advantage (MA), is suddenly shrinking.
Honestly, it's a bit of a shock. For years, Humana was the darling of the "privatized Medicare" world. They grew fast, their stock soared, and they seemed to have the "Star Ratings" game figured out. But now? They are exiting hundreds of counties and cutting ties with roughly 560,000 members for the 2025 and 2026 plan years.
It isn't just one thing. It's a "perfect storm" of government crackdowns, a massive math error (depending on who you ask), and the fact that we're all going to the doctor more often.
The $3 Billion Star Ratings Disaster
You can't talk about why is humana losing medicare advantage plans without talking about the "Star Ratings" fiasco. Think of these stars like a Yelp review from the government. If a plan gets 4 or 5 stars, they get a massive bonus check from Uncle Sam. If they drop to 3.5? That money vanishes.
Last year, Humana got punched in the gut.
The Centers for Medicare & Medicaid Services (CMS) released the 2025 ratings, and Humana’s flagship contract—which covers about 45% of its members—plummeted from 4.5 stars to 3.5 stars. Because of how the math works, this drop doesn't just hurt their feelings; it hits their 2026 revenue to the tune of billions of dollars.
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Humana actually sued the government over this. They claimed CMS used "secret shopper" phone calls that were flawed. Specifically, they argued that a few dropped calls or "no-callback" interactions shouldn't be enough to tank a multi-billion dollar business. A judge in Texas didn't agree, though, and tossed the suit in late 2025.
When that bonus money disappears, the math for offering a "zero-premium" plan with all the bells and whistles—like dental, vision, and gym memberships—just doesn't work anymore.
The Profitability Over Growth Pivot
For a decade, the goal was: get as many members as possible. Humana was great at it. But now, the CEO, Jim Rechtin, has signaled a hard shift. They are no longer chasing every senior in every county.
They are cutting the "unprofitable" ones.
Basically, if a specific county has high hospital costs and the government isn't paying enough to cover those costs, Humana is out. For 2025, they exited 70 counties. For 2026, they are pulling back even further, reducing their footprint from 89% of U.S. counties down to 85%.
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It's a strategy called "margin recovery." They’d rather have 5 million profitable members than 6 million members where they lose money on every doctor visit.
Why healthcare is getting pricier for insurers
- Utilization is through the roof: People are finally getting those hip replacements and heart surgeries they put off during the pandemic.
- The Inflation Reduction Act (IRA): This law is great for you because it caps your out-of-pocket drug costs at $2,000. But for insurers like Humana? They now have to pick up a much larger share of the bill for expensive specialty drugs.
- CMS Payment Cuts: The government has been slowly tightening the belt on how much they pay per member, essentially trying to rein in the "overpayments" that have fueled the MA boom for years.
The "Secret" Move to HMOs
If you look closely at the plans Humana is keeping, you'll notice a trend. They are ditching PPOs (Preferred Provider Organizations) in favor of HMOs (Health Maintenance Organizations).
PPOs are popular because you can see almost any doctor. But they are expensive for Humana to run because they can't control the prices those "out-of-network" doctors charge.
By switching more of their portfolio to HMOs, Humana gets more control. You stay in the network; they keep the costs down. It's a way to survive the 2026 budget crunch, even if it means you have fewer choices for where you get your surgery.
Is Humana in Trouble?
Not exactly, but they are "re-tooling." They still have millions of members and a massive primary care business called CenterWell. But the days of easy money in Medicare Advantage are over.
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You've probably noticed your "extra" benefits getting trimmed. Maybe that $50-a-month over-the-counter (OTC) allowance is now $25. Or maybe your dental coverage has a lower cap. This is how Humana is trying to stay in the game without going into the red.
They are betting that by 2027, they will have "cleaned up" their books, fixed their star ratings, and regained their footing. But for the 500,000+ people who lost their plans this year, that's cold comfort.
What You Should Do Now
If your plan was one of the ones Humana cut, or if your benefits look unrecognizable for 2026, don't panic. You have options.
- Check the ANOC: Every September, you get an Annual Notice of Changes. Read it. If it says your plan is terminating, you have a Special Enrollment Period to find a new one.
- Look at "Special Needs Plans" (SNPs): While Humana is cutting general plans, they are actually expanding plans for people who have chronic conditions or are dual-eligible for Medicaid.
- Compare the "Big Three": Humana isn't the only one cutting back. UnitedHealthcare and Aetna are doing it too. Sometimes a smaller, regional player might actually have a better deal in your specific county right now.
- Watch the 5th Circuit: Humana is still appealing that court case about the star ratings. If they win an unexpected victory in 2026, they might suddenly have the cash to beef up benefits again for the following year.
The landscape of Medicare is changing. It's becoming less about "freebies" and more about managed care. Humana is just the first big domino to fall in this new era of austerity.
Next Steps:
Go to Medicare.gov and use the "Plan Finder" tool. Enter your specific medications and your preferred doctors. Because Humana has narrowed its networks, your favorite specialist might not be covered under their new, leaner 2026 plan designs.