Nearly 3 million Americans will lose their Medicare Advantage plan this year, according to an estimate from a research letter published in the major medical journal JAMA (formerly known as the Journal of the American Medical Association). This news is a consequence of how the Medicare Advantage program is built to favor the enrichment of health insurers over providing coverage to American seniors.

Medicare Advantage is private insurance for seniors that is funded by taxpayers. The government – the Centers for Medicare and Medicaid Services (CMS) – gives a lump sum payment per patient to insurance companies for each patient that they cover. The sicker the patient, the more taxpayer money the insurer receives; and the less money the insurer spends, the more money it keeps as profit. This system is meant to incentivize insurers to keep enrollees healthy so they spend less money. This contrasts with traditional Medicare, where the government directly reimburses providers for each health care service.

While Congress created Medicare Advantage with the claim that it would be more efficient than traditional Medicare, the program has never saved money. This is because insurance companies have exploited the Medicare Advantage program to get the government to vastly overpay them to the tune of hundreds of billions of dollars. Insurers targeted healthier patients to enroll while also making their enrollees seem as sick as possible; thus, they maximized their revenue while choosing patients that would minimize their costs.

In 2025, the Medicare Payment Advisory Commission (MedPAC) estimated that insurers got $84 billion more in taxpayer money than otherwise would have been spent if all seniors were enrolled in traditional Medicare. Consequently, the Committee for a Responsible Federal Budget then estimated $1.2 trillion in overpayments over a decade. After CMS implemented measures to reduce overpayments, MedPAC’s 2026 estimate was just slightly lower: $76 billion. Compared to standard private plans offered to the rest of the population, Medicare Advantage has been significantly more profitable for insurance companies. Accompanying this gravy train, Medicare Advantage ballooned over the last two decades with the majority of seniors choosing it over traditional Medicare.

Yet as soon as the government sought to minimally address overpayments and patients needed more health care coverage, insurance companies have been dropping plans in droves. With rising public scrutiny on overpayments, the Trump administration proposed an increase in payment rates to insurers for 2026 that was basically flat; the administration had more than doubled the payment rate in 2025 from what was proposed under the Biden administration. Members of Congress from both major parties have also proposed legislation to curb overpayments in 2025, but there is no current indication if and when Congress would pass such a measure.

With rising government scrutiny and decreased payment increases, insurance companies also faced another bind: seniors actually needed to use their health coverage. Citing higher costs from having to provide health coverage, insurers have been eliminating plans across the country that they did not deem sufficiently profitable. These plans tend to offer greater choice of doctor, better benefits, and cover people in rural areas. On the latter point, the research letter estimates that over 40 percent of seniors enrolled in Medicare Advantage in rural states like Idaho, Wyoming, North Dakota, South Dakota, Vermont, and New Hampshire will be forcibly disenrolled from their plans.

Rural Americans have significantly fewer choices for affordable health care plans compared to the rest of the population. Thus, they are less likely to find a new Medicare Advantage plan that covers their geographic area. For those that can, along with other forcibly disenrolled seniors from non-rural areas, available plans will offer worse coverage and benefits unless they are willing to pay more in premiums.

Fortunately, any of the nearly 3 million Americans who will lose their Medicare Advantage coverage will be automatically enrolled in traditional Medicare if they cannot find another MA plan. Yet, traditional Medicare has significant gaps that can financially burden patients; gaps that Congress has chosen not to fix. For example, the government requires all Medicare Advantage plans to have an out-of-pocket maximum so that no patient has to pay more than a certain amount ($9,250 in 2026) per year. The government has created no such requirement for traditional Medicare.

Consequently, seniors enrolled in traditional Medicare often get a Medigap plan, supplemental insurance that fills in the gaps in traditional Medicare. These plans cost anywhere from $32 to $550 per month in 2025 depending on how comprehensive the coverage is. However, nearly every state in the country (barring a handful) allows insurance companies offering Medigap plans to discriminate against people with preexisting conditions if they first enrolled in Medicare Advantage. Thus, any of the 3 million forcibly disenrolled Americans can be denied Medigap coverage or have to pay higher premiums.

With all its faults, Congress created traditional Medicare in 1965 to ensure American seniors had health coverage. Its purpose was for the public benefit, and seniors today can know that for as long as the program exists, they will have health coverage. 

Medicare Advantage, by comparison, has no such commitment to seniors. These health insurance companies have the primary motives of maximizing profits and returns to their shareholders. They can and have kicked people off of their health coverage whenever the companies deem a plan to not be sufficiently profitable. Given that different MA plans have various restricted networks of providers that patients can choose from (unlike traditional Medicare which 98 percent of non-pediatric physicians accept), such forced disenrollment means that many patients will no longer be able to see their doctor.

While the same reality holds true for standard private insurance, the difference with Medicare Advantage is that taxpayers directly foot the bill, and the government has used their money to overpay and enrich for-profit insurance companies by hundreds of billions of dollars.

Congress has the ability to change this system so that taxpayers don’t enrich private insurance companies while American seniors get comprehensive coverage without immense financial burden. With the same amount of taxpayer money currently overpaying insurers, Congress can create a cap on out-of-pocket expenses in traditional Medicare – as low as $1,000 per year according to one Brown University estimate – along with offering supplemental vision, dental, and hearing benefits which are currently not part of the program. In this situation, no patient would have to worry that in any given year their insurance company will end their coverage — either because it deems their plan not profitable enough because patients are using too much health care, or because the government might start to limit how much they are overpaid.