Humana will exit Medicare Advantage plans covering roughly 600,000 members for the 2027 plan year, about 8% of its 7.2 million MA lives, and expects to recapture only about 240,000 of them into retained plans (Healthcare Dive, July 2026).
That leaves roughly 360,000 members leaving the book outright. The actuarial question the exit raises is not how many people go, but which ones stay.
Key Takeaways
- A 40% recapture assumption carried over from Humana's 2025 exits, when it retained just over 40% of roughly 500,000 displaced members, is what converts 600,000 exiting lives into the guided 240,000 retained and 360,000 lost.
- Q2 2026 pretax MA margin was 1.8%, against a stated goal of at least 3% by 2028 and a 6.7% margin as recently as 2020, which is the gap the exits are meant to close.
- The recaptured members are the ones who did not shop. CMS crosswalk and default-enrollment mechanics retain the least engaged members, so a 40% recapture is not 40% of the exiting pool's average morbidity.
- The coding-intensity cushion has thinned from about 10% of MA payments in 2022 to about 4% in 2026, the first year the V28 model runs unblended, leaving less room to absorb an unfavorable mix shift.
- Only 20% of Humana members sit in 4-star-or-better plans for the 2026 bonus year, down from 94% in 2024, and the measures that drive stars are easier to hit in a healthier population.
What the 600,000 Actually Represents
CFO Celeste Mellet framed the exits on the July 29 second-quarter call as a deliberate cut of "the lower tail of profitability and return," prioritizing plans with greater value-based care penetration for retention (Healthcare Dive, July 2026). Most of the affected plans are rated 3.5 stars or below for the 2027 bonus year, though the company said profitability, not the rating itself, drove the decisions.
The quarter around that decision was strong. Revenue reached $40.9 billion, up 26% year over year, with net income of $694 million, up 27% (CNBC, July 2026). What the exits are aimed at is the margin underneath: a Q2 2026 pretax Medicare Advantage margin of 1.8%, down from 6.7% in 2020, against a stated target of at least 3% by 2028.
The recapture figure is the number the model turns on, and it comes from precedent rather than from the 2027 book. Humana retained just over 40% of the roughly 500,000 members displaced by its 2025 exits, and is guiding to a similar share this time.
| Metric | Value | Source |
|---|---|---|
| Total MA membership exiting for 2027 | ~600,000 (8% of 7.2M base) | Healthcare Dive, July 2026 |
| Expected recapture into retained plans | ~240,000 (40% rate) | Healthcare Dive, July 2026 |
| Net member loss | ~360,000 | Derived |
| 2025 exit recapture rate (precedent) | ~40% of ~500,000 | Healthcare Dive, July 2026 |
| Members in 4+ star plans, 2026 vs. 2024 | 20% vs. 94% | Fierce Healthcare, 2026 |
| Q2 2026 insurance segment benefit ratio | 91.2%, up from 89.9% | Investing.com transcript, July 2026 |
| CY2027 CMS effective growth rate / net rate change | 5.33% / 2.48% | CMS final rate notice, April 2026 |
Why the Stayers, Not the Leavers, Set the 2027 Price
Recapture in Medicare Advantage is not a random draw from the exiting population, which is what makes an 8% headcount cut a bigger pricing event than it looks.
CMS default-enrollment and crosswalk mechanics auto-assign a share of displaced members into the nearest comparable plan from the same company unless the member actively shops. The members most likely to be recaptured are therefore the ones least engaged with plan selection, a group that skews toward higher chronic-condition burden and lower health literacy. The members who compare star ratings and switch carriers during the October 15 to December 7, 2026 annual enrollment period are, by construction, engaged enough to act on new information.
If that pattern holds, the 240,000 recaptured members lean toward the passive, higher-morbidity end of the exiting pool and the 360,000 who leave lean toward the active, lower-morbidity end. The retained book's average risk score then rises even though membership fell by 8%. That is a different pricing input from a flat 8% reduction at unchanged morbidity, and neither the CMS rate notice nor Humana's guidance quantifies it; it has to be inferred from the crosswalk mechanics. The insurance segment's Q2 2026 benefit ratio of 91.2%, up from 89.9% a year earlier, is the pre-exit baseline any 2027 assumption starts from (Investing.com, July 2026).
Humana is not alone in the trade. Roughly 1 in 10 MA beneficiaries in HMO or PPO plans nationally face forced disenrollment in 2026 as plans exit (Health Affairs Scholar, 2026), and UnitedHealthcare ran a larger version of the same move, shedding 1.3 million MA members to push its medical cost ratio from near 90% to 83.9%.
The Cushion That Would Have Absorbed the Mix Shift Is Gone
The mechanism above assumes risk adjustment eventually catches up with the retained population's true morbidity. In 2027 it has less room to do so.
MedPAC estimates MA plans in 2026 were paid $76 billion more than traditional Medicare would have spent on the same beneficiaries, with $28 billion of that gap attributable to coding intensity (KFF, 2026). That effect has fallen from an estimated 10% of MA payments in 2022 to about 4% in 2026, the first year the V28 model runs without a blended transition. At 4 percentage points of uplift rather than 10, a carrier absorbing an unfavorable shift in its retained pool has a thinner buffer before the shift shows in the benefit ratio.
CMS also finalized restrictions for 2027 excluding diagnoses from unlinked chart reviews and audio-only telehealth visits from risk score calculations. A post-exit pool skewed toward higher true morbidity needs those diagnoses captured cleanly to have risk-adjusted revenue match the population, and the documentation pathways for doing it have narrowed.
The star-rating leg works against the fix as well. Exiting sub-4-star plans mechanically lifts the enrollment-weighted average rating of what remains, but adherence and blood-pressure-control measures are easier to hit in a healthier, more engaged population. Only 20% of Humana members are in 4-star-or-better plans for 2026, against 94% in 2024 (Fierce Healthcare, 2026). CEO Jim Rechtin has targeted top-quartile performance by 2028 without promising it: "We don't know industry thresholds. So while we feel good about our substantial progress, we cannot guarantee an outcome."
Further Reading
- UnitedHealth, Presbyterian and Humana's 2027 Medicare Advantage Exits Trace to County Benchmark Math
- Medicare Advantage 2026: How Forced Disenrollment Reshapes Risk Pools and Locks In 2027 Bid Exposure
- UnitedHealthcare Trades 1.3M MA Members for Margin Gains in the Largest Medicare Advantage Repricing in History
- 2026 Medicare Advantage Enrollment: SNP Growth and the 2027 Bid Risk Pool
- How a Morbidity Shift Assumption Moves a 2027 Rate Filing
- ACA 2027 Risk Adjustment Recalibration and What It Means for Pricing
- Decomposing Humana's Q2 benefit ratio into three drivers – the pricing mechanics behind the exit decision.
Sources
- Humana to Exit More Medicare Advantage Plans in 2027 (Healthcare Dive, July 2026)
- Humana (HUM) Q2 2026 Earnings (CNBC, July 2026)
- Humana Q2 2026 Earnings Call Transcript (Investing.com, July 2026)
- Humana Says 20% of Members in MA Plans With Four-Plus Stars for 2026 (Fierce Healthcare, 2026)
- Decoding Medicare Advantage Coding Intensity (KFF, 2026)
- Exposure to the New Medicare Advantage Risk Adjustment Model Varies Across Insurers (Health Affairs Scholar, 2026)
- CMS Releases Final Rate Notice for CY2027 Medicare Advantage (RISE Health, April 2026)
- Thousands of Seniors May Lose Medicare Advantage as Plan Exits Escalate (Forbes, August 2026)