Medicare Advantage now prices against a population it has spent fifteen years absorbing. MedPAC's July 2026 data book counts 35.5 million MA enrollees in February 2026, 55 percent of eligible beneficiaries, and puts 2026 benchmarks at 124 percent of what fee-for-service spending would have been for those enrollees (MedPAC, July 2026). Every county bid target anchors to per capita spending in a program that now covers a minority of beneficiaries.
Key Takeaways
- 35.5 million enrollees in February 2026, up from 11.7 million in 2011, when penetration stood at 26 percent. Enrollment compounds while the FFS population that defines every county benchmark keeps contracting.
- 124 percent of what MA enrollees would have cost in FFS is where 2026 benchmarks sit. Statute alone puts them at 107; coding intensity and favorable selection supply the rest.
- $76 billion, or 12 percent of MA payments, is MedPAC's projected 2026 excess over FFS cost, down from 20 percent for 2025. Selection now dominates coding, at $57 billion of the $76 billion.
- 0.36 points of the CY2027 growth-rate revision traced to one additional quarter of FFS claims experience, moving the growth engine for $615 billion of annual payments.
- 58 percent of MA enrollment sits with three organizations, and the top three hold 82 percent of the average county. Bid discipline operates on a thin margin.
The Enrollment Detail Behind the 55 Percent
Total MA enrollment grew about 3 percent over the year, but the composition is more informative than the level. Regional PPO enrollment fell 31 percent to 163,000 and private fee-for-service plans hold just 36,000 members, while local coordinated-care plans now carry 35.3 million enrollees, over 99 percent of the program (MedPAC, July 2026). More than three-quarters of the past year's local-plan growth came from special-needs plans.
KFF's parallel analysis of March 2026 enrollment puts SNPs at 8.2 million members, 23 percent of MA enrollment, and attributes 85 percent of the year's net program growth to them (KFF, June 2026). The growth engine is now the dual-eligible and chronic-condition products, which carry the highest rebates and the highest coding intensity in the program.
The dollars scale with the count. Medicare paid MA plans an estimated $537 billion in 2025, more than double the 2019 total, and MedPAC's March 2026 report projects $615 billion for 2026. Penetration is dispersed rather than uniform: fourteen states sit at 60 percent or higher, with Michigan at 67 percent and Puerto Rico at 96 percent, against Alaska at 2 percent and Vermont at 13 percent (MedPAC, July 2026).
The Benchmark Formula and Its Shrinking Denominator
The statutory mechanics have not changed. Counties are ranked into quartiles by per capita FFS spending, and benchmarks run from 95 percent of projected local FFS spending in the highest-spending quartile through 100 and 107.5 percent in the middle quartiles to 115 percent in the lowest, with a 5 percentage point increase for plans rated 4 stars or better and 10 points in double-bonus counties. What has changed is the population underneath the projection: as of June 2024, MA-eligible beneficiaries split 32.8 million in MA against 27.6 million remaining in FFS.
MedPAC's front matter states the measurement problem directly, noting that aggregate FFS sector spending changes now partly reflect enrollment migration to MA rather than cost trend. The Commission has separately criticized the projection base, because CMS county estimates include beneficiaries with Part A only who cannot enroll in MA; excluding them raised 2023 national per capita FFS spending by about 6 percent. Favorable selection, the tendency of the FFS-calibrated risk model to overpredict what MA enrollees would have cost, added between 9.4 and 11.2 percent to payments in every year from 2015 through 2023.
| 2026 estimate, share of FFS spending | Benchmarks | Bids | Payments |
|---|---|---|---|
| Before coding and selection effects | 107% | 83% | 99% |
| Estimated coding effect | +4 | +3 | +4 |
| Estimated selection effect | +12 | +9 | +11 |
| Overall estimate | 124% | 95% | 114% |
Payments land at 114 percent of what the same enrollees would have cost, a projected $76 billion in 2026, equal to 12 percent of all MA payments (MedPAC, March 2026). That is down from the 20 percent estimated for 2025, and the Commission credits the completed phase-in of the V28 risk model for most of the improvement.
The anchor is also sensitive in a way pricing teams have to carry as uncertainty rather than a point estimate. CMS's April 2026 rate announcement finalized an effective growth rate of 5.33 percent against 4.97 percent in the January advance notice, and Georgetown's Medicare Policy Initiative traced 0.36 points of that revision to a single additional quarter of FFS claims experience. The overall update moved from 0.09 percent to 2.48 percent, roughly $13 billion.
That sensitivity runs straight into the rebate pool at 65 to 70 cents on the dollar, before a single medical trend assumption changes. The 2026 average rebate is $218 per member per month, $274 for SNPs, up from $170 in 2021, financing roughly $2,600 per enrollee per year of extras. Enrollment-weighted bids average 77 percent of benchmarks and, before coding and selection adjustments, 83 percent of projected FFS spending. Rebate competition is the enrollment engine, and plans defend it before margin, the trade-off behind the 2026 benefit-design paradox.
Three Organizations, 58 Percent of Enrollment
Bid competition is the system's intended discipline on that 124 percent, and it operates on a narrow margin. UnitedHealth Group, Humana and CVS Health together enrolled 58 percent of all MA members as of July 2025, up from 32 percent in 2008. At the county level, where bids actually compete, the largest organization holds a weighted-average 43 percent of enrollment and the top three hold 82 percent, and 95 percent of enrollees live in counties that qualify as highly concentrated on the Herfindahl-Hirschman index (MedPAC, March 2026).
The 2026 plan year rearranged share inside that group rather than beyond it. UnitedHealth's enrollment fell nearly 647,000 members to a 26 percent share while Humana added 1.3 million to reach 20 percent (KFF, June 2026). MedPAC cites the research consequence, that less-concentrated MA markets are associated with more generous benefits and lower premiums. Star bonuses add about $16 billion to 2026 payments on top of the rebate stack, which is why cut-point methodology is now annual litigation.
Concentration also changes what plans compete on. MedPAC found 8 of the 10 largest MA organizations posted 2024 coding intensity at least 5 percentage points above the 5.9 percent adjustment CMS applies, and eight exceeded FFS coding levels by more than 20 percent. Documentation becomes risk score, risk score becomes rebate, and rebate becomes the supplemental benefits that win enrollment. Net coding effects still add $22 billion to 2026 payments.
The fiscal total is what eventually forces the correction. The Committee for a Responsible Federal Budget extended MedPAC's $76 billion across CBO's February 2026 baseline and projects roughly $1.3 trillion of above-FFS payments over the coming decade (CRFB, March 2026). MedPAC adds that higher MA payments raise Part B premiums about $11 billion in 2026, roughly $14.61 per beneficiary per month, charged to FFS enrollees who receive no supplemental benefits from the arrangement. The 55 percent milestone is not the finding. The reference price under all of it is measured on the other 45 percent.
Further Reading
- UnitedHealth, Presbyterian and Humana's 2027 Medicare Advantage Exits Trace to County Benchmark Math: how the 124%-of-FFS benchmark average documented here still produces county-level exits once quartile rebasing and star-rating rebates are applied.
- MA Crosses 51.6% Penetration: What the Majority Threshold Means for Plan Actuaries: the site's earlier majority-threshold analysis, now extended by the data book's 55 percent reading.
- CMS 2027 Medicare Advantage Rate Reversal: What 2.48% Means for Plan Actuaries: the April 2026 rate announcement mechanics behind the benchmark growth discussed here.
- How Forced Disenrollment Reshapes Risk Pools and Locks In 2027 Bid Exposure: the county-exit dynamics that moved 2026 membership between national carriers.
- Medicare Trustees Report 2026: HI Fund Depletion Moves to 2033: the trust-fund frame for the MA overpayment debate.
Sources
- MedPAC: July 2026 Data Book, Health Care Spending and the Medicare Program (July 2026)
- MedPAC: July 2026 Data Book, Section 9, Medicare Advantage (July 2026)
- MedPAC: March 2026 Report to the Congress, Chapter 12, The Medicare Advantage Program: Status Report (March 2026)
- CMS: 2027 Medicare Advantage and Part D Rate Announcement Fact Sheet (April 2026)
- KFF: Medicare Advantage in 2026, Enrollment Update and Key Trends (June 2026)
- Georgetown Medicare Policy Initiative: From Flat to Favorable, How MA Payments Increased in the CY2027 Rate Announcement (April 2026)
- Committee for a Responsible Federal Budget: New Data Suggests MA Overpayments of $1.3 Trillion Over the Next Decade (March 2026)