(NewsNation) — UnitedHealth will drop several Medicare Advantage plans that collectively cover more than 600,000 people, part of a broader financial reset as the company grapples with rising medical costs.
Tim Noel, CEO of the company’s health insurance division, announced the decision to exit certain Medicare Advantage plans during a second-quarter earnings call Tuesday, noting it would primarily affect members in “less managed products such as PPO offerings.”
Medicare Advantage plans are private health insurance plans approved by Medicare that provide an alternative way for people to receive their Medicare benefits. In 2024, more than half (54%) of eligible Medicare beneficiaries, about 32.8 million people, were enrolled in Medicare Advantage plans, according to the Kaiser Family Foundation.
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UnitedHealth Group, a health conglomerate, owns UnitedHealthcare, the nation’s largest health insurer, covering 50 million people. It also operates a growing Optum business that provides care and technology support.
Despite its size, the company hasn’t been immune to financial pressures linked to rising medical costs, recent earnings show.
The health care giant’s profit fell 19% to $3.41 billion even as revenue rose 13% in the second quarter. Medical costs, the company’s biggest operating expense, jumped 20% to $78.6 billion in the quarter.
“The American health system’s long-standing cost problem is accelerating,” Noel said on Tuesday’s earnings call.
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Insurers have seen a rise in expensive emergency room visits, and UnitedHealth leaders said that doctors are billing for more tests and services during those visits than they anticipated.
Insurance companies are also dealing with growing prescription drug costs, especially from expensive treatments for cancer and obesity, as well as gene therapy, The Associated Press noted.
Noel said on Tuesday’s call that customers can expect “strongly responsive pricing for 2026” as “we are intensifying our remediation actions.”
“We have stepped up our audit, clinical policy and payment integrity tools to protect customers and patients from unnecessary costs,” he said, adding that the efforts will be “grounded in safety and quality while also identifying waste and abuse in outlier coding and billing practices.”
The company, Noel noted, has also scaled its AI efforts, which “improves the patient and provider service experiences while driving cost savings.”
The Associated Press contributed to this report.
