Humana will “adjust” Medicare Advantage benefits in 2027 as the gap between CMS funding and the cost of care has grown wider heading into this year’s bid cycle, company executives said April 29 during the insurer’s first-quarter earnings call.
President and CEO Jim Rechtin said the funding shortfall is more pronounced now than a year ago, noting that the medical cost trend has been relatively stable for two years and pointing to the funding side as the primary pressure. Though CMS’ final 2.48% rate increase for 2027 was better than originally proposed, it still falls short of what executives say is needed.
“We are approaching bids with a focus on returning to a sustainable margin of at least 3% in 2028 and making progress against that in 2027,” he said.
Humana also said it expects to double individual MA margin in 2026, adjusted for star ratings performance. The share of Humana’s MA members enrolled in plans rated 4 stars or higher dropped to 25% for the 2025 rating year, down from 94% in 2024. In November, the company appealed a court ruling that upheld the lower ratings.
On benefit design, Mr. Rechtin said adjustments will be targeted, with member retention ranked second only to margin recovery.
“To the extent that you make adjustments to benefits, you do it in a way where it has the least impact on the things that are most important to them,” he said. “It doesn’t mean you don’t make adjustments. It means you do it in a way that is thoughtful to your members.”
George Renaudin, Humana’s outgoing insurance segment president, added that the company is evaluating changes market by market.
In 2026, Humana held benefits largely steady as competitors scaled back their offerings, gaining 1.2 million MA members in the process — the only major national insurer to grow enrollment last year. The company ended the first quarter with 7.1 million total MA members.
The full cost profile of Humana’s new members may not be known for several more months, potentially after 2027 plan bids are submitted to CMS. Executives said early indicators are tracking favorably, with hospital admissions per thousand, pharmacy claims, and risk scores all running in line to slightly better than expectations through April.
Humana reported net income of $1.18 billion in the first quarter, down slightly from $1.24 billion during the same period last year. Total revenue reached $39.6 billion, up from $32.1 billion in the first quarter of 2025. The insurer’s medical loss ratio reached 89.4% in the quarter, up from 87% during the same period last year.
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