UnitedHealth Group Incorporated UNH is scaling back parts of its Medicare Advantage (MA) business for 2027 as elevated medical costs and utilization continue to pressure profitability. Per Bloomberg, UnitedHealthcare will discontinue plans covering about 390,000 members next year. The move reflects a more selective approach as the insurer focuses on improving the economics of its Medicare business.
The retrenchment is part of a broader industry reset, with insurers placing greater emphasis on plan-level profitability rather than maximizing enrollment. Reuters reported that UnitedHealthcare plans to exit locations where it has a higher concentration of preferred provider organization (PPO) plans, which offer broader out-of-network access but can carry higher costs.
For UNH, reducing exposure to less profitable plans could strengthen returns in Medicare Advantage as medical cost trends remain elevated. Beyond portfolio changes, UNH plans to invest nearly $1.5 billion in AI-related initiatives in 2026, aiming to improve productivity and reduce administrative burden. The company is also shifting toward narrower-network offerings. UnitedHealthcare said that 66% of members will have access to both health maintenance organization (HMO) and PPO plans in 2027, compared with 70% in 2026, according to Reuters.
Still, the strategy comes with a membership trade-off, as some displaced members could move to competitors instead of remaining within UnitedHealthcare. However, prioritizing sustainable margins over membership growth could support UNH’s earnings recovery. With the MA market facing persistent cost and reimbursement challenges, tighter plan selection could help the company build a healthier membership mix and improve Medicare Advantage profitability while preserving exposure to the market’s long-term growth opportunity.
How Are Competitors Faring?
Some of UNH’s major competitors in the healthcare service provider space are Humana Inc. HUM and Centene Corporation CNC.
Humana is also pruning its Medicare Advantage portfolio for 2027, with exits expected to affect roughly 600,000 members. The insurer is prioritizing stronger-performing plans and value-based care exposure, aiming to protect profitability while redirecting affected members toward other HUM plans.
Centene is taking a selective approach to Medicare Advantage for 2027. Per Becker’s Payer Issues, CNC’s Wellcare is reducing its plan lineup and exiting Hawaii, Oklahoma and Tennessee, while retaining Special Needs Plans in Nevada and Ohio as it refines strategy.
UnitedHealth’s Price Performance, Valuation & Estimates
Shares of UNH have gained 32.2% over the past six months compared with the industry’s rise of 32.1%.
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From a valuation standpoint, UnitedHealth trades at a forward price-to-earnings ratio of 16.98, above the industry average of 14.93. UNH carries a Value Score of B.
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The Zacks Consensus Estimate for UnitedHealth’s 2026 earnings is pegged at $19.85 per share, implying 21.4% growth from the year-ago period.
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UNH stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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