The Center for Medicare & Medicaid Services (CMS) recently announced its 2026 projections for Medicare Advantage (MA), the privatized version of Medicare coverage that is dominated by a handful of massive insurance companies. For next year, about one million fewer people will be enrolled in MA plans (down from about 35 million to 34 million), and the MA share of the Medicare population will drop to 48 percent.

For those who have been critical of MA – seeing it as a confusing and bloated waste of billions of taxpayer dollars that often leaves seniors without the health coverage they need  – this might sound like good news. But it’s not. In fact, it is just another sign that the current system is broken.

For two decades, the Medicare Advantage program has funneled taxpayer money to private companies to manage health coverage for those eligible for Medicare. The companies are paid a fixed amount per enrollee based on a range of factors. As has been amply documented, the companies increase profits by providing less care (often by selecting healthier patients) and making patients appear sicker than they are (known as upcoding), which increases the payments they receive.

There is no doubt that MA has been a boon to private insurers – their share of the Medicare market has exploded, and they make more providing Medicare coverage than they do selling conventional insurance coverage. Insurers made that kind of money in part by relying on prior authorization to limit the amount of medical care available to their customers.

So what has changed? The simple answer is that people are using the health care they are paying for, which reduces insurance company profits. So insurers seek to deny more claims, increase the costs borne by customers, or exit certain markets altogether. As many subscribers have found out the hard way, Medicare Advantage plans sound great until you need to take advantage of the coverage that the companies and their marketing materials have promised.

So that is what is happening now – MA insurers are cutting back on some coverage and exiting certain markets they have deemed unprofitable – practices euphemistically described as being “much more focused on profitability.” Seniors who suddenly find themselves without coverage must now shop for an alternative, which is likely to be more expensive and worse quality.

These moves to scale back MA benefits, as the Wall Street Journal noted two months ago, have been met with cheers on Wall Street. Two of the largest providers – Humana and CVS, which operates Aetna – saw their share prices rise as they unveiled plans to cut coverage for hundreds of thousands. Meanwhile, UnitedHealth had been pursuing a strategy of growing its MA footprint. The company’s stock price was trending in the opposite direction, while it also found itself the target of Justice Department investigations over its MA practices. In the end, United joined the rest of the major players, recently announcing that it would stop offering MA plans in 109 counties, affecting about 180,000 people.

As Medicare open enrollment begins this week, many seniors will get word that their insurers are changing the terms of their plans, or they have decided to ‘exit’ their market altogether. Other MA beneficiaries will likely see a cut to benefits as insurers boost profits by offering ‘skinny’ plans with some combination of higher cost sharing for dental, vision and hearing care, and reduced coverage for other necessities. The burden will be on enrollees to review their plans to see what changes insurance companies have made. Those who have lost MA plans entirely may need to revert to traditional Medicare, but they may not be able to secure a supplemental insurance policy that would pay the balance of the cost of care after Medicare pays its part of the bill, putting them at serious financial risk.

The tens of billions of dollars that we waste propping up for-profit insurers under the banner of Medicare Advantage could be better spent on making Traditional Medicare stronger and more affordable for everyone.

This first appeared on CERP.