Memorial Hermann will shut down its Medicare Advantage plan at the end of 2026, forcing more than 14,000 members across the Houston area to find new coverage in the months ahead. The health system says current coverage stays active through Dec. 31, 2026, but the plan itself will no longer exist starting in 2027.
Memorial Hermann Health Plan, in a notice posted to its broker resource center, cited intensifying competition, regulatory uncertainty and increased compliance burdens as reasons behind the closure, saying health system-owned plans are facing increased pressures on multiple fronts. The Medicare Advantage HMO had enrolled more than 14,000 members as of January, according to data reported by Fierce Healthcare. Memorial Hermann is Houston's largest health system, and according to the Houston Chronicle, the company said focusing on its core strengths will position it for sustainable growth going forward.
What Happens to Current Members
Members can keep using their Medicare Advantage benefits through the end of 2026, and Memorial Hermann planned to begin contacting current enrollees about the closure starting Oct. 1. Affected members have a special window to enroll in another Medicare health or drug plan through Feb. 28, 2027, per the company's notice. Enrollment requests submitted to a new plan by Dec. 31, 2026, will generally take effect Jan. 1, 2027, while requests made in January or February 2027 generally take effect the start of the following month.
Anyone who doesn't pick a new Medicare Advantage plan by the end of the year will generally be shifted back to Original Medicare effective Jan. 1, 2027. The Chronicle reports that members can compare their options through Medicare.gov, by calling 1-800-MEDICARE, through their State Health Insurance Assistance Program, or with a licensed Medicare sales representative. Memorial Hermann is separately winding down its employer-focused commercial offerings — including an HMO, a PPO and a third-party administrator for self-funded plans — by the end of 2026, as first reported by Fierce Healthcare.
A Nationwide Retreat From Medicare Advantage
Memorial Hermann's exit is part of a much larger shakeout in the Medicare Advantage market. According to NPR, at least 2 million people will be affected by Medicare Advantage plan closures in 2026, based on an analysis of insurer announcements by the An Arm and A Leg podcast — on top of the 2.9 million seniors whose plans closed last year. Other preliminary estimates cited by NPR range as high as 5 million seniors affected nationwide, out of roughly 35 million people currently enrolled in Medicare Advantage.
The pullback is hitting some metro areas harder than others. NPR reports that Dallas, Minneapolis, Seattle, Houston and Portland will each see between one-quarter and one-third fewer Medicare Advantage plans available to seniors this year, and 193 counties nationwide will have zero Medicare Advantage plans at all, up from about 120 counties last year. A separate analysis from Johns Hopkins' Bloomberg School of Public Health found that roughly 10% of Medicare Advantage policyholders in non-employer HMO or PPO plans are expected to face forced disenrollment in 2026 — a sharp jump from an average of just over 1% between 2018 and 2024, which climbed to 6.9% in 2025 before reaching that 10% mark this year.
Bigger Insurers Are Cutting Too
Memorial Hermann isn't alone among major players scaling back. Humana and UnitedHealthcare are discontinuing some Medicare Advantage plans beginning in 2027, together ending coverage for about 1 million people age 65 and older, according to CBS News. Humana's exits are expected to affect roughly 600,000 members, while UnitedHealthcare is closing a plan covering about 390,000 members, who will have access to another UnitedHealthcare Medicare Advantage plan. UnitedHealthcare told CBS News it is facing higher costs and increased plan usage — pressures the insurer says are affecting the whole health care industry.
Even insurers staying in the market are trimming what they offer. Insurers broadly reduced benefits for 2027, particularly dental allowances and Part B premium givebacks, according to Healthcare Dive. UnitedHealthcare's dental cuts affected nearly 70% of its members, Humana reduced or eliminated its Part B giveback for 62% of its members, Centene cut dental allowances for 45% of its members, and CVS's Aetna division trimmed dental benefits for 36% of its members. Insurers now expect industry-wide Medicare Advantage enrollment to drop 6% to about 34 million people in 2027, even as the federal Centers for Medicare and Medicaid Services describes the market as stable, Healthcare Dive reports.
Why Hospital-Owned Plans Are Under Strain
Hospital-owned Medicare Advantage plans like Memorial Hermann's surged in popularity over the past decade, with nearly one in six Medicare Advantage enrollees nationwide now in a hospital-owned plan, according to the Chronicle. The appeal was straightforward: clear rules and predictable pricing that made the plans attractive to hospitals, along with greater control over patient treatment paths and less prior authorization friction, as Grace Mackleby told the paper. Mackleby and researcher Geronimo Bejarano Cardenas have studied the effects of these hospital-owned plans, and Bejarano Cardenas's research found evidence they could lead to better patient health outcomes — though hospital ownership also carries risk, since the arrangement may encourage doctors to over-diagnose patients in order to increase federal payments.
Coding intensity has historically been a vulnerability of Medicare Advantage plans generally, and the federal government has made changes meant to prevent it, including an overhaul of how it calculates payments to insurers. The Centers for Medicare and Medicaid Services pays more for patients with health conditions that typically require more care through a process called risk adjustment, and the government has reformed that system to curb overpayments — reforms that could further tighten payments to insurers. Bejarano Cardenas told the Chronicle that hospitals facing financial pressure may choose to cut their insurance arm rather than close a hospital outright, and Molly Smith said operating a complex health-plan business has grown difficult amid the combination of challenges facing the industry.
Hospitals and insurers broadly have struggled with rising health care costs and higher-than-expected demand for services, partly driven by seniors catching up on medical care they delayed during the COVID-19 pandemic, per the Chronicle's reporting. That demand drove costs beyond what plans like Memorial Hermann's had expected, compounding the effects of federal policy changes that tightened payments to Medicare Advantage plans. Medicare coverage is available to adults 65 and older as well as people with certain disabilities and medical conditions, and Houston-area families with other coverage needs can also turn to Texas Children's Health Plan, which offers Medicaid STAR and CHIP coverage for children in low-income households and for pregnant women.
