Medicare Advantage's Hidden Headline (Part 2)

Special Needs Plans are surprisingly (and highly) profitable. That's good for payers — but what about members? 

For private payers, Medicare Advantage (MA) has been a lucrative business.

"Plans have had strong incentives to enter the MA market: relatively stable, higher payments and higher gross margins compared to other lines of business," says Jeannie Fuglesten Biniek, Associate Director-Program on Medicare Policy at Kaiser Family Foundation (KFF).

It's even more lucrative when it comes to Special Needs Plans (SNP) — in particular D-SNPs, or plans for people dually eligible for Medicaid and Medicare.

As noted in HealthLeaders' prior coverage:

• SNPs are the fastest-growing MA plan type compared to individual and employer/group coverage

• Enrollment has doubled since 2019
• Growth has continued in 2025, with 8% more D-SNP plans and 21% more C-SNP plans on the market

In addition, D-SNP profit margins are double that of MA plans (7.5% vs. 3.6% in 2022).

Why SNP growth x MA market exits matter

Despite these silver linings, there is a cloud.

In contrast to SNP, the 2025 MA market has seen "unprecedented challenges with a redesigned Part D benefit, MA revenue pressures, and rising healthcare trends . . . [with] fewer plans, fewer carriers, and a significant uptick in plan terminations " (Milliman). This after many years of Medicare plans being a "huge driver of profits for insurance companies" (Wall Street Journal; Kaiser Family Foundation-KFF).

SNP's explosive growth makes it a bad time for the broader "Medicare Gold Rush" to be slowing:

• MA market exits put SNP's growing members (particularly D-SNP) in the hands of fewer private payers.
• This increases payer power with D-SNP members, who are already vulnerable — medically and socioeconomically (the social drivers of health, or SDoH)
• Per KFF, "Medicare Advantage [already] enrolls a disproportionate share of people of color."

All of this casts insurers in a somewhat negative light. Like Big Tech — which corrects over hires with mass layoffs — MA payers were all in when times were flush but headed for the exits when market pressures hit.

Milliman notes that in 2026, "we will again see significant changes to stakeholders in Medicare Advantage." With more SNP growth guaranteed, the market has more questions to answer.

Big questions remain — before 2030 and after

What are the Medicaid implications?

Here, D-SNPs are a push-pull:

• Redeterminations cut Medicaid members from the rolls who would have been dual-eligible.

• Conversely, the market is not fully tapped, with 1.2 million current Medicaid members eligible for D-SNPs but enrolled in other plans (KFF).
• Finally, D-SNP enrollment benefits states, who can lean on MA payers to provide extra benefits (i.e., "Medicare maximization").

Are there implications for value-based care (VBC)?

By 2030, CMS wants 100% of traditional Medicare beneficiaries to be in value-based arrangements. But it must also lean on MA plans to deliver VBC.

• CMS continues to over-incentivize MA plans despite mixed results.
• All of this could make SNPs a great proving ground for VBC demonstrations that get results. SNPs are already growing and strive for the kind of integrated, coordinated care that CMS models target.
• The agency is clearly willing to try more complex VBC models (e.g., Innovations in Behavioral Health, which targets dual-enrollees with severe mental health and substance use disorders.

How much more will SNPs grow and for whom?

The CBO projects that MA penetration will reach 64% by 2030 (a 10% increase). As the fastest-growing plan type, SNPs — and the payers that offer them — are poised to capture a healthy percentage of this growth.

In 2023, UnitedHealthcare and Humana held 52% of D-SNP enrollment. Expect those numbers to grow and include other payers. In 2025, UHC, Aetna and Devoted Health grew their D-SNP plan counts by double-digits" (Milliman).

A modified Medicare Gold Rush?

Milliman predicts another challenging year for MA at large in 2026. Meanwhile, expect SNP plans to continue growing in a market that's not fully tapped.

Will some payers decide to focus more exclusively on SNPs? Possibly, particularly smaller MA carriers.

Could more SNP members in the hands of fewer payers be a good thing? Possibly, if they continue to fine-tune the kind of integrated services and specialized care coordination that SNPs were created to deliver.

As KFF's Associate Director-Program on Medicare Policy Jeannie Fuglesten Biniek has noted: "It's an open question whether plans are actually better at managing these populations or if the payment is so generous that it gives plans more room financially."

All of this spells a Medicare Gold Rush that's not entirely over — just modified, with a SNP twist.