Humana expects to grow its Medicare Advantage membership by more than 25% this year, a prediction that could lead the insurer to supplant UnitedHealthcare as the largest MA carrier in the U.S. — while potentially saddling Humana with higher medical spending.
Humana added roughly 1 million individual MA members during the sign-up period for 2026, and expects that momentum to continue over the year, executives told investors during a Wednesday morning call to discuss the company’s fourth quarter results.
If the prediction bears out, Humana could end 2026 with almost 7.3 million members in the privatized Medicare program, compared to 5.8 million at the end of 2025.
Humana’s rapid enrollment growth is a concern for investors, given MA has experienced acute cost pressures in recent years and could be poised for a further reimbursement cut in 2027. Most MA insurers tried to cut benefits and exit markets to trim their membership this year to improve flagging margins.
Humana also reduced its geographic footprint, but largely maintained the generosity of the benefits in its remaining plans, making it an outlier among major MA carriers.
UnitedHealthcare — long the largest player in MA — expects to lose more than 1.1 million MA members this year because of its own margin recovery actions. That could shrink the company’s MA membership to between 7.2 million and 7.3 million people — putting it neck-and-neck with Humana’s 2026 enrollment expectations.
As a result, 2026 could end with a new frontrunner in MA.
Humana executives acknowledged concerns about the company’s sizable membership gains during the Wednesday call, but said they expect the new members to be profitable on average. That’s because most of them signed up for highly rated plans that come with more lucrative bonuses for the payer, Humana said.
In addition, the majority switched over from existing Medicare plans as opposed to joining the insurance program for the first time, and those members tend to have better economics. Finally, roughly one-third of the new members were previously in a Humana plan, giving the insurer more visibility into their health statuses and expected medical needs.
“We continue to feel good about our membership growth,” Humana CEO Jim Rechtin said on the call.
Humana’s fourth quarter results, however, suggest that further MA membership growth may not be a good thing for the company’s bottom line.
The Louisville, Kentucky-based insurer posted a steep loss of $796 million in the quarter, worse than the $693 million loss it lodged in the fourth quarter of 2024 when it was caught off guard by unexpectedly high medical spending.
Humana’s insurance medical loss ratio — a marker of spending on patient care, the large majority of which is on MA members — was 93.1% in the quarter, up one percentage point year over year.
The higher the MLR, the less in premiums insurers are spending on administration or marketing — or retaining as profit. As such, insurers generally try to keep their MLRs low, but within regulatory bounds to avoid sanctions.
Humana also issued 2026 earnings guidance lower than investors had expected, following similarly disappointing outlooks from some of its managed care peers, including UnitedHealth, CVS and Elevance. Humana’s stock fell 4% in morning trade Wednesday after publishing its results and outlook for the year.
Humana expects adjusted earnings per share of about $9 this year, compared to analysts’ consensus expectations of about $12. The lower guide is mostly due to Humana’s declining MA star ratings, which will impact its quality bonus payments from the CMS this year.
The guidance is also more conservative than typical, given the challenges facing insurers, according to CFO Celeste Mellet. Hospital services and drugs are becoming more expensive, and seniors are using more of them. Meanwhile, reimbursement in federal programs like MA hasn’t kept pace with rising costs, insurers say.
Still, Humana said it’s still on track to double pre-tax margins in the privatized Medicare plans next year compared to 2025, excluding the impact of star ratings.
Including that impact, Humana expects its MA margins to be slightly below breakeven this year.
Amid the challenges for its core MA division, Humana continues to build out its Medicaid division and its primary care business CenterWell. Humana expects to add between 60 and 70 new CenterWell locations this year.
Some of that growth could come from M&A, Rechtin teased on the call.
“We also hope to soon announce a strategic acquisition in the primary care space,” the CEO said.
