Medicare Advantage growth is being driven by these niche - and lucrative - plans

By Jessica Hall

 Growth in Medicare Advantage has been slowing, but 83% of sign-ups came from these patients 

 More than 8 million people are enrolled in SNPs, an increase of nearly 900,000 enrollees from a year ago, KFF found. 

 Growth in Medicare Advantage plans has slowed in the past year and would be almost nonexistent if not for specialty plans that cater to people with chronic conditions or to low-income subscribers - and that bring in much more money than individual plans. 

 These special-needs plans, known as SNPs, generated 83% of the growth in Medicare Advantage enrollment over the last year, contributing disproportionately to the program's growth, according to KFF, a nonprofit specializing in healthcare policy and research. 

 As of February, more than 8 million people were enrolled in SNPs, an increase of nearly 900,000 from a year ago. By comparison, the increase in enrollment in individual plans for Medicare Advantage was much smaller, rising by just 224,000 people from a year ago, KFF found. 

 SNPs are driving growth in Medicare Advantage at a time when the private-insurance alternative to Medicare is seeing its once-robust enrollment increases falter. Medicare Advantage plans had 35.5 million enrollees as of February 2026, up 3.2% from February 2025, according to data from the Centers for Medicare & Medicaid Services. That's down from growth rates that ranged from from 7% to 10% a year between 2017 and 2024. 

 This growth in SNPs comes as Medicare Advantage's overall subscriber gains have cooled as the private insurers behind the program exit certain unprofitable markets or discontinue plans due to higher-than-expected medical expenses among subscribers and changes in government payments that have squeezed margins. 

 SNPs, which became a permanent part of the Medicare Advantage program in 2018, are health plans designed for special categories of subscribers. Most enrollees are part of dual-eligible SNPs, which are limited to people with both Medicare and Medicaid. These people tend to have lower incomes, more chronic conditions, and more functional and cognitive impairments than Medicare beneficiaries without Medicaid coverage, KFF said. 

 The two other types of SNPs are chronic-condition SNPs, which are limited to people with certain chronic conditions such as diabetes, heart failure, lung disease and cancer, and institutional SNPs, which are limited to people who require an institutional level of care. 

 These plans are attractive to insurers because SNPs get higher per capita payments because enrollees have higher expected medical spending due to their more severe healthcare needs. By carefully controlling and managing the care provided, the insurers can make more money. 

 "Patients have higher health needs. So there are higher payments. By managing care, there's more opportunity to control costs. There's opportunities there to save money and see more profits," said Jeannie Fuglesten Biniek, associate director for the Program on Medicare Policy at KFF. 

 The government already spends more for Medicare Advantage enrollees than it would if the same people were covered under traditional Medicare. In 2025, the Medicare Payment Advisory Commission estimated that Medicare Advantage payments were 20% higher, costing the government an additional $84 billion. 

 SNPs have even fatter profit margins than traditional Medicare Advantage plans. For example, MedPAC found the average margins for dual-eligible SNPs were 7.5%, and for chronic-condition SNPs they were 7.4% - double the average 3.6% margin of Medicare Advantage plans overall as of 2022. 

 "We see insurers saying in earnings calls that SNPs are important lines of business, and they're focusing on them," Biniek said. 

 -Jessica Hall 

 This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal. 

(END) Dow Jones Newswires

03-08-26 1647ET

Copyright © 2026 Dow Jones & Company, Inc.