Alignment Health Plan CEO: Sometimes When MA Plan Is Pulling Out, the Provider Is to Blame

Why It Matters

If hospital pricing remains unchecked, MA plan availability will shrink, reducing Medicare beneficiaries' access to affordable care and reshaping the payer‑provider power balance.

Key Takeaways

• Hospitals charging 200% of Medicare rates push MA plans out of markets
• Alignment proposes automatic MA participation for hospitals in traditional Medicare
• 40 health systems dropped MA contracts in 2025 due to low reimbursement
• Insurers’ net earnings fell to $9 B in 2024 from $25 B
• 37% of U.S. hospitals reported losses in 2024, threatening capacity

Pulse Analysis

The Medicare Advantage landscape is undergoing a structural shift as hospitals leverage their bargaining power to demand reimbursement well above traditional Medicare rates. Insurers like UnitedHealthcare have already withdrawn from over a hundred counties, and dozens of health systems have terminated MA contracts, citing unsustainable payment terms. This dynamic reflects a broader tension between fee‑for‑service hospital economics and the capitated models that MA plans rely on, forcing payers to reassess network strategies and geographic footprints.

Alignment Health Plan’s CEO Dawn Maroney highlighted a policy gap: hospitals that participate in original Medicare are not automatically eligible for MA networks, leaving each contract open to steep price negotiations. Her call for automatic MA participation aims to standardize rates and prevent hospitals from inflating fees to 200% of Medicare benchmarks. By offering to pay 100% of Medicare rates, Alignment underscores the misalignment between provider expectations and payer willingness, a mismatch that threatens plan viability and could accelerate market consolidation if left unresolved.

The financial ripple effects are evident. While the insurance industry’s net earnings dropped sharply to $9 billion in 2024, many hospitals faced losses, with 37% reporting negative margins. This paradox intensifies scrutiny from regulators and policymakers seeking to protect Medicare beneficiaries. Continued hospital‑driven cost pressures could limit plan options for seniors, elevate out‑of‑pocket expenses, and prompt legislative action to harmonize reimbursement structures across Medicare and MA programs.