Allen and Philomena Martin will need a new insurance plan January 1 when their HMO plan drops Medicare recipients.

NEW YORK (CNN) -- Health maintenance organizations promised their customers better health coverage at lower prices -- doctor visits, prescriptions and hospitalizations would be all but paid for.

At least, that is what Allen Martin says he was promised by Oxford when he and his wife, Philomena, switched their Medicare over to managed care three years ago.

"We were elated that there was no money involved and we would have the coverage we wanted," he said.

But the coverage is about to end. Martin, his wife and about 440,000 other seniors on Medicare got letters telling them they are being dropped by their HMOs on January 1.

Philomena Martin, who is healthy, was able to find a new HMO without any problem.

Allen Martin wasn't. His kidneys don't work and he needs dialysis three times a week to flush his body -- an expensive treatment. He is left scrambling to find new coverage.

Allen Martin needs costly dialysis treatments several times a week.

"What's the health plan for?" said Philomena Martin. "You're sick; you need help and they say we can't take you on, it's pre-existing."

There are roughly 350 managed care plans covering government-insured seniors, with others trying to break in. But 65 are pulling out.

HMOs maintain they are businesses. And, they say, without more payments from Congress, they can't stay afloat.

"Payments are limited to a certain amount," said Karen Ignani of the American Association of Health Plans. "Meanwhile, health care inflation has risen to more than double those amounts."

Several years ago, HMOs aggressively targeted people covered by Medicare and 6 and a half million signed up.

But critics, like author Dr. Jeanne Kassler, say HMOs didn't make as much money as expected.

"They discovered after enrolling them that if the government -- federal government -- cut subsidies, the profit margins couldn't stay high," she said.

The Martins have two choices: return to Medicare and pay more direct costs, or buy additional insurance. Both options will cost them thousands of extra dollars, no choice at all for people on a fixed income.

"I will have to go to work I guess," Philomena Martin said.