Shakespeare famously wrote in The Tempest, “What’s previous is prologue,” to specific how occasions of the previous set the stage for developments within the current.
That sentiment was clear for well being insurers within the second quarter, through which firms that slashed Medicare advantages and reduce unfastened unprofitable members final 12 months loved obvious immunity from the tidal wave of medical prices burying their friends.
Humana and CVS have been the one insurers to boost their annual revenue expectations following the second quarter, bucking a broader downturn. 4 different main payers — UnitedHealth, Elevance, Centene and Molina — both lowered their revenue expectations or established new flooring properly beneath earlier targets.
(The opposite main publicly traded insurer, Cigna, reaffirmed its earlier outlook. Cigna doesn’t take part in MA.)
The state of play is a pointy about-face from 2024. Final 12 months, Humana and CVS have been hit hardest by utilization and regulatory modifications within the privatized Medicare program as Biden administration insurance policies that shrunk reimbursement coincided with rising medical spending. Their insurance coverage income plummeted because of this.
Each insurers retrenched with the hope of enhancing margins in 2025, slimming their plans and waving goodbye to counties the place they couldn’t flip a revenue.
That technique is bearing fruit, CVS and Humana executives instructed traders in second-quarter calls.
Strikes that Aetna made final 12 months to rationalize its merchandise and geographies have resulted in an “optimum” Medicare membership combine, Steve Nelson, the president of Aetna, mentioned throughout CVS’ name with analysts in late July.
“All respect to the setting that we’re in — very, very inspired how the quarter is taking part in out,” Nelson mentioned.
Humana’s MA membership has dropped by greater than 400,000 individuals because the finish of 2024, whereas CVS’ has fallen by greater than 200,000 individuals.
Compared, different insurers like UnitedHealth expanded their MA membership for 2025, possible capturing among the high-cost members that Humana and CVS offloaded, based on analysts.
UnitedHealth’s insurance coverage division UnitedHealthcare added greater than 500,000 MA members within the first half of 2025 — the most important enrollment progress amongst main MA organizations. That’s positioned the payer in a troublesome scenario: saddled with extra membership at a time of upper prices.
UnitedHealthcare executives mentioned they considerably underestimated accelerating medical development once they priced their plans for this 12 months, particularly in MA.
Medicare is the largest single driver of decrease earnings expectations for 2025, based on Tim Noel, the top of UnitedHealthcare. “In brief, most encounters are intensifying in companies and costing extra,” Noel mentioned on UnitedHealth’s late July name with traders.
Molina additionally reported medical prices as a share of premiums — a metric referred to as the medical loss ratio, or MLR, carefully watched by traders — got here in greater than the corporate had anticipated in MA.
Compared, executives for Humana and CVS mentioned their plans have been well-equipped to cowl elevated medical utilization. Humana mentioned its enterprise discount was to thank.
“We have been the one plans to scale back advantages in any approach in [2024] and we diminished extra advantages extra considerably than simply about any of our rivals in [2025],” mentioned George Renaudin, the president of Humana’s insurance coverage section, through the late July name.
Given the reductions, “we’ve got a major hole to friends’ profit worth whereas some friends held their advantages steady and even invested extra of their advantages,” he added.
Medical prices as a share of premiums grew the least for Humana and CVS
Well being insurers’ second quarter medical loss ratios, 2024 versus 2025
Payers that didn’t adequately forecast prices mentioned that they plan to reduce advantages and exit further markets in 2026 in a bid to get well earnings and get again on Wall Avenue’s good aspect.
UnitedHealthcare, which is the most important MA insurer within the U.S., outlined a very aggressive technique. The payer intends to exit plans that at the moment serve greater than 600,000 members, executives mentioned.
UnitedHealthcare may even elevate premiums and reduce advantages to “intensely focus” on recovering income, Noel mentioned through the investor name.
As insurers proceed to sacrifice progress for profitability, seniors could discover themselves with fewer plan choices subsequent 12 months. These remaining could also be much less beneficiant — particularly within the vaunted supplemental advantages like dental protection or debit playing cards distinctive to MA — and embrace greater premiums or price sharing.
Nonetheless, even with the cuts for 2025, there was nonetheless a panoply of plans obtainable for many seniors this 12 months, suggesting that smaller insurers might step into gaps left by the departure of their bigger friends. Almost one-third of Medicare beneficiaries lived in a county with greater than 50 MA plan choices for 2025, based on the well being coverage assume tank KFF.
Medicaid and the ACA
Insurers are additionally battening down the hatches in Medicaid and the Inexpensive Care Act, two areas moreover slammed by rising prices.
Within the second quarter, Medicaid spending rose sharply, significantly in behavioral healthcare and high-cost medicines, whereas states’ fee charges weren’t excessive sufficient to compensate. As for ACA plans, a market-wide enhance in members’ well being wants drove higher-than-expected spend, executives for a number of insurers mentioned.
Insurers introduced in much less revenue and even misplaced cash from providing insurance coverage within the second quarter — with two exceptions
Q2 working revenue for main payers’ insurance coverage divisions
Elevance and Molina each mentioned they considerably raised premiums for ACA plans subsequent 12 months, whereas Centene is at the moment refiling bids with its ACA states in order that it can also elevate charges.
UnitedHealthcare might additionally exit choose ACA markets subsequent 12 months if it might’t safe excessive sufficient charges, particularly given anticipated membership turmoil, Noel mentioned.
In the meantime, CVS already mentioned it’ll depart the turbulent ACA exchanges solely subsequent 12 months.
All instructed, the actions will end in fewer decisions and better premiums for ACA enrollees in 2026. Insurers are requesting a median premium enhance of 15% subsequent 12 months — the most important hike since 2018, based on a KFF evaluation of preliminary charge filings.
Main payers are rolling again plans at a time of great coverage uncertainty. The GOP’s just lately handed tax and coverage legislation is anticipated to trigger hundreds of thousands of People to lose Medicaid and ACA protection, whereas extra beneficiant subsidies for ACA plans are set to run out on the finish of this 12 months — organising a one-two punch for People that depend on authorities insurance coverage packages.
In the meantime, many insurers’ shares have been tanking as traders balk on the challenges dealing with payers. Credit score scores companies and funding banks have downgraded a number of medical insurance suppliers. It’s not stunning then that on this environment, payers are prioritizing profitability over seemingly all else — together with the influence on shoppers.
Throughout an investor name, Molina CFO Mark Keim summarized the obvious sentiment of main insurers heading into 2026: “We are able to prioritize margin and let membership fall the place it might.”
