I don’t know if I’ve ever written this before, but I actually feel a little bad for health insurance companies. The 16-year period of uninterrupted prosperity that started with the ACA — marked by UnitedHealthcare exceeding its earnings targets for 60 consecutive quarters — has ended in an abrupt and dramatic blowout.

Stock prices have declined by 40-50% for the largest payors, earnings are under pressure, and much of that is driven by increased MLR (Medical Loss Ratio) for every line of business.

You know things are tough when UnitedHealthcare implodes.

Wow.

There is a lot to find distasteful with payor business practices: denials, prior authorizations, AI-driven clinical reviews, forcing hospitals and physicians to collect money — and pushing providers to bear the financial risk — when the insurance company makes benefit design and coverage decisions.

I could go on.

There is so much harm done to patients and their families, as well as to hospitals, doctors, and others who care for the sick, elderly, and vulnerable. Yet it’s imperative that we understand what’s going on with the health insurance business.

Payors may be hard on providers when business is good. But when payors are under financial pressure, it’s an inarguable fact that they will make life way, way harder for providers. We just haven’t seen that for a long, long time.

I want to focus this blog post on MLR, since higher MLR for payors means people are, in general, sicker. Here are a few examples of how they’re accessing more care that payors are obligated to pay for.

ACA Marketplace

Oscar’s first profitable year ever was in 2024. Oscar now expects a $230 million operating loss for Q2 2025 and a full year loss of $300 million. Why the dramatic turn? Higher Exchange risk scores, an 86-87% MLR, and the same increasing utilization rates that are impacting bigger carriers. Oscar expects to resubmit premium rate filings for 2026 for almost 100% of current membership to reflect the higher market risk scores.

Medicaid

Centene posted over $1 billion in profit in Q2 2024. A year later, they’re experiencing cost pressures attributed to new members with higher levels of utilization — especially applied behavior analysis, cancer drugs and gene therapies. Year over year, the MLR has grown from 87.6% to 93%. As a result, they have withdrawn their 2025 earnings guidance.

Reacting to medical cost pressure in all lines of business, Molina Healthcare CEO Joe Zubretsky said, “The short-term earnings pressure we are experiencing results from what we believe to be a temporary dislocation between premium rates and medical cost trend which has recently accelerated.”  

Medicare Advantage

We’ve been following this segment for some time and written extensively about how problematic these plans are for insured members, healthcare providers, and taxpayers. Cigna sold off its Medicare Advantage plans in 2024, and other payors have taken major financial hits. The Wall Street Journal reported:

“Insurers are cutting benefits and exiting from unprofitable markets, and Wall Street is cheering them on. Once rewarded by investors for rapid expansion in the lucrative privatized Medicare program, companies are now being applauded for showing restraint amid rising medical costs and lower government payments.“

The payors that prioritized enrollment growth took the biggest hits in 2024, with CVS Health reporting a substantially higher surge in MLR from 2023 to 2024. The WSJ notes that payors who are staying in the market are dialing back the optional extras that are so appealing to members during open enrollment.

Commercial

Let’s see what experts are predicting for commercial health insurance in 2025.

“Commercial payers in 2026 will be asked to continue paying the ballooning bill for medical services and prescription drugs… For the fourth year, health plan actuaries surveyed annually told us they anticipate medical cost trends for the Group and Individual markets to remain elevated. Based on their input, we’re projecting the medical cost trend in 2026 to remain at 8.5% for the Group market and 7.5% for the Individual market.” (PWC, July 16, 2025)

“Insurers and employers are expecting double-digit increases for premiums and health benefits next year blaming their higher costs on hospitals and drugs, OBBBA-induced insurance coverage lapses and systemic lack of cost-accountability. For insurers, already reeling from 2023-2024 financial reversals, forecasts are dire. Payers will heighten pressure on healthcare providers — especially hospitals and specialists — as a result.” (The Keckley Report, July 20, 2025)

Final thoughts  

I want to be clear – I’m not raising any of these issues to create sympathy for the health insurance companies. Yet it’s critical that we know what’s happening in their world, plan for inevitable pressure on rates and payment yields across all lines of business, and prepare for increasingly contentious and difficult negotiations for new contracts.

Further, health insurance companies will continue to blame hospitals and doctors for rising healthcare costs, use billionaire foundations to fund public attacks, and throw additional revenue at lobbyists to drive their own agendas. As hospitals are under incredible pressure from OBBBA and inflation, there is no easy source of funds to ensure their long-term sustainability.

The payors are really the only place to go, and it will be tough.