Close up of a medical insurance form with stethoscope
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Health insurance companies including UnitedHealthcare, CVS Health’s Aetna, Centene and Blue Cross and Blue Shield plans owned by Elevance Health are seeing lower costs from patients submitting claims.
But there’s trouble ahead for plans offering government-subsidized health insurance as Americans drop coverage or can no longer afford it due in part to healthcare policy changes by the Republican Congress and Donald Trump White House.
Take the nation’s largest health insurer, UnitedHealthcare, owned by UnitedHealth Group, which last month reported a medical loss ratio, which is the percentage of premium revenue that goes toward medical costs, below 85% for the first quarter of this year. And Wall Street was thrilled and the company’s stock jumped.
Most health insurers have been battling rising medical expenses from customers in their health plans for the better part of the last two years. Their medical loss ratios, also called benefit expense or medical care ratios, have been around 90% or higher in most cases. Last year, UnitedHealthcare’s full year adjusted 2025 medical care ratio was 88.9% compared to 85.5% in 2024. And its adjusted medical care ratio was more than 91% in the fourth quarter.
But UnitedHealth’s “first quarter 2026 medical care ratio was 83.9% compared to 84.8% in the first quarter 2025,” the company said. “The year-over-year decrease was driven by strong medical cost management and favorable reserve development, partially offset by consistently elevated utilization and unit cost trends.”
Still, industry analysts say costs could rise again and threaten insurer cost management.
“Sector developments could challenge UnitedHealth’s margin recovery efforts in the coming quarters,” Fitch Ratings said in a report last week. “These include ongoing elevated healthcare utilization trends, potentially higher acuity in the Medicaid risk pool driven by program changes included in the 2025 tax and spending bill, and the expiration on Dec. 31, 2025 of enhanced Premium Tax Credits associated with the Affordable Care Act individual exchange business.”
In part due to the loss of enhanced Obamacare tax credits, UnitedHealth last month said its Obamacare enrollment fell to 1.4 million from 1.7 million last year. And Centene last month said such enrollment tumbled by 2 million enrollees to 3.58 million at the end of the first quarter compared to 5.54 million at the end of last year and 5.62 million in the year ago quarter. Meanwhile, Elevance’s enrollment in individual plans was flat at 1.4 million in the first quarter of this year compared to the year-ago quarter. Elevance operates Blue Cross and Blue Shield plans in 14 states.
Across the health insurance industry, the end of enhanced tax credits is triggering an exodus of health plan members who either can no longer afford coverage or who are buying lower-priced “bronze” plans that carry high deductibles, industry analysts and companies have said.
The big dip in enrollment and health insurer exits like Cigna’s decision announced two weeks ago and CVS Health’s last year are what Democrats in Congress and health insurance industry analysts said would happen after Republicans in Congress and the Donald Trump White House wouldn’t agree to extend enhanced tax credits for buyers of Obamacare. A KFF analysis last fall said middle income Americans “as well as those with low incomes” will see “major out-of-pocket premium increases” if tax credits aren’t extended. And they are with customers reporting a doubling and even tripling of premiums for this year.
The subsidies, or tax credits, made health insurance premiums more affordable for individuals and were enhanced by the Biden administration and the Democratic-controlled Congress, which passed the Inflation Reduction Act of 2022, allowing more Americans to buy coverage. The enhanced subsidies helped enrollment in Obamacare eclipse a record 24 million Americans and drove its popularity to all-time highs.
A smaller pool of patients with insurance coverage could trigger even more customer losses.
“The cost of public exchange coverage premiums has increased for those individuals previously receiving the enhanced (premium tax credits), which may negatively impact our individual market enrollment,” Elevance Health said in its first quarter filing with the SEC discussing earnings. “The ACA continues to impact our business and results of operations, including pricing, minimum medical loss ratios, and the geographies in which our products are available.”