| Last year, health insurer after health insurer slashed or withdrew their profit outlooks after being sucker-punched by high medical costs. |
| This year is shaping up to be a totally different story. As the first-quarter earnings season wraps up, UnitedHealth Group, CVS Health, Cigna, Elevance and Centene all beat Wall Street expectations and hiked guidance. Nearly every health insurer's shares are up by double digit percentages over the last month. |
| Have insurers finally escaped the myriad problems of 2025 and 2024? It’s a little too soon to tell, Leerink Partners analyst Whit Mayo told me. |
| Last year, people with Medicare Advantage, Medicaid and Affordable Care Act plans got more care than insurers projected. The ACA marketplace grew sicker and costlier as it absorbed patients who had been kicked off Medicaid. A federal crackdown made it harder for insurers to exaggerate their members’ illnesses to nab higher reimbursement. And they complained that hospitals used AI to bill more. (UnitedHealth's performance was so bad, it replaced its CEO.) |
| Insurers responded by reducing benefits and shutting down certain plans, prioritizing better margins over growth. Some shifted away from wide-network PPO plans to get a better handle on where members go for care. These moves might be working: Costs look to be coming in lower, Mayo said. |
| Still, “it’s early and there’s a lot more game to play,” he cautioned. |
| Medical claims tend to lag, so insurers don’t yet have a complete view of how costs in the first three months compared to their expectations, Mayo said. Health systems have been reporting fewer visits because of a milder flu season and bad storms that led to canceled procedures, but it’s possible weakening demand for care is only temporary. Q2 will be the real test, he said. |
| I’ve been reporting on health insurers for many years and one thing remains true: The big ones, at least, tend to be able to get themselves out of most scraps. Unfortunately, the levers they pull to do that — raising prices, exiting geographies, tightening networks — have a big impact on access to the care people need. |
| - Shelby |
