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This audio is auto-generated. Please let us know if you have feedback<\/a>.<\/p>\n Shakespeare famously wrote in The Tempest,\u00a0\u201cWhat\u2019s past is prologue,\u201d to express how events of the past set the stage for developments in the present.<\/p>\n That sentiment was clear for health insurers in the second quarter,\u00a0in which companies that slashed Medicare benefits and cut loose unprofitable members last year enjoyed apparent immunity from the tidal wave of medical costs burying their peers.<\/p>\n Humana and CVS were the only insurers to raise their annual profit expectations following the second quarter, bucking a broader downturn. Four other major payers \u2014\u00a0UnitedHealth, Elevance, Centene and Molina \u2014\u00a0either lowered their profit expectations or established new floors well below previous targets.<\/p>\n (The other major publicly traded insurer, Cigna, reaffirmed its previous outlook<\/a>. Cigna does not participate in MA.)<\/p>\n The state of play is a sharp about-face from 2024. Last year,\u00a0Humana<\/a> and CVS were hit hardest by utilization and regulatory changes<\/a>\u00a0in the privatized Medicare program as Biden administration policies that shrunk reimbursement coincided with increasing medical spending. Their insurance profits plummeted as a result.<\/p>\n Both insurers retrenched with the hope of improving margins in 2025, slimming their plans and waving goodbye to counties where they couldn\u2019t turn a profit.<\/p>\n That strategy is bearing fruit, CVS and Humana executives told investors in second-quarter calls.<\/p>\n Moves that Aetna made last year to rationalize its products and geographies have resulted in an \u201coptimal\u201d Medicare membership mix, Steve Nelson, the president of Aetna, said during CVS\u2019 call with analysts<\/a>\u00a0in late July.<\/p>\n \u201cAll respect to the environment that we\u2019re in \u2014 very, very encouraged how the quarter is playing out,\u201d Nelson said.<\/p>\n Humana\u2019s MA membership has dropped by more than 400,000 people since the end of 2024, while CVS\u2019 has fallen by more than 200,000 people.<\/p>\n In comparison, other insurers like UnitedHealth expanded their MA membership for 2025, likely capturing some of the high-cost members that Humana and CVS offloaded, according to analysts.<\/p>\n UnitedHealth\u2019s insurance division UnitedHealthcare added more than 500,000 MA members in the first half of 2025 \u2014 the largest enrollment growth among leading MA organizations. That\u2019s placed the payer in a tough situation: saddled with more membership at a time of higher costs.<\/p>\n UnitedHealthcare executives said they significantly underestimated<\/a> accelerating medical trend when they priced their plans for this year, especially in MA.<\/p>\n Medicare is the biggest single driver of lower earnings expectations for 2025, according to Tim Noel, the head of UnitedHealthcare. \u201cIn short, most encounters are intensifying in services and costing more,\u201d Noel\u00a0<\/strong>said on UnitedHealth\u2019s late July call with investors.<\/p>\n Molina also reported medical costs<\/a> as a percentage of premiums \u2014 a metric called the medical loss ratio, or MLR, closely watched by investors \u2014 came in higher than the company had expected in MA.<\/p>\n In comparison, executives for Humana and CVS said their plans were well-equipped to cover elevated medical utilization.\u00a0Humana said its business reduction<\/a> was to thank.<\/p>\n \u201cWe were the only plans to reduce benefits in any way in [2024] and we reduced more benefits more significantly than just about any of our competitors in [2025],\u201d said George Renaudin, the president of Humana\u2019s insurance segment,\u00a0during the late July call.<\/p>\n Given the reductions, \u201cwe have a significant gap to peers\u2019 benefit value while some peers held their benefits stable or even invested more in their benefits,\u201d he added.<\/p>\n Medical costs as a percentage of premiums grew the least for Humana and CVS<\/p>\n Health insurers\u2019 second quarter medical loss ratios, 2024 versus 2025<\/p>\n Payers that didn\u2019t adequately forecast costs said that they plan to scale back benefits and exit additional markets in 2026 in a bid to recover earnings and get back on Wall Street\u2019s good side.<\/p>\n UnitedHealthcare, which is the largest MA insurer in the U.S.,\u00a0outlined a particularly aggressive strategy. The payer intends to exit plans that currently serve more than 600,000 members, executives said.<\/p>\n UnitedHealthcare will also raise premiums and cut benefits to \u201cintensely focus\u201d on recovering profits, Noel said during the investor call.<\/p>\n As insurers continue to sacrifice growth for profitability, seniors may find themselves with fewer plan options next year. Those remaining may be less generous \u2014 especially in the vaunted supplemental benefits like dental coverage or debit cards unique to MA \u2014\u00a0and include higher premiums or cost sharing.<\/p>\n Still, even with the cuts for 2025, there was still a panoply of plans available for most seniors this year, suggesting that smaller insurers could step into gaps left by the departure of their larger peers.\u00a0Nearly one-third of Medicare beneficiaries<\/a>\u00a0lived in a county with more than 50 MA plan options for 2025,\u00a0according to the health policy think tank KFF.<\/p>\n Medicaid and the ACA<\/p>\n Insurers are also battening down the hatches in Medicaid and the Affordable Care Act, two areas additionally slammed by rising costs.<\/p>\n In the second quarter, Medicaid spending rose sharply, particularly in behavioral healthcare and high-cost medications, while states\u2019 payment rates weren\u2019t high enough to compensate. As for ACA plans, a market-wide increase in members\u2019 health needs drove higher-than-expected spend, executives for multiple insurers said.<\/p>\n Insurers brought in less profit or even lost money from offering insurance in the second quarter \u2014 with two exceptions<\/p>\n Q2 operating income for major payers\u2019 insurance divisions<\/p>\n Elevance and Molina both said they significantly raised premiums for ACA<\/a> plans next year, while Centene is currently refiling bids<\/a>\u00a0with its ACA states so that it too can raise rates.<\/p>\n UnitedHealthcare could also exit select ACA markets next year if it can\u2019t secure high enough rates,\u00a0especially given expected membership turmoil, Noel said.<\/p>\n Meanwhile, CVS already said it\u2019ll leave<\/a> the turbulent ACA exchanges entirely next year.<\/p>\n All told,\u00a0the actions will result in fewer choices and higher premiums for ACA enrollees in 2026. Insurers are requesting a median premium increase of 15%<\/a> next year \u2014 the largest hike since 2018, according to a KFF analysis of preliminary rate filings.<\/p>\n Major payers are rolling back plans at a time of significant policy uncertainty. The GOP\u2019s recently passed tax and policy law is expected to cause millions of Americans to lose<\/a> Medicaid and ACA coverage, while more generous subsidies for ACA plans are set to expire at the end of this year \u2014 setting up a one-two punch for Americans that rely on government insurance programs.<\/p>\n