Mixed Q2 Results for Major Insurers Amid Rising Costs in Medicare Advantage and ACA Marketplaces

Major health insurance companies faced a challenging second quarter of 2025, with mixed financial results driven by ongoing cost pressures in Medicare Advantage (MA) plans and emerging difficulties in the Affordable Care Act (ACA) marketplaces. While some insurers managed to weather the storm, others were forced to revise their outlook for the year and implement strategic changes to address the evolving landscape.

Medicare Advantage Challenges Persist

UnitedHealth Group, the industry leader, reported $3.4 billion in profit and $111.6 billion in revenue for Q2. However, the company fell short of analysts' profit estimates due to unexpectedly high medical costs. UnitedHealthcare CEO Tim Noel revealed that the company's updated outlook accounts for $6.5 billion in additional medical costs, with more than half stemming from MA plans.

In response, UnitedHealth is repricing its products for 2026 and plans to exit certain underperforming MA plans, potentially affecting about 600,000 enrollees. This move highlights the ongoing struggle faced by insurers in the MA market.

Humana, the second-largest MA player, reported $545 million in profit and $32.4 billion in revenue. Unlike UnitedHealth, Humana stated that MA utilization was in line with expectations, crediting its earlier pivot in response to rising costs in late 2024. The company now anticipates lower membership losses than previously expected, projecting about 500,000 departures from its plans.

ACA Marketplace Pressures Emerge

While MA challenges continue, a new financial threat is building in the ACA marketplaces. Centene Corporation, a key player in this market, reported a $253 million loss in Q2 and withdrew its guidance for the year. CEO Sarah London cited more aggressive provider coding, increased utilization, and a shift in member mix as factors driving up costs.

Molina Healthcare echoed Centene's concerns, lowering its guidance for the year. CEO Joseph Zubretsky described the cost spike as "a temporary dislocation between premium rates and medical cost trend which has recently accelerated." Molina posted $294 million in profit and $11.4 billion in revenue for Q2.

Elevance Health also lowered its 2025 outlook due to headwinds in both ACA exchanges and Medicaid. CEO Gail Boudreaux announced steps to reprice 2026 ACA plans to address the new cost pressures. A recent KFF analysis suggests that many insurers are taking similar actions, with early rate filings showing a median proposed increase of 15% for 2026.

Varied Performance Across the Industry

Despite the challenges, some insurers managed to navigate the turbulent waters more successfully. CVS Health's Aetna showed improvement in the MA space for the first time since mid-2024, becoming a bright spot for the company. CVS posted $1.02 billion in profit for Q2, with executives emphasizing their focus on Aetna's continued turnaround.

Cigna Group, with its focus on the commercial market, remained relatively insulated from the medical cost trends affecting its competitors. The company reaffirmed its outlook for the year, reporting $1.5 billion in profit and $67.2 billion in revenue for Q2.

As the industry grapples with these challenges, insurers are implementing various strategies to mitigate risks and maintain profitability. These include repricing products, exiting underperforming markets, and focusing on long-term investments to bolster against ongoing headwinds.