As UnitedHealth Group Inc. confronted a rough first quarter, most of the largest publicly traded US managed care insurers fared well during the earnings season in an industry largely insulated from tariff concerns.
As President Donald Trump's proposed tariffs caused volatility in the broader stock market and created uncertainty among some insurance sectors, managed care insurers were generally unaffected, given the nature of their businesses.
While tariffs may not have posed much of an issue, several managed care insurers continued to grapple with the rising medical costs associated with government-subsidized plans such as Medicare Advantage and Medicaid.
UnitedHealth takes a tumble
The health insurance giant stumbled during the first quarter with results that were "unusual and unacceptable," CEO Andrew Witty said.
Utilization trends for Medicare Advantage, which offers expanded government-subsidized plans to seniors, were twice the rate of 2024, Witty said.
"This increase in care activity was limited to our [Medicare Advantage] business and was not a factor in our commercial or Medicaid businesses," Witty said. "Care activity trends in those areas were as expected."
While 2025 rate increases to Medicaid — a US government plan administered by private companies that provides health coverage to people with limited income — more closely align with members' cost needs, CFO John Rex said the funding remains insufficient to meet patients' health needs.
The market responded, and stock in the company, which is the largest US insurer by market cap, fell 32.57% between April 16 and May 6, from $585.04 per share to $394.51 per share.
UnitedHealth did not respond to a request for comment.
Medicare Advantage levels out
After nearly two years of higher-than-anticipated Medicare Advantage costs, many of the largest managed care insurers appeared to turn a corner during the first quarter.
Humana Inc., which has long been hit particularly hard by Medicare Advantage costs, met expectations during the first quarter, CEO Jim Rechtin said.
As the company heads into the annual process of submitting new rate bids to the US government for 2026, Rechtin said the rate notice "better reflects the trend environment and should enable greater industry stability."
Similarly, Elevance Health Inc. CFO Mark Kaye said costs associated with Medicare plans "remain elevated but manageable," and the quarter developed in line with expectations that high-cost trends would persist in 2025.
The Cigna Group, meanwhile, saw an earnings bump related to Medicare but for different reasons, as it completed the divestiture of its Medicare business.
Announced in January 2024, Cigna sold its Medicare businesses to Health Care Service Corp. a Mutual Legal Reserve Co. for $3.3 billion, closing the deal March 19. At the time of the deal's announcement, it was seen by experts as a move that could prime the insurer for a long-rumored merger with Humana.
Medicaid reform looms large
Following rumblings of Medicaid reforms from the federal government, Centene Corp. CEO Sarah London pushed back on these concerns during an earnings call.
"We do not see broad support for benefit cuts in Medicaid from either the White House or from Congress," London said.
While there is building momentum for adding work requirements to Medicaid, London said there is also bipartisan recognition in Congress of the need to continue using enhanced premium tax credits, which are refundable credits that help eligible individuals and families cover the premiums for their health insurance.
