Health insurance companies have grappled with higher-than-expected medical costs all year, rattling investors and prompting strategical and tactical shifts, especially in Medicare and Medicaid.
In addition, tougher regulations and oversight from the Centers for Medicare and Medicaid Services have forced insurers to rethink how they manage their government-sponsored lines of business.
Related: Humana tinkers with Medicare Advantage plans amid higher costs
Here is a recap of the year so far in Medicare Advantage, Medicaid and the health insurance exchanges for the sector:
Medicare Advantage
Leading Medicare Advantage carriers such as UnitedHealth Group, Humana and CVS Health subsidiary Aetna are dealing with higher costs among older members and lower federal payments that are forcing some to revise their playbooks.
Medicare Advantage bids for 2025, which CMS is expected to release any day now, may shed light on how insurers are structuring contracts and plans in response. While legal wins against CMS led to a boost in Medicare Advantage star ratings and bonuses for some companies, insurers appear poised to reconsider their geographic footprints and benefit designs to achieve stronger margins.
To be sure, UnitedHealth Group expects to grow its Medicare Advantage business and Elevance Health sees a chance to gain market share as competitors scale back their presence. Others are being more cautious.
On Friday, Centene revealed its intention to exit a "handful" of Medicare Advantage markets. In February, the company said rate cuts would result in slimmer benefits.
Cigna is pulling out of Medicare Advantage and is selling its Medicare book to Health Care Service Corp. Blue Cross and Blue Shield of Kansas City, Missouri, is also quitting Medicare Advantage.
Top Medicare Advantage insurer Humana foresees losing as much as 5% of its members as it reconfigures its offerings for 2025, and is carrying out a multiyear cost-cutting initiative. Aetna is bracing for a 10% membership reduction and is trimming supplemental benefits.
Medicaid
Cost pressures emerged in Medicaid business as fallout from eligibility redeterminations continues.
After more than 24 million Medicaid enrollees lost coverage during the process of unwinding continuous coverage rules in place during the early phases of the COVID-19 pandemic, memberships among Medicaid insurers have fallen. Insurers also are reporting sicker risk pools among those who remain in the program.
UnitedHealth Group, Centene, Elevance Health and Molina Healthcare are anticipating near-term Medicaid hits and have cautioned that aligning spending with state Medicaid payments may take multiple quarters. Many states have responded by increasing payments to Medicaid carriers.
Centene and Molina Healthcare nevertheless are moving ahead with plans to expand their Medicaid businesses, either through geographic expansions or mergers and acquisitions.
Individual market
Health insurance exchange signups reached a record high of 21.3 million after the last open enrollment period, highlighting why insurers view this market as an opportunity.
Centene, Oscar Health and Highmark, for instance, are eying moves in the marketplace space. Oscar Health has identified individual coverage health reimbursement arrangements, also known as ICHRAs, offered in conjunction with exchange plans as an entree into the employer market.