Health plan underwriting losses balloon to $10.4B: Report

August 25, 2026

Health insurers collectively lost $10.4 billion on underwriting in 2025, a dramatic deterioration from $1.7 billion the year before, according to a Mark Farrah Associates analysis.

The Aug. 25 analysis compared 2024 and 2025 profitability across four segments: individual, employer-group, Medicare Advantage and managed Medicaid. The analysis is based on aggregated NAIC financial filings and covers approximately 80% of the U.S. health insurance market.

Seven notes:

1. The individual and Medicare Advantage segments accounted for the bulk of the underwriting losses, which overall swung from a $1.7 billion loss in 2024 to $10.4 billion in 2025.

2. The individual market was the hardest hit of any segment, with the average medical expense ratio jumping to 93.2% in 2025, up from 85.3% the prior year. On a per-member-per-month basis, medical expenses grew 12% while premiums rose just 2.5%. Total medical expenses across the segment grew 16.5% year over year, outpacing the 6.6% increase in premiums earned.

3. Among the largest individual market insurers, Centene and UnitedHealthcare saw medical expense growth significantly outpace premium increases, performing worse than the broader segment on that measure. Elevance posted the lowest medical expense ratio among leading plans at 87%, while HCSC posted the highest at 97.8%.

4. Medicare Advantage enrollment continued to grow, reaching approximately 35.7 million members, an increase of more than 1.1 million from 2024, but profitability declined. The segment’s average medical expense ratio rose to 91% from 89.5%, as medical expenses on a PMPM basis grew 13.6% while premiums grew 11.8%.

5. CVS Health reported the largest premium increase on a PMPM basis among leading plans at 15.2%, which helped push its medical expense ratio down to 89.3% from 92.4% in 2024. UnitedHealth moved in the opposite direction, posting the largest PMPM increase in medical expenses and the biggest medical expense ratio increase among MA segment leaders.

6. Employer-group segment membership declined 4.2% to approximately 41.4 million, and the average medical expense ratio increased to 89.7% from 88%. PMPM medical expenses grew 8.6%, outpacing 6.6% growth in PMPM premiums. Among leading plans, BCBS Michigan posted the largest medical expense ratio improvement, with a 7.3% PMPM premium increase outrunning its medical expense growth. HCSC reported the sharpest rise in PMPM medical expenses among the top carriers.

7. Medicaid was the only segment where the medical expense ratio improved, falling to 90.8% in 2025. Rising premiums on a PMPM basis outpaced medical expenses, with premiums up 14.3% and costs up 13.7%. However, most leading Medicaid carriers still saw their individual ratios worsen, with only Elevance reporting a slight decrease among the top plans, driven by slower growth in medical expenses. 

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