UnitedHealth Group Hits Financial Pothole
The fiscal crisis that other insurers saw in 2024 has now hit UnitedHealth Group. Its stock dropped sharply after the insurance giant slashed its earnings outlook for 2025. Not only did United’s stock drop, but so did the stock of other big health players. And the entire market went down as well Thursday.
United is now seeing the high utilization of other plans in its insurance business. This is especially explosive in Medicare Advantage (MA). MA costs have increased twice as much in 2025 as they did in 2024. United only just learned of this. Not only did its insurance business suffer, but so did its Optum services business, which saw its patient profitability drop as its health plan clients struggled with their finances.
Ironically, United went into the 2025 MA enrollment season excited to enroll a large number of beneficiaries. It performed well. The growth in lives will now add to financial problems.
Elevance Health, the second largest overall insurer, issued guidance early after the United news. It reaffirmed its 2025 guidance. Its assumptions on medical expense were reaffirmed too.
The industry hailed the 5 plus % hike for 2026 in MA, but as I noted struggles would continue due to high utilization across the board but especially in MA. This is the first sign that that is so.
In other news, a good Health Affairs Forefront blog discusses how MA leads to lower cost trends in all of Medicare because of MA policies as well the relationships the private program forms with physicians. Providers change behaviors and that “spills over” to traditional Medicare for savings. The authors think this is still true notwithstanding MedPAC’s arguments on overpayments and beneficial selection. It notes that the government should think twice before tying the hands of MA as it has done of late on prior authorization.
Additional articles: https://thehill.com/policy/healthcare/5254865-unitedhealth-group-stock-drops/ and https://www.beckerspayer.com/payer/elevance-assures-investors-with-reaffirmed-2025-earnings-guidance/ and https://www.modernhealthcare.com/finance/elevance-warns-about-financial-hit-amid-unitedhealth-miss and https://www.healthcaredive.com/news/unitedhealth-unh-cuts-2025-guidance-profit-underperforms-q1/745592/ and https://www.beckerspayer.com/payer/unitedhealth-cuts-earnings-guidance-amid-rising-medicare-advantage-costs/ and https://www.modernhealthcare.com/insurance/unitedhealth-group-earnings-2025-forecast and https://www.healthaffairs.org/content/forefront/medicare-advantage-helping-bend-cost-curve
(Some articles may require a subscription.)
#medicareadvantage #healthplans #margins
FFY 2026 Budget Blueprint Slashes Healthcare Organizations And Programs
According to a leaked draft budget outline, the Trump administration aims to slash the budget of the Department of Health and Human Services by roughly one-third and shutter a number of departments in a re-organization. HHS’s budget would be reduced from roughly $120 billion in fiscal year 2024 to about $80 billion in fiscal year 2026. The 340B drug discount program would be slated to move from the Health Resources and Services Administration (HRSA) to the Centers for Medicare and Medicaid Services (CMS). The document also endorses the sunset of the expanded Exchange premium subsidies.
In other news, states that have expanded Medicaid constitutionally or do not have a statutory escape clause (rolling back Medicaid expansion) could face the biggest obstacles if Medicaid is cut significantly. Generally, states would have to make massive cutbacks or raise additional revenue. Lawmakers on both sides of the aisle are already getting pressure from states. More and more are coming out against major Medicaid cuts during budget reconciliation.
Additional article: https://stateline.org/2025/04/17/states-that-enshrined-medicaid-expansion-in-their-constitutions-could-be-in-a-bind/ and https://www.fiercehealthcare.com/regulatory/hhs-budget-slashed-40-billion-first-look-hhs-reorganization-leaked-document
#budgetreconciliation #doge #healthcare #medicaid
https://www.healthcaredive.com/news/hhs-budget-proposal-trump-health-cuts-funding/745658
Drug Tariff Notice Issued
The Trump administration issued a Federal Register notice that could lead to the issuance of tariffs on drug imports based on national security grounds. Medical devices and supplies already have a tariff.
In other news, UnitedHealth Group says it has protections in its contracts on the price of drugs that mitigate tariff impacts.
Also, the America First Policy Institute (AFPI), is calling on U.S. trade officials to take aim at foreign drug pricing policies that force American consumers to shoulder a greater burden of pharmaceutical innovation. The think tank says the Trump administration could use tariffs to force other countries to abandon what it calls “freeloading” practices.
Proposed tariff rule on drugs: https://public-inspection.federalregister.gov/2025-06587.pdf
Additional articles: https://insidehealthpolicy.com/inside-drug-pricing-daily-news/trump-aligned-think-tank-pushes-tariffs-tool-lower-us-drug-prices and https://www.beckerspayer.com/policy-updates/unitedhealth-feels-better-than-pretty-good-about-pharma-tariffs/
(Some articles may require a subscription.)
#tariffs #drugpricing
Paragon Calls Out CA Long-Term Care Expansion
The Paragon Health Institute recently issued a report discussing California’s use of provider taxes to massively expand federal revenue and grow Medicaid. Now it issued another report attacking the Golden State for a massive expansion of Medicaid long-term care (LTC). As of 2024, the state has eliminated the asset test for Medicaid LTC. The think tank notes that it adds $1.4 billion in new costs and will crowd out those in real need. Paragon says federal reforms are needed to close these loopholes and restore integrity to Medicaid.
#medicaid #ltc #longtermcare #ca
— Marc S. Ryan
