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More Costs Will Be Pushed To Employees In 2026 A new Mercer study shows that half of large employers plan to shift costs onto employees as well as reduce benefit offerings. Further, due to rising spending, employers are looking for ways to reduce costs while at the same time being open to safeguarding coverage of popular weight loss drugs and well-being. But weight-loss drugs may have to be reined in due to the magnitude of costs. Employers expect costs to rise by 6% in 2025 and go up more in 2026. About 51% of large employers (500 or more employees) said they’re likely or very likely to shift more costs to employees, including raising deductibles or out-of-pocket maximums. This compares with 45% in 2024. About 35% of large employers said they plan to offer a non-traditional medical plan option in 2026, such as variable copay plans. #employercoverage #coverage #healthcare https://www.healthcaredive.com/news/mercer-large-employers-to-shift-health-plan-costs-onto-employ/756673

UnitedHealth Group’s Struggles UnitedHealth Group continues its financial cleanup by ousting executive leaders. Today, the company announced it will replace its CFO, John Rex. Wayne DeVeydt, a former managing director and operating partner at Bain Capital, will take on the role. UnitedHealth Group’s credit outlook also was downgraded to “negative” from “stable” by Fitch Ratings. Fitch blamed recent poor Q2 financials. Additional articles: https://www.modernhealthcare.com/insurance/mh-unitedhealth-credit-outlook-downgraded-fitch/ and https://www.healthcaredive.com/news/unitedhealth-replaces-cfo-john-rex-wayne-deveydt/756561/ (Some articles may require a subscription.) #unitedhealthcare #margins https://www.fiercehealthcare.com/payers/unitedhealth-group-cfo-john-rex-step-down-september Changes Forcing Hospitals To Rethink Operations I have argued that hospitals generally are the most bloated providers out there. And their perverse pricing system promotes such inefficiency. But hospitals now are worried about administrative costs. Rising healthcare costs, including drug costs, and labor continue to increase. But Medicaid and Medicare cuts are also impacting revenue. Some admin reductions are being made in anticipation of more cuts. I am not sure how committed the hospitals really

340B Program Reform Coming The Trump administration indicated in several drug price reform announcements it would seek to reform the 340B drug discount program. Now, it is proposing a pilot to go down the reform path. The Health Resources and Services Administration (HRSA) is launching a voluntary program to test drug makers paying rebates versus issuing discounts upfront to the qualifying providers, which include some hospitals, federally qualified health centers, and other safety-net providers. The pilot will cover just a small subset of drugs, including those for diabetes, rheumatoid arthritis, and heart failure. Some brand drug makers attempted to convert to rebates but were stopped by the Biden administration. The Trump administration appears on board, although hospitals and other providers oppose the changes. But 340B badly needs reforms as the drug discounts are not truly being passed on by most providers, who pocket the discounts. Additional articles: https://www.modernhealthcare.com/politics-regulation/mh-hrsa-340b-rebate-pilot-program-2026 (Some articles

More Insurer Financial News Medicare Advantage-dominant insurer Humana had better financial news than most insurers these days, but perhaps because of its earlier bad reports and its ongoing efforts to right its financial ship. Humana slightly raised its guidance on earnings, although it did have a decline in net income in Q2. Humana reported a net income of $545 million in the second quarter, down from a net income of $679 million during the same period last year. Lower MA revenue and high utilization spend continues to challenge Humana. The medical loss ratio was reported as 89.7%, high but in line with forecasts. Its Medicaid financials bucked trends. Its pharmacy unit was a bright spot. Humana says its projected loss in membership in MA will be lower than previously forecast – 500,000 vs. 550,000. In other news, Fitch affirmed UnitedHealth Group’s “AA-” rating July 30 but revised the company’s outlook to negative from

UnitedHealth Group’s Financial Woes UnitedHealth Group painted a bleak picture in its revised outlook for 2025. It significantly downgraded its projections for 2025 and reported a steep drop in earnings per share. Net income declined 19% to $3.4 billion. United says it will deemphasize sales of Medicare Advantage (MA) PPOs, eliminate unprofitable MA plans in 2026 that cover more than 600,000 people, and may exit some Exchange markets in 2026. United is seeing its MA costs spike well over forecast and they could go even higher, to as much as 10%. While most plans are hurting in MA, United’s problems seemingly came out of the blue and are right now worse than others. Costs are high in other business lines, too. Its normally strong services unit, Optum, also is feeling the pinch. And given its continuing financial woes, Humana is offering certain employees voluntary early retirement buyouts. Employees age 50

CMS Reins In Part D PDP Premium Stabilization Program The Centers for Medicare & Medicaid Services (CMS) released preliminary technical Medicare Part D bid information for contract year 2026. It released the national average monthly bid amount (NAMBA) and base beneficiary, which are used in bid preparation. CMS also announced it was again funding a special premium stabilization demonstration started in 2025 to keep premiums from rising dramatically. The culprit for rising premiums is largely the passage of cost-sharing limits in Part D in the Democrats’ Inflation Reduction Act. The Democrats did not adequately fund the changes and therefore pushed many of the costs to plans, which then had to increase premiums and cost-sharing and make other reductions. The IRA changes have badly impacted the financial stability of the standalone Part D offerings (PDPs). For 2026, the generosity of the demonstration will be less. In 2026, CMS is reducing the uniform base beneficiary premium

Centene Reports Huge Loss in Q2 After pulling its earnings guidance several weeks ago, Centene announced today a $253 million loss in the second quarter as it navigates significant cost pressures. Financials will be challenging in 2026 due to Exchange and Medicaid reductions in the recent budget bill. Its medical loss ratio (MLR) was 93%. It also received lower risk adjustment transfers in the Exchange than anticipated. Through the first six months of the year, the company brought in $95.4 billion in revenue and $1.05 billion in profit. Centene will update rates for the Exchange given higher adversity and the impact of the budget bill. It also hopes for higher Medicaid rates. Centene is the largest Exchange plan, with 5.8 million members in 29 states, and the largest Medicaid plan, with 12.8 million members in 30 states. Additional articles: https://www.fiercehealthcare.com/payers/centene-posts-253m-loss-amid-aca-marketplace-woes and https://www.modernhealthcare.com/insurance/mh-centene-earnings-medicaid-cuts-aca-market/ and https://www.beckerspayer.com/payer/centene-posts-253m-loss-in-q2/ (Some articles may require a subscription.) #centene