The largest insurers spent the first quarter navigating continued Medicare Advantage funding pressures, a slow and uneven path back to Medicaid profitability, a rapidly evolving prior authorization regulatory landscape, and mounting pressure to show returns on billions of dollars in AI investments.
“Looking to the future, there’s no question that the status quo in healthcare is unsustainable,” incoming Cigna Group CEO Brian Evanko said. “Costs continue to rise as does demand for healthcare services – an untenable equation.”
Here’s what was top of mind for executives on first quarter earnings calls:
1. Medicare Advantage pressures will persist
Every insurer with a meaningful MA footprint said CMS’ final 2027 rate notice of 2.48% was an improvement over the advanced notice, but it doesn’t close the gap with ongoing medical cost trends.
“Right now, the takeaway is modest favorability in government programs, but progressing at those elevated high levels,” UnitedHealthcare CEO Tim Noel said. “We’re not seeing any inflection point, and we’re really comfortable with the pricing posture that we had coming into 2026 based on how things are playing out in the early innings.”
UnitedHealthcare entered 2026 pricing MA trend at roughly 10%, against a backdrop of 7% to 8% cost growth in the prior two years. The company expects MA membership to decline by 1.3 million by the end of 2026 as it prioritizes margin recovery.
Humana executives said conditions heading into the 2027 bid season are more difficult than they were a year ago. The company expects to double its individual MA margin in 2026 and reaffirmed its commitment to returning to a sustainable margin of at least 3% by 2028, with benefit reductions planned for next year to stay on that trajectory.
Elevance Health leaders said the company is on track for at least a 2% MA operating margin in 2026, citing product repositioning and selective market exits. Centene reported that its MA business is performing ahead of expectations with an 84.9% segment MLR in the first quarter and said it now sees a path to breakeven next year.
2. Medicaid may be stabilizing as H.R. 1 impact looms
The managed Medicaid industry continues to see pressures stemming from elevated behavioral health costs, high-cost drugs, home health, and the residual acuity effects of redeterminations post-pandemic, though multiple executives pointed to early evidence of trend deceleration and improving conversations with states over reimbursement.
Centene CEO Sarah London said the company’s behavioral health trend is beginning to stabilize after years of increases, crediting the company’s multipronged medical cost management program. Centene expects a composite Medicaid rate yield of 4.5% for the full year against a net trend target that is also in the mid-4% range.
“We are seeing stabilizing year-over-year ABA trends that we believe are a direct result of the actions we have taken to ensure appropriate high-quality care for ABA members across the country,” Ms. London said.
Molina Healthcare CEO Joseph Zubretsky said the 2025 Medicaid trend of 7.5% included roughly 250 basis points of acuity shift tied to the post-pandemic redetermination process, and that the first quarter results suggest the acuity shift has not recurred.
“The trend observed in the first quarter annualized would put us at better than 5% for the full year,” he said.
Molina also reported that the percentage of low- and no-utilizer members in its Medicaid population is now below pre-pandemic levels, a metric the company is using as a proxy for whether additional acuity shift remains in the population.
Every insurer is currently preparing for the impending rollout of work requirements and biannual redeterminations starting next year. Molina called the membership impact “minor and emerging gradually through 2027 and 2028.” Centene noted that the state-by-state implementation process is highly variable and Elevance said it expects the impact to be “much more phased and much more manageable than the redetermination cycle historically.”
3. Prior authorization reform impact
Amid an industry backdrop of ongoing voluntary commitments and new regulatory requirements, executives cited concrete metrics on electronic prior authorization submission rates, real-time processing, approval timelines, and denial reductions.
UnitedHealthcare said that nearly 95% of prior authorization requests are now submitted electronically, with about 50% processed in real time and more than 90% approved within one business day. The company also committed to reducing the total number of medical prior authorizations by 30% or more by the end of 2026 and announced that rural healthcare providers will be exempt from most requirements.
Cigna announced it is “exploring strategic alternatives” for eviCore, its prior auth services business used by other insurers.
“The continued progress around standardization and automation of prior authorization processes led us to step back and assess the future of the business within our portfolio,” Mr. Evanko said. Separately, Cigna reported it has removed hundreds of services from its prior auth process, reducing volume by approximately 15%.
CVS leadership said that Aetna has the fewest medical services subject to prior auth in the industry and reported that more than 95% of eligible requests are approved within 24 hours, with over 80% approved in real time.
Last June, around 50 insurers voluntarily committed to simplifying and reducing prior authorization requirements and have since reported an 11% decline industrywide. In April, the group committed to standardizing electronic prior authorizations across most medical services. On the regulatory side, CMS finalized a rule in 2024 requiring payers to issue prior authorization decisions within 72 hours for urgent requests and seven calendar days for standard requests, mandated publication of aggregated 2025 prior authorization metrics by the end of March 2026, and has proposed interoperability APIs and shorter authorization timelines for drugs as well.
Centene called the cross-company collaboration “unprecedented” and framed it as necessary structural reform.
“This work is not about self-regulating, it’s about self-disrupting,” Ms. London said.
4. AI investments scale enterprise-wide
Every major insurer described active, scaled deployments with AI rather than experimental pilots, spanning prior auth automation, member navigation, claims adjudication, clinical workflow support, fraud detection, and administrative cost reduction.
UnitedHealth said it is on track to invest nearly $1.5 billion in AI-related initiatives in 2026, along with the same amount in 2027. Sandeep Dadlani, CEO of Optum Insight, said roughly one-third of that is explicitly invested in AI-first software products and platforms, with the remaining two-thirds deployed across signature processes and functions across the entire company. He cited the company’s new generative AI chatbot, Avery, which will expand to more than 20 million members by year-end, and Optum Real, an AI-first platform that has processed 500 million transactions this year and expects to close 2026 at over 2.5 billion transactions. Mr. Dadlani said the company expects a return of two-to-one on internal AI programs over the next few years, with many paying back within 12 to 18 months.
Elevance said it is investing more than $1 billion in digital and AI-enabled capabilities. CEO Gail Boudreaux pointed to an AI-enabled virtual assistant that now serves 22 million commercial members, its personalized provider-matching tool Sydney that uses over 500 data points and has already connected more than 20% of members to providers, and AI-driven tools that are reducing prior auth denials by nearly 70%. She said the company is embedding AI “in practical ways, first to help us reduce costs and to simplify experiences, and then take administrative costs and complexity out for ourselves.”
CVS described its forthcoming Health100 platform as an “AI native state-of-the-art technology and service platform” intended to serve as a consumer front door that connects payers, PBMs, pharmacies, and providers. CEO David Joyner said the company is “moving from a consumer-based healthcare company to a consumer-based healthcare technology company.”
Cigna described using AI to power a predictive high-cost claims model that identifies members with increasing care needs earlier and connects them with clinical teams before acute utilization occurs. For members engaged in the model, the company reported an average of $2,000 per member per year in savings. The company also said AI-enabled improvements to its call centers and digital experiences drove a 20% drop in total inbound calls within its employer-sponsored business.
Centene described deploying advanced analytics and AI across forecasting, medical economics, and payment integrity, using the tools as an independent validation layer alongside traditional actuarial forecasting and for earlier fraud and abuse detection.
5. The ACA market contracts
The ACA market is seeing enrollment contraction stemming from the expiration of enhanced tax credit and a shift toward bronze plans, along with more market exits.
Cigna said it will exit the exchange business at the end of 2026, citing an inability to scale the business to meaningful size within the context of the broader company and a desire to concentrate on its core operations.
UnitedHealthcare expects to lose one-third of its individual ACA membership in 2026, focusing on bronze and gold-tiered products that have member mix and utilization rates more aligned with its plan designs.
Elevance reported ACA membership growth in Q1, driven in part by more enrollees selecting bronze plans. The company expects to end Q2 with approximately 1.2 million members, ahead of its initial outlook of at least 900,000.
Centene reported ending Q1 with just under 3.6 million members, with nearly half in silver, roughly 35% in bronze, and the remainder in gold. Silver tier members showed higher-than-expected utilization in Q1, which the insurer characterized as a reflection of higher acuity in the remaining Silver pool following the subsidy expiration and the resulting shift to bronze plans.
Ms. London noted that as lower-acuity enrollees purchased bronze coverage or left the market entirely, the remaining silver tier population became increasingly high-acuity, a dynamic she said she said can be profitable for plans positioned to capture it.
Molina, with 305,000 ACA members concentrated in silver and gold, reported 70% renewal of its membership and said the shift toward bronze was less pronounced in its book because of its high retention rate. The company expects to end 2026 with approximately 250,000 members.
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