UnitedHealth Group reported its fourth quarter and full year 2025 earnings Jan. 27, projecting membership declines between 2.3 million and 2.8 million across its Medicare Advantage, Medicaid and commercial business lines in 2026 as the company prioritizes margin recovery following a turbulent financial year.
UnitedHealthcare’s total earnings from operations were $9.4 billion in 2025, down about 40% year-over-year from $15.6 billion in 2024. The insurer’s operating margin dipped to 2.7% in 2025, compared to 5.2% in the previous year. The company projects $10.8 billion in operating earnings and a 3.2% operating margin in 2026.
Medicare Advantage
UnitedHealthcare expects to lose between 1.3 million and 1.4 million Medicare Advantage members in 2026, higher than the 1 million previously anticipated. In their earnings call with investors, executives attributed the steeper losses to intense competition during the annual enrollment period, which drove more beneficiaries to other plans. At the end of 2025, the company had 8.4 million Medicare Advantage, 4.3 million Medicare supplement and 2.8 million standalone Part D members.
The medical cost trend for MA came in at approximately 7.5% for 2025, which was in line with expectations. The company reaffirmed a 10% trend for 2026. Despite the membership losses, the company expects MA margins to improve by approximately 50 basis points from 2025 levels.
Executives were critical of CMS’ proposed 2027 payment increase of 0.09% for MA plans, saying it did not “reflect the reality of medical utilization and cost trends.” UnitedHealthcare CEO Tim Noel said the company may pull back further on its MA plans from a benefits and geography perspective if the rates are finalized as proposed.
Medicaid
UnitedHealthcare expects continued pressure on its Medicaid business in 2026, driven by state funding shortfalls. The insurer said it has received some rate increases but that payments still do not match the acuity of its membership. Medicaid membership is expected to contract by 565,000 to 715,000 members this year, including D-SNP enrollees. The company had 7.4 million Medicaid members at the end of 2025.
Commercial and marketplace
UnitedHealthcare is projecting commercial risk-based membership to contract by 1.3 million to 1.4 million in 2026, partially offset by growth of 550,000 to 750,000 in self-funded plans. More than 500,000 of the risk-based decline is tied to the ACA exchange business, where the company is pulling back after years of marginal performance. At the end of 2025, commercial members totaled 29.7 million, including 8.2 million who are risk-based and 21.5 million who are fee-based.
“Over the course of the decade-plus in which we have operated in [the exchange] market, it has never been a significant contributor of earnings for us,” UnitedHealthcare commercial CEO Dan Kueter said. The company expects exchange margins to land around 1% in 2026 after repricing efforts. UnitedHealth previously said that it would rebate exchange profits back to consumers in 2026 following the expiration of the enhanced premium subsidies at the end of 2025.
Optum Health
Optum Health, the company’s care delivery arm, spent 2025 scaling back after a period of overexpansion.
The company has narrowed its affiliated provider network by nearly 20% over the past year and reduced its risk-based membership by approximately 15%. The membership reduction reflects dropped PPO contracts, market exits and walking away from risk-sharing deals with insurers where the company could not reach viable terms.
Optum Health also pulled back from taking on financial risk for ancillary services to refocus on core medical care, with executives describing the effort as a return to the “original intent” of its value-based care model.
Optum Health is projecting approximately 9% operating earnings growth in 2026 with margin expansion of roughly 30 basis points.
AI investment
UnitedHealth said it plans to invest nearly $1.5 billion in AI and related technologies in 2026, with a similar amount expected in 2027.
The company has already integrated over 1,000 AI use cases across its business and it employs more than 2,000 AI engineers. Optum has been rolling out AI-enabled products to hospitals and other providers, including a multi-payer claims solution and predictive analytics tools for operating room scheduling, as it works to regain customers lost after the 2024 Change Healthcare cyberattack.
