The first half of the year has been challenging for major insurers, with disappointing financial results, market exits, and pulled products. In contrast, smaller, often single market-focused payers have seen a surge in revenues and continued growth in membership. Some even aim to capitalize on the struggles of their larger competitors, planning to take market share in areas where the big players have stumbled.
“We’re going to keep taking market share while delivering a better experience for seniors,” Alignment Healthcare CEO John Kao previously told Becker’s.
Alignment reported its first-quarter earnings on May 1, posting revenues of $923 million (up 47%) and membership growth of 32%, reaching more than 217,000 members. In 2024, the company’s membership grew by 58%.
“We knew our competitors were struggling with their star ratings and risk adjustment,” Mr. Kao said. “As a result, they were also facing challenges in medical management, particularly those with globally capped contracts and sub-cap providers. We took a very precise, market-by-market approach to product design.”
Meanwhile, larger players like UnitedHealth have struggled in recent months. In April, the company was caught off guard by higher than usual care utilization rates among its Medicare Advantage membership, especially for outpatient and physician services. The unexpected rise in costs prompted the company to revise its earnings guidance for 2025, sending its share price down more than 20%.
Elevance Health, which reported that its MA costs were in line with internal expectations, made the decision to remove most of its MA plans from online broker platforms in May. Aetna announced it would exit the individual ACA market in 2026, expecting to lose up to $400 million in the space by the end of the year.
In contrast to these setbacks, smaller insurers like Clover Health and Oscar Health are thriving. Clover’s MA membership has reached more than 103,000, a 30% increase, and the company saw adjusted profits soar by 322% in the first quarter. Similarly, Oscar Health’s exchange membership is up 45% year over year, and the company posted $275.2 million in profits for the first quarter (up 55%).
SCAN Health Plan also continues to experience growth, recently welcoming its 300,000th member, making it the 12th largest Medicare Advantage provider in the nation.
But not all smaller payers are faring as well. Some nonprofit, regional, or provider-owned insurers are still struggling. Several Blue Cross Blue Shield plans reported losses in 2024, and health systems are scaling back or shuttering their insurance operations altogether. The rising costs of medical care, increasing regulatory demands, and a focus on clinical operations over insurance offerings have driven these decisions.
“While regional community-based nonprofit health plans often have revenues in the billions, they are competing against plans with tens or hundreds of billions in revenue,” SCAN Group President and CEO Sachin Jain, MD, wrote on LinkedIn on May 7. He highlighted multiple factors contributing to the challenges faced by many nonprofit insurers.
“The price of servicing each member is higher for these smaller plans than for larger ones,” he said. “In a rapidly changing industry, regional not-for-profit health plans often remain excessively conservative and fail to adapt to changing market conditions.”
