Health insurers spent the third quarter resetting pricing models and narrowing their product portfolios as medical cost trends remained elevated and Medicare Advantage headwinds intensified heading into 2026.
UnitedHealth Group reported Q3 revenue of $113.2 billion, up 12% year over year, as its medical loss ratio rose to 89.9% and earnings from operations fell compared to last year. Executives at the company told investors that repricing, portfolio rationalization, and margin repair would be the focus at UnitedHealthcare for 2026.
“Throughout the quarter, we have continued to evaluate the company’s businesses with fresh perspectives and with continued confidence in our progress and our overall direction,” Chair and CEO Stephen Hemsley said. “We expect to complete that assessment in the fourth quarter as we position for 2026 and the years ahead.”
UnitedHealthcare expects membership contraction of approximately 1 million in Medicare Advantage next year after “significant adjustments to benefits” and targeted plan exits to offset rising utilization trends and funding cuts, a strategy executives framed as a conservative path to margin growth supported by improving star ratings.
Beyond MA, UnitedHealthcare said its ACA filings for 2026 reflect “average rate increases of over 25%” across 30 states and targeted service area reductions that are likely to cut exchange enrollment by roughly two‑thirds, while its commercial employer business expects to see a return to normal margins in 2027. Medicaid remains the toughest recovery path as states “have not funded in line with actual cost trends,” particularly around behavioral health, home health, and specialty pharmacy costs. On provider behavior, UnitedHealthcare cited “more service intensity per encounter” and said it is using AI in payment integrity, policy changes, and network actions where needed “to keep medical costs and healthcare affordable.”
Optum Health is refocusing on a tighter, more integrated value‑based care model. The company will exit lower‑performing PPO models and move more of its affiliated physicians to employed or dedicated arrangements, and finish over 90% of payer contracts for 2026 with rates and product changes that aim to offset about half of the final headwinds stemming from V28.
Cigna posted Q3 revenue of $69.7 billion and said it is moving to a rebate‑free, delinked PBM model that gives members the lowest available price at the counter with upfront discounts, initially across Cigna Healthcare’s fully insured lives in 2027 and then as the enterprise standard in 2028.
“Our new simple and transparent model…will replace the complex post‑purchase rebate process with a simple upfront discount…to automatically pay the lowest price at the counter,” CEO David Cordani said, noting the average prescription cost paid by a member would drop about 30% on average under the model.
Cigna secured long‑term renewals or extensions with the Department of Defense, Prime Therapeutics, and Centene, but expects pharmacy benefit services operating income to decline in 2026 due to lower returns on renewals and investment in the new model.
Evernorth’s specialty and care services continued to grow double digits with biosimilar adoption and a strategic Shields Health Solutions investment to deepen provider‑administered specialty capabilities, while PBM client retention approached 97% for 2026.
Humana reported Q3 revenue of $32.7 billion and net income of $195 million. Executives said medical cost trends were in line with expectations and used the quarter to fund about $150 million of incremental investments in star ratings, clinical programs, and network management to support a multi‑year margin rebuild.
“Our third quarter results reflect solid execution and underlying fundamentals…we are pleased that our year‑to‑date performance and outlook support reaffirmation of our full year adjusted EPS outlook of approximately $17,” CFO Celeste Mellet said
The company said that individual MA membership losses for 2025 should be smaller than previously estimated and are now expected to be around 425,000. Humana also expects fewer members in higher‑rated plans for 2026, with about 20% in 4‑stars and above. Recent legal challenges over its 2025 ratings failed to reverse that pressure.
In their third quarter call with investors, CVS Health executives discussed PBM model transformation, pointing to the new TrueCost model, point‑of‑sale rebates for over 25 million customers, and formulary moves around GLP‑1s that drove net prices lower.
Elevance Health CEO Gail Boudreaux told investors that the company is embedding AI at scale, citing its Health OS platform and a new OpenAI partnership. The company also said that “reduced denials by more than 68% and peer to peer reviews by over 100%” serves as early proof that AI is creating productivity leverage and improving the provider and member experience.
