ACA and Medicaid changes hang over health earnings
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Sweeping changes in Affordable Care Act and Medicaid markets are hitting the balance sheets of some of America's largest health care companies, based on quarterly earnings issued this week.
Why it matters: Insurers and health systems already are feeling the effects of significant enrollment drops and changes in who's paying for care.
- The full effect of some of the biggest policy shifts won't be felt until after the midterm elections.
Driving the news: UnitedHealth Group on Thursday said it's contending with declining ACA and Medicaid enrollment and rising health costs, even though it raised its overall earnings guidance for the year.
- New Medicaid work requirements stemming from last year's Republican tax-and-spending package helped drive down enrollment by 525,000 at its UnitedHealthcare unit. Executives told CNBC they expect a loss of roughly 500,000 members in ACA plans in 2026.
- Elevance Health reported membership dropped by 469,000, driven in large part by losses in ACA plans and Medicaid. Executives reported they are leaving the D.C. Medicaid program and eyeing additional exits in the next 18 months.
The changes also are hitting big hospital chains. HCA took a $400 million hit from patients dropping off ACA exchanges.
- Overall, the company said, changes in the ACA market will cost it $1 billion to $1.2 billion this year.
The big picture: Any rise in the uninsured rate will put more stress on the health system, squeezing providers and payers at the same time medical costs are rising.
- The companies are navigating fallout from Congress' refusal to extend enhanced ACA subsidies, which has led millions to drop marketplace coverage, and Medicaid cuts and first-time work requirements.
- But the tough environment extends beyond government insurance.
What they're saying: UnitedHealth Group said medical costs for employer-sponsored plans were "stubbornly high," jumping 11% and beating an already high projection.
- The company blamed "aggressive" provider billing and what it said was abuse of the surprise billing law's arbitration process by some large out-of-network providers.
- It also pointed to soaring pharmacy costs, especially for pricey specialty drugs and GLP-1 treatments for obesity and diabetes.
What we're watching: How much providers and payers shift more costs to commercially insured patients to offset losses from government programs.
