The national insurers' financial performance in Q4 2025: How the Big Five insurers weathered 2025—and what to expect in 2026

Over the past few weeks, all five national, publicly traded health plans have hosted their fourth set of earnings calls for 2025, sharing their performance from Q4 and their 2026 outlook. We make it a point to stay on top of these players’ performance to monitor the health insurance industry’s overall financial position and to see what the data tell us about ongoing demographic shifts, the margin outlook for providers, the real-world and cost implications of innovations from the drug pipeline, and the state of the regulatory environment. You can find our analysis of the “Big Five” national insurers’ financial performance in Q1 linked here, Q2 linked here, and Q3 linked here.

In today's post, we’ll summarize the trends we saw across 2025 performance, dive into the details of the "Big Five" national insurers' financial performance in Q4 2025, and outline what we’re watching moving forward.

Read on to get our full commentary, or use the links below to jump to a specific area of interest:

• High-level trends

• Deep dives into specific players

  • Cigna

  • CVS Health (Aetna)

  • Elevance Health

  • Humana

  • UnitedHealth Group

• What we're watching moving forward

High-level trends across the national insurers' financial performance in Q4 2025

Insurers’ performance in 2025 was volatile: they delivered solid top‑line growth, largely on the back of non‑traditional businesses like PBMs and specialty pharmacy. Persistent cost and regulatory pressures—especially in Medicare Advantage (MA), Medicaid, and the ACA marketplaces—pushed Medical Loss Ratios (MLRs) to historically high levels and forced payers into restructuring, exits, and benefit redesigns (we’ll dive into the details of these moves later). None of that is especially surprising given the drivers: long‑running shifts in utilization and acuity, specialty drug inflation, MA policy changes, and growing scrutiny of vertical integration and PBM practices—all of which are structurally difficult to unwind in a single year.

Let’s dive into a recap of the major trends and moves made in 2025.

The story of 2025: Rising utilization and medical costs continue to hammer MLRs

MLRs continued to trend in the wrong direction, due to rising utilization and associated medical costs. As a reminder, MLRs are a key financial metric for insurers’ overall performance, representing how much of a plan’s premiums are spent on patient care. Looking back across 2025, we saw a slight stabilization of MLRs in the first quarter, followed by a slight inflection in Q2, and then further deterioration in Q3 and Q4 as higher utilization and rising medical costs pressured insurers.

The end result? Structurally higher MLRs, with several MLRs in the mid‑90s. That’s extremely high on an absolute basis (post‑ACA, large insurers are required to spend at least 85% of the premiums they collect on member care), leaving less room for administrative costs, investment, and margin than plans had built into their pricing. We’ve previously covered why this is somewhat surprising—after all, managing MLR is essentially what the insurance business is all about: accurately predicting utilization and managing costs accordingly. As we discussed in our Q2 post, these elevated MLRs don’t appear to be a function of a single miscalculation or a single driving force, but rather the cumulative result of many smaller, harder‑to‑predict factors—behavioral health demand, deferred care coming due, site‑of‑care shifts, specialty drug mix, and regulatory/pricing changes—pushing costs higher simultaneously. Across all lines of business, insurers failed to anticipate the speed and scale of the shift in both patient behavior and cost pressures, and by the time those trends were fully visible in the data, 2025 benefit designs and bids were already locked in.

More specifically, insurers have struggled in the government segments, including MA and Medicare/ACA marketplaces. These products are more tightly regulated, more politically salient, and more price‑constrained, which has made it harder for plans to rapidly reprice or trim benefits in response to rising costs. As a result, 2025 became the year when the long‑building MA profitability squeeze and marketplace volatility finally showed up in reported MLRs (we’ll dive into how MA challenges played out in the next section)—forcing national insurers to accelerate market exits, benefit redesigns, and a broader strategic shift away from chasing membership growth at all costs in these lines of business.

With financial pressures rising, insurers are increasingly pulling on a few common levers to help manage costs and rising MLRs.

Across the major insurers, we see a similar playbook in response to rising MLRs: classic cost‑containment and operating‑efficiency efforts (now heavily AI‑enabled), active pruning and reshaping of product portfolios to exit weaker markets, aggressive benefit and pricing redesign to re‑underwrite risk in MA and ACA, and a strategic shift toward diversified, services‑driven business lines like PBMs, specialty pharmacy, and vertically integrated care platforms.

1. Cost containment and operating efficiency

Insurers are pulling classic cost‑containment and operating‑efficiency levers, but now with a much heavier overlay of AI and automation. Across the Big Five, 2025 and early 2026 have brought large‑scale restructuring programs, clinic and site consolidations, and targeted layoffs. And all of the major insurers have announced various AI initiatives to streamline operational efficiencies and improve customer service—a theme that we will expect to feature heavily in 2026 earnings calls.

2. Strategic exits and portfolio reshaping

At the same time, plans are aggressively reshaping their portfolios, especially in government programs and the ACA marketplaces, to concentrate on markets where they have better cost control. The elephant in the room is the increasing pressure felt in MA. As we covered in previous blogs, MA has become less profitable in the face of recent changes (including changes to the HCC model and the star ratings model). As a result, insurers—especially those with large MA footprints—have decided to exit unprofitable MA markets. Even UHG—one of the insures who had been holding out on strategic exits—announced its plans to exit a subset of MA markets in 2026.

These moves were already happening before CMS’s recent proposed 0.09% payment update for MA in 2027—a move that insurers have warned will force further exits and benefit cuts if finalized. CMS released the Contract Year (CY) 2027 Medicare Advantage (MA) and Part D Advance Rate Notice in January 2026. (Comments on the advance notice were due on February 25, 2026, and CMS will issue a final notice in early April 2026.) The topline story is that CMS proposed an essentially flat update that is significantly lower than the 5.06% update finalized last year and well below what industry analysts expected (closer to 4%-6%). At the same time, CMS is proposing a shift in the v28 risk adjustment model. CMS proposed excluding patient diagnoses that aren’t linked to actual medical care from MA risk adjustment. The policy would eliminate the financial motivation insurers have to mine their members’ medical charts for additional diagnoses, since insurers wouldn’t be able to use those additional diagnoses to inflate members’ risk scores. The news dragged down the stock prices of many of the major insurers. (Both UHG and Humana saw stock prices fall almost 20% in the day following the news.)

3. Product, benefit, and pricing redesign

Product and pricing redesign has been the other major shock absorber. All the major insurers have adopted benefit reductions and cost‑sharing changes for 2025 and 2026—narrower supplemental benefits, higher copays, tighter prior authorization—as necessary to keep MA products viable in the face of flat or declining effective rates. Across the board, carriers are signaling premium increases for 2026 in MA and exchange products, citing IRA‑driven Part D changes, higher specialty‑drug spend, and flat MA benchmarks as reasons why more of the actuarial risk now has to be borne by members through pricing and benefit design—often wrapped in deliberately vague contract language even as providers push for more specificity around utilization management and reimbursement terms.

The net effect: shift more cost burden and risk pricing onto members and benefit structure, trying to re‑square the actuarial math under new policy and utilization conditions.

4. Structural pivot toward non‑insurance, technology, and clinical management plays

Finally, insurers are doubling down on non-insurance business lines to bolster financial performance. Cigna’s Evernorth (Pharmacy Benefit Services and Specialty and Care Services), CVS’s Caremark (PBM), UHG’s Optum (non-insurance segment), Elevance’s Carelon (healthcare services division) and Humana’s CenterWell (health services division that includes primary care, home health, and pharmacy businesses) all played outsized roles in propping up 2025 earnings, with strong specialty pharmacy, care‑management, and primary‑care revenues partially offsetting weaker insurance margins. These units are increasingly framed not just as diversified earnings streams but as active levers to manage clinical risk: deploying AI for predictive care management, steering patients into owned or aligned providers, and tightening control over high‑cost drugs and procedures. (We are watching how this strategy will play in 2026 as we question whether insurers are reaching the limits of vertical consolidation as a strategy in the face of escalating structural pressures.)

One thing to call out: Something noticeably absent from this playbook (and the earnings calls) is any mention of denials...

Throughout 2025, insurers have consistently downplayed the role of denials in their results, even as they quietly ramp up AI‑enabled tools that can be used to tighten utilization management and prior authorization. In earlier quarters, national plans emphasized “collaboration” and “friction reduction” with providers, but the same earnings calls and strategy updates highlighted expanded use of automated clinical criteria, real‑time decisioning, and predictive models embedded in claims and prior‑authorization workflow, such as:

• Aetna's "Level of Severity Payment Policy": Automatically downcodes or adjusts high-level E/M claims to lower codes through algorithmic review. So, while Aetna still approves claims, they are paid at a reduced rate. This policy took effect January 1, 2026 (after being delayed from an original start date of November 25, 2025).

• Cigna's E/M downcoding policy: Automatically downcodes Level 4–5 E/M codes. If documentation doesn't meet Cigna's criteria (not CMS criteria — Cigna's own), claims are downcoded to Level 3—no denial, just reduced payment. This policy launched October 2025.

That framing allows insurers to position AI as a way to speed appropriate approvals and streamline administration, while avoiding a more explicit acknowledgment that these same tools can systematically narrow what gets paid for—and on what terms.

Deep dives into specific players

Here’s how each of the major insurers performed in Q4 2025.

Cigna

Cigna’s Q4 2025 performance surpassed market expectations with adjusted revenue of $72.5 billion, up 10% from Q4 2024 and driven largely by continued strength in the Evernorth Health Services unit, including specialty pharmacy growth and expanded client relationships. Adjusted EPS came in at $8.08, beating forecasts and capping a year in which Cigna delivered 11% full‑year adjusted revenue growth to $275 billion.

MLR continued to tick upward, coming in at 87.9%, an increase over last quarter and year‑over‑year, which leaders attributed to elevated medical costs and ongoing utilization pressure in the ACA marketplaces. Even so, Cigna’s relatively small MA footprint and commercial‑heavy mix meant it again looked like the least exposed of the “Big Five” to government‑program volatility—consistent with how it has outperformed peers across 2025 by leaning into high‑margin pharmacy and specialty services rather than chasing MA growth.

CVS Health

CVS Health had a relatively strong 2025, and Q4 was no exception, with higher‑than‑expected performance. Revenue reached $105.7 billion in the fourth quarter (8% year‑over‑year growth), helping CVS deliver full‑year 2025 adjusted EPS of $6.75—roughly 15% above its initial outlook. Throughout 2025, CVS has benefited from robust specialty and retail pharmacy growth, a trend that continued into Q4 as the company completed its Rite Aid prescription file transaction, adding about 9 million new patients and bolstering script volume.

Despite these positive results, CVS Health’s Aetna division could not escape the same pressures that have led to steady MLR increases across the sector, with Q4 2025 MLR at 94.8%—reflecting elevated medical costs, IRA‑related shifts in Part D seasonality, and persistent utilization pressure in government lines of business. At the same time, falling share prices reflect investor concerns about regulatory and market headwinds (such as PBM reforms and drug‑pricing), even as the PBM and retail franchises continue to buoy overall performance.

Elevance Health

Elevance Health turned in a slightly better‑than‑expected fourth quarter, with Q4 EPS of $3.33 surpassing the $3.10 forecast and supported by contributions from its Carelon (health services/PBM) portfolio and continued focus on operational efficiency. However, Q4 revenue of $49.4 billion came in just below expectations and was essentially flat year‑over‑year, underscoring how rising government‑segment costs are offsetting revenue growth. MLR continued to increase, landing at 93.5% in Q4, as elevated Medicare, Medicaid, and ACA marketplace costs persisted despite management’s messaging that trends remain “manageable and in line with expectations.”

Looking ahead to 2026, Elevance’s plans to deepen its “whole‑person health” strategy through enhanced care coordination and advocacy programs . At the same time, shrinking membership—especially in Medicaid and MA—highlights a tougher growth path and reinforces the trade‑off it has made in prioritizing margins over membership in challenged government markets.

Humana

Despite better‑than‑expected Q4 headline results, Humana’s stock fell off after leadership issued 2026 earnings forecast that fell well below analyst expectations, signaling a reset in the company’s MA profitability outlook. Fourth‑quarter revenue came in at $32.52 billion—modestly ahead of forecasts—with full‑year adjusted revenue up more than 10% to $129.8 billion. CenterWell continued to be a bright spot in 2025, underscoring Humana’s longer‑term bet on health‑services‑driven value‑based care.

Humana reported an adjusted net loss of –$3.96 per share for Q4 2025—slightly better than expectations but still a stark reminder of how far MA economics have shifted. Fourth quarter MLR rose year‑over‑year to 93.1%, which Humana attributed to a mix shift toward standalone Part D (which carries structurally higher MLRs), declining MA membership following plan exits, and continued investments to shore up operations and outcomes. Leaders noted that MA product changes, benefit design adjustments, and some 2025 cost tailwinds partially offset these pressures but would not be enough to prevent a step‑down in 2026 earnings

UHG

UnitedHealth Group capped a rocky 2025 with a weaker‑than‑expected Q4, reinforcing leadership’s framing of 2025 as a “reset” year focused on absorbing pain to position for margin recovery in 2026. While full‑year 2025 revenue increased versus 2024, Q4 2025 revenue of $113.2 billion missed expectations by roughly $0.5 billion, and EPS of $2.11 merely met forecasts as higher medical costs and restructuring charges weighed on margins. Optum Health’s fourth‑quarter performance came in below internal expectations, reflecting the ongoing operational clean‑up of its value‑based care portfolio and restructuring‑related items, even as UHG continued to emphasize the long‑term strategic importance of the Optum platform.

Looking ahead, UHG guided to a 2026 revenue decline to about $440 billion, with management signaling that improvement will show up sooner in UnitedHealthcare than in Optum, which will require more aggressive operational work and time to re‑align to its “original” value‑based care model. At the same time, the company previewed significant operational restructuring and AI and technology investments for 2026, aimed at tightening clinical workflows, modernizing claims and prior auth, and integrating Optum Financial Services with Optum Insight. The stock fell more than 16% in pre‑market trading following the Q4 release, reflecting investor unease with the revenue miss, cautious 2026 outlook, and continued MA pressures (including the latest MA rate notices).

Parting thoughts: What can we expect in 2026?

After a rocky 2025, it doesn’t appear that 2026 will be any easier for the Big Five with a few major challenges looming.

The ongoing payer-provider AI arms war

Margin pressure on both sides of the table all but guarantee that payers and providers will escalate the existing AI arms race. Insurers will likely lean harder into AI‑driven utilization management, network optimization, and claims editing to squeeze more value out of each premium dollar, while providers respond with their own AI tools to optimize coding, document medical necessity, and predict which claims are most at risk of denial or downcoding. As that dynamic intensifies, AI will likely become a defensive necessity: plans can’t afford to leave savings on the table, and health systems can’t afford to passively absorb another round of payer‑side automation that erodes revenue. The result is a feedback loop where each side’s deployment of AI forces the other to upgrade in kind, with the core battle shifting from human negotiations to algorithmic control over which services get delivered, how they are documented, and what ultimately gets paid.

A possible crack down on health insurers

Insurers head into 2026 facing not just margin pressure, but the real prospect of a political and regulatory crackdown. The new bipartisan “Break Up Big Medicine Act” from Senators Elizabeth Warren and Josh Hawley would prohibit common ownership of insurers or PBMs alongside providers or management services organizations, forcing vertically integrated conglomerates to choose between their health plan/PBM arms and their delivery assets within a year. This comes on top of a growing wave of PBM transparency and rebate‑disclosure requirements, including new Trump administration rules aimed at exposing spread pricing and steering in pharmacy networks.

Layered over all of this is a broader affordability narrative in which “Big Insurance” and its PBM subsidiaries are increasingly cast as the villains in stories about rising premiums, medical debt, and opaque drug pricing, making it politically easier for both parties to train their fire on insurers even as those same insurers are already struggling to stabilize MLRs and earnings.

Want more on this topic?

This is one of the topics we’ll discuss at our upcoming State of Revenue Cycle 2026 Board Briefing. Members can register here.

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