As national payers recover, not-for-profit regional plans face an uphill battle

It’s no secret that rising medical costs and policy shifts have challenged health insurers over the last few years.

Major insurers have responded by pulling plans from unprofitable areas, raising prices, or exiting certain lines of business, particularly within Medicare Advantage and the Affordable Care Act (ACA) marketplace. Now, those big companies finally seem to be getting costs under control. Their Q1 2026 and Q2 2026 earnings beat expectations.

But regional not-for-profit plans are facing a different reality. Their financial recovery looks more difficult. They may operate in only one state or offer a more limited number of plans, which gives them fewer options for restructuring, experts said.

If their financial struggles push these plans to shutter or consolidate, that can leave consumers with fewer options and higher premiums, according to research by the American Medical Association.

Digging into details. Dan Delaney, a managing partner at consulting firm HealthScape Advisors, told Healthcare Brew the health insurance industry is going through a “structural reset.”

“We’re starting to see a divergence between [plans] who are financially resilient and those who are financially vulnerable,” Delaney said.

Nearly 3 out of 4 health plans reported operating losses in 2025 according to an Aug. 6 report from HealthScape Advisors coauthored by Delaney.

Though health plans in all categories struggled, only about 43% of national plans reported operating losses, compared to 72% of regional not-for-profit plans and 83% of Blue Cross Blue Shield-affiliated plans, known collectively as the Blues.

Nationals typically have larger, diversified businesses, which makes it possible to pull out of certain states and markets or to stop offering one type of insurance, Delaney said.

For example, in April, Cigna Healthcare announced it would leave the ACA marketplace in 2027. CVS’s Aetna left the ACA marketplace in 2026. Both cited the market’s underperformance during earnings calls. In both cases, the ACA marketplace was a small portion of the company’s total business.

“A single-state Blue, or a local community plan, they oftentimes don’t have the same kind of scale. They also don’t have the same type of portfolio flexibility,” Delaney said.

Smaller plans scramble. HealthScape’s analysis found that, overall, 1 in 4 financially vulnerable health plans announced affiliations, acquisitions, partnerships, or market exits between 2024 and 2025.

The Blues each operate independently and range in size, offerings, and non-profit status. Over the last year, regional Blues plans in North Dakota, Arkansas, and Missouri announced plans to affiliate with or completed affiliations with national health plans.

Health systems including Washington-based Providence Health and Texas-based Baylor Scott & White Health announced they would end their regional health plans or exit certain lines of business like Medicaid.

Springfield, Missouri-based CoxHealth announced Aug. 7 it would stop directly offering ACA marketplace plans in 2027. Instead, national insurer Oscar Health will offer marketplace plans “built around” CoxHealth’s system, according to a system press release.

Considerable caveats. Though the regional not-for-profit plan category had the highest proportion of financially vulnerable plans, there were also “some in line with the industry’s strongest balance sheets,” per the HealthScape report. The key factor that makes or breaks a health plan’s success, Delaney said, is financial discipline.

Although many Blues reported operating losses, they typically keep more money in reserve and are thus better prepared to weather the current turmoil than many regional and local community plans, Delaney added.

“The Blues can be a good example of [how] you don’t have to be a huge organization to be in a spot where you can emerge from this period and thrive,” he said.

A recent report from management consulting firm Oliver Wyman identified a similar earnings trend. Public companies reported a 0.9% profit margin in 2025. The average health carrier’s profit margin sunk to -0.9%.

“There was a lot of universal pain in 2025, and a lot of the headwinds still exist,” Marc Lambright, a report coauthor and senior principal at Oliver Wyman, told us. ”I don’t know that there were a lot of companies cracking champagne bottles because they did great in 2025.”