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Health insurers report better-than-expected Q3 earnings
Humana, Elevance, UnitedHealthcare, and other insurers are getting costs under control.
Morning Brew Design
Humana, Elevance, UnitedHealthcare, and other insurers are getting costs under control.
Morning Brew Design
Payer earnings are up and membership is down across the board.
After taking steps like raising premiums, slashing benefits, and investing in technology, for-profit, publicly traded insurers UnitedHealth Group, Elevance, CVS Health, Cigna, Humana, Molina, and Centene beat analyst expectations in Q3 2026. All but Molina raised 2026 earnings guidance.
“All in all, the medical cost environment remains elevated, but Q3 gave us a few glimpses of stabilization,” Daniel Rich, a senior equity research analyst at investment research firm CFRA Research, told Healthcare Brew over email.
The payers said they largely plan to take similar cost-cutting steps for Medicare Advantage (MA) and ACA marketplace plans in 2027. Meanwhile, the uninsured rate is rising and Medicaid work requirements are expected to reduce enrollment further.
The question now is how far health insurers can raise prices before customers decide the cost isn’t worth the coverage and transition to alternative health coverage options, Arielle Trzcinski, principal analyst at advisory firm Forrester, told Healthcare Brew via email.
“Health insurers cannot ignore this growing issue in 2027. The population of intentionally uninsured is growing, and employers are looking for new paths to provide benefits for employees and their dependents,” she said.
We dive into some of the major payers’ earnings below.
Elevance’s total membership fell to 44.9 million on Sept. 30, down from 45.4 million the same time last year.
Earnings were up and the benefit-expense ratio—the portion of premium revenues spent on providing coverage—was down from 91.3% in Q3 2025 to 90.6% in Q3 2026. This suggests the insurer’s premium increases are offsetting higher medical costs.
Elevance’s operating revenue jumped to $50.4 billion in Q3 2026, up from $50.1 billion in Q3 2025.
In the payer’s Oct. 21 earnings call, EVP and CFO Mark Kaye attributed this increase to higher health insurance premium yields, profits from its CarelonRx pharmacy benefit management (PBM) segment, and service fees. PBMs are increasingly vertically integrated with health insurers and can help prop up earnings.
“Carelon is not insulated from broader cost pressures, but its financial results do not mirror the overall cost trend we are seeing,” Kaye said.
President and CEO Gail Boudreaux said next year’s MA plans “prioritize stability in the benefits members value most and reflect a measured view of cost trends.”
The nation’s largest health insurer saw total health insurance members fall to 48.3 million as of Sept. 30, down from 50.1 million the same time last year. MA membership fell from 8.4 million to 7.6 million, and Medicaid membership fell from 7.5 million to 6.7 million.
Healthcare Brew previously reported on the payer’s decision to exit MA markets and reduce benefits, part of an ongoing recovery effort after high medical costs in its MA segment took the insurer by surprise in 2025.
The medical care ratio for UnitedHealth Group was down, too. It fell to 88.4% compared to 89.9% in Q3 2025.
This doesn’t mean medical costs are down. UnitedHealthcare CEO Tim Noel said on an Oct. 13 earnings call that “costs remain stubbornly high across the entire healthcare landscape, and particularly in areas such as specialty pharmacy and acute healthcare service intensity.”
But the payer is responding to those costs “with appropriate medical management, operational discipline, and a commitment to identify and remove excess and unnecessary costs from our own enterprise as we advance simpler and more modern services,” Noel said.
Humana, in many ways, bucks the trend of many other health insurers, logging more MA members and a higher medical cost ratio compared to a year ago.
The payer beat expectations, but its insurance segment still lost $303 million in operating income and saw a benefit-expense ratio of 93.7%. In Q3 2025, it was 91.1%.
An accompanying press release attributes this higher ratio to headwind from poor 2026 star ratings, and new MA members with higher costs on average. The payer predicts its medical claims reserve—money set aside for future medical claims—had less money left over in Q3 2026 compared to Q3 2025, though Humana still has more in reserve than the company anticipates it will need.
Humana’s total individual MA membership skyrocketed from 5.2 million in September 2025 to almost 6.5 million in September 2026. So far this year, it grew Medicaid membership by 103,600, or 7%, largely due to new members being dually eligible for Medicare and Medicaid, CEO and President James Rechtin said on the earnings call.
Rechtin said on Nov. 6 that the payer expects to increase MA membership even more in 2027 based on results so far during the annual enrollment period, which started on Oct. 15.
CFO Celeste Mellet added that MA membership growth is largely “driven by our really strong relationships with our broker partners.” In addition, “there has been some consolidation of some smaller plans, which is driving a bit better performance from the larger players,” Mellet said.
Mellet added Humana has “significantly improved” its positioning and pricing with the goal of achieving better margins. And though it expects an increase this coming year, it won’t be as dramatic as the 1 million jump in MA members from 2025 to 2026, meaning there will be lower marketing and onboarding costs.
