Amid increasing pressures from rising medical costs and market instability, major insurers are pulling or adjusting their 2025 earnings projections, signaling the start of a downturn in the industry amid the looming impact of the One Big Beautiful Bill Act.
Five things to know:
1. On July 4, President Donald Trump signed the One Big Beautiful Bill Act, which includes nearly $1 trillion in Medicaid spending cuts over the next decade, potentially increasing the number of uninsured individuals by 11.8 million. The bill also does not extend ACA premium tax credits, which could result in significantly higher consumer prices and shrink marketplace enrollment by half. Analysts have downgraded the insurance industry’s outlook, citing expected headwinds such as reduced enrollments because of the cuts to public health benefits.
2. Molina Healthcare cut its second quarter and full year 2025 adjusted earnings guidance on July 7, citing medical cost pressures across all three lines of its business. The company now expects its second quarter adjusted earnings to be approximately $5.50 per share and full year adjusted earnings to be in the range of $21.50 to $22.50 per share, compared to the previous guidance of at least $24.50 per share.
“The short-term earnings pressure we are experiencing results from what we believe to be a temporary dislocation between premium rates and medical cost trend which has recently accelerated,” Molina President and CEO Joseph Zubretsky said. “As we are still performing near our long-term target ranges, nothing, including the potential impacts of the budget bill, has changed our outlook for the long-term performance of the business.”
3. On July 2, Molina’s former CEO, J. Mario Molina, MD, warned that the insurance industry is just beginning to experience a major downturn driven by escalating issues in the Medicaid and ACA markets, as well as growing scrutiny of prior authorizations and pharmacy benefit managers.
“There are problems with Medicaid and Marketplace that will only get worse with the budget bill passed by the Senate. Health plans are under attack over prior authorizations and relaxing the prior authorization requirements will lead to further deterioration in margins. PBMs are under siege,” Dr. Molina wrote.
4. On July 1, Centene pulled its earnings guidance for 2025, citing higher aggregate ACA market morbidity and lower than expected growth in 22 of its 29 marketplace states. Centene expects a decline in risk-adjustment revenue to hurt earnings by $2.75 per share. The company previously projected earnings of at least $7.25 per share in 2025. Centene also reported that costs in its Medicaid business are increasing, especially in New York and Florida. Behavioral health, home health and high-cost drugs are driving the increase.
5. In May, UnitedHealth Group pulled its earnings guidance for 2025, attributing the reduced performance to higher-than-anticipated healthcare usage, particularly within its Medicare Advantage business, and “unanticipated changes in the profile of Optum Health members.” The company expects to return to growth in 2026.
