A new analysis from Morningstar estimates that the major national firms will continue to grow their share of the market over the next decade.
The study projects that the six largest carriers—Aetna, Centene, Cigna, Elevance Health, Humana and UnitedHealthcare—will insure 56% of Americans by 2034, increasing from 41% in 2014. As of 2024, these six firms cover 52% of Americans, per Morningstar’s Julie Utterback, senior analyst for medical technology and services.
Of those companies, Utterback projected that UnitedHealth and Elevance will continue to lead the way as the largest firms by membership.
There are a number of factors at play, according to the report. These larger firms have obvious competitive advantages over smaller players, and there’s an ongoing trend toward outsourcing government programs to private operators. The estimates also come in spite of slowing population growth outside of the senior demographic, the report said.
However, despite the growth potential over the next several years, the report also highlights plenty of headwinds for the industry. For instance, an ongoing trend toward elevated utilization has driven down profits for all of the national insurers aside from Cigna over the past two years.
Across the six companies, profits are down by 27% on average, with the largest decline at Centene, where profits have decreased by more than 70% since 2023.
The document highlights the long tail that care delayed during the COVID-19 pandemic is having on the finances of these companies in 2025, as their medical-loss ratios spike. Those figures have spiked into the 90% range over the past several quarters, with Medicare Advantage (MA) as a key source of utilization increases.
The Morningstar report expects base medical-loss ratios to be significantly higher in 2025 than they have been over the past five years.
Managed care organizations have typically generated notable returns for investors, but there have been multiple bumps in the road over the past 20 years, including contentious election cycles where health policy was front and center in the conversation.
That trend is reflected in the present as the full impact of major policy changes enacted by Republicans over the past several months has yet to be seen, Utterback notes. For instance, the uninsured rate has been at record lows in the past several years, but multiple analyses suggest the One Big Beautiful Bill Act will reverse those trends.
“Additionally, the current election cycle appears unique because of the industrywide mismatch in rates and medical utilization that has also significantly deflated MCO earnings,” Utterback wrote.
MA plans in particular face regulatory hurdles in the near term, as scrutiny of billing practices and other insurer actions in this market ramps up. The Centers for Medicare & Medicaid Services has said it plans to invest in auditing all MA plans each year, which could put pressure on insurers, according to the report.
There is also the potential for regulators to push to claw back overpayments in MA, which could be substantial sums even if there isn’t evidence of fraudulent activity, Utterback said.
Potential reforms to pharmacy benefit managers enjoy bipartisan support, and that could also prove a financial pressure point in the future, according to the report. The three largest PBMs are all integrated into these large national insurance companies.
That said, Utterback wrote that the most prominent policies on the table to reform the PBM market are likely manageable for these companies. A ban on spread pricing, for instance, is a common refrain, and, while some clients do choose these models, most PBMs make most of their money in administrative fees.
Cigna and CVS Health would be the most affected if they were forced to split off their PBM divisions, but Utterback said they may be able to find a solution if this scenario came to pass. Utterback estimates CVS and Cigna could lose about half and 20% of their profits, respectively, if they had to divest their PBM units.
“However, those two companies may be able to spin those businesses off directly to shareholders, which could preserve the long-term earnings power of those businesses for investors, although valuations at the time of the spinoff may not fully reflect their long-term potential and some synergies may be lost,” Utterback wrote.
“The other MCOs face more limited risks even in a sale situation due to their lower exposure to medication dispensing,” she said.
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