Elevance, a US health insurer, has cut its annual profit forecast due to persistently high medical costs. The company’s shares have fallen over 10% after announcing the reduced earnings expectations.
Elevance reported higher-than-anticipated costs in its individual plans that conform to the Affordable Care Act (Obamacare) and Medicaid plans for low-income people. This is not an isolated incident, as other major health insurers like UnitedHealth Group, Centene, and Molina Healthcare have also warned about elevated costs across government-backed insurance plans.
The Trump administration’s plans to implement work requirements for Medicaid beneficiaries may shift Elevance’s member mix towards a sicker patient profile. The company said it would prioritize factors within its control, including taking decisive action to stabilize trends and align pricing for long-term sustainability.
Industry analysts predict that Elevance will increase prices in 2026 to improve profit margins, but the challenges being seen in utilization rates may add pressure on rates. The company forecast a full-year medical loss ratio of about 90%, reflecting an ongoing industry-wide trend of higher costs on Medicaid and Obamacare plans.
The news follows similar warnings from other major health insurers in recent months, highlighting the ongoing challenges faced by US health insurance companies due to rising medical costs.
Source: https://www.reuters.com/business/healthcare-pharmaceuticals/elevance-cuts-forecast-us-health-insurers-battle-higher-costs-2025-07-17