Update: The Initial Analysis of How the Current Carrier Challenges Will Impact ACA Agents for 2026

In 2025, all insurance carriers will face challenges that negatively impact their business, which will also impact agents. This article explains these challenges and delivers tips on still thriving in 2025.

Most of these challenges revolve around one four-letter word: cost.

MLR Rising

Direct health insurance costs, known as Medical Loss Ratios (MLRs), are rising above carrier projections for both Medicare and the ACA. By law, the MLR is the minimum number of resources carriers must pay toward beneficiary benefits.

ACA requires carriers to maintain a minimum MLR of 80%, while Medicare requires a minimum MLR of 85%.

This Fierce Healthcare article provides an excellent overview of the major carriers’ financial health as of Q3 2024.

The article mentions significant profits for the major carriers. These numbers are temporary due to the MLRs.

In Q3 2024, the lowest MLR among the six most significant health insurance carriers was 82.8%, with four MLRs above 89%.

Carriers want to be closer to the statutory MLR minimums, as higher MLR erodes their profit margins.

This MLR number is accelerating; the 2024 MLR increase will double the 2023 MLR increase.

Health insurance carriers will implement cost controls to bend the cost curve back to acceptable ratios, resulting in benefit degradation.

The increasing MLRs will affect all carrier products, whether ACA or Medicare, and carriers must address the fundamental direct cost to them.

Carriers Reduce Benefits

We have already seen how carriers address MLR increases. During the 2025 Medicare Annual Enrollment, Humana, Centene, and Aetna reduced their Medicare Advantage service areas and degraded benefits in several other regions.

These service-area reductions and benefit degradation result from the high MLRs carriers experienced in these regions for customer care. Smaller regional carriers like Care N Care went out of business entirely.

PBM Ownership

The new administration is investigating Pharmacy Benefit Managers (PBMs) owned by carriers as a cause of increasing prescription drug costs. Few in Washington, DC, will be surprised if carriers’ PBM ownership ends.

Carriers acquired PBMs to integrate operations and lower costs through efficiencies. Divesting PBMs will be difficult for carriers to accept and will increase costs for affected carriers, including UnitedHealthcare, Cigna, and Aetna.

Indirect costs are proving to be a problem for carriers in 2025, with UnitedHealthcare leading this list by far. UnitedHealthcare’s cybersecurity costs skyrocketed following the Change Healthcare ransomware attack in 2024. In its 2024 financials, UnitedHealthcare attributes nearly $3 billion in costs to the cyberattack on its subsidiary.

UnitedHealthcare also faces significant legal expenses from a Department of Justice antitrust investigation. This investigation examines UnitedHealthcare’s relationship with its subsidiary, Optum, and an antitrust lawsuit against Optum regarding its proposed acquisition of Amedisys.

The cost pressures discussed above led to Cigna’s sale of its Medicare business line to HCSC in 2024. Cigna said this sale was its response to cost trends it forecast for the Medicare market.

Cigna’s Medicare MLRs are among the lowest of any significant Medicare carrier, so what happens with these Medicare customers at HCSC on MLR?

Rumors indicate that Humana is seeking a partner or an acquisition opportunity.

How to Thrive Despite the Changes

So, what do health insurance agents do about all of this?

1. Stay informed on what’s happening with your health insurance carrier partners, especially their MLRs. Carriers should begin addressing this in the third quarter of 2025, with announcements of service-area reductions, followed by announcements of health benefits.

2. Fill your product toolkit with supplemental products to address benefit gaps your ACA or Medicare clients have.

a. Hospital indemnity insurance.

b. Critical illness products for cancer, stroke, or heart attacks.

c. Dental, vision, and hearing.

3. Fill your toolkit with supplemental products to diversify business revenue.

a. Short-term health plans.

b. Accident.

c. Life and annuity.

d. ICHRA for employer group clients.

Agility Here to Help

Agility recognizes agents need this information about carriers’ MLR performance, so stay tuned for updates on the Agility blog.

More MLR pressure is coming in 2025 due to two prescription drug questions. Federal and state regulatory agencies are finalizing coverage for GLP-1 prescription drugs for weight loss under the ACA and Medicare Part D.

Most expect that the ACA and Medicare will require carriers to offer health plans that cover most of the cost of these drugs for weight-loss benefits. If this happens, this direct cost will increase the carriers’ ACA, Medicare, and Medicaid MLRs. The expectation is that the prescription drug benefits for ACA and Medicare plans will decrease.

Agility’s extensive contracting resources help agents identify the best partners to meet their clients’ needs, and training on these products is available. If you have any questions about these products or contracting partners, please reach out now at 866-590-9771 or email support@enrollinsurance.com for assistance.