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, called Medical Loss Ratios (MLRs), are rising beyond 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 article from Fierce Healthcare 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 number of the six most significant health insurance carriers was 82.8%, with four MLR numbers being higher than 89%.

Carriers want to be closer to statutory minimum MLR numbers as a higher MLR number erodes their profit margin.

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

The health insurance carriers will implement cost controls to bend this cost curve back into acceptable ratios, resulting in health plan benefit degradation.

The increasing MLRs will impact all carrier products, whether ACA or Medicare and they must address THE fundamental direct cost to carriers.

Carriers Reduce Benefits

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

These service area reductions and benefit degradation result from the high MLRs carriers had in these regions for their customers’ 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 bought PBMs to integrate this operation to lower costs through synergy. Divesting PBMs will be hard for carriers to swallow and will increase costs for the impacted carriers such as 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 after the Change Healthcare data breach ransomware attack in 2024. In their 2024 financials, UnitedHealthcare attributes almost $3 billion in costs to address the data breach cyberattack on the subsidiary.

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

The cost pressures discussed above resulted in Cigna’s sale of the Medicare business line to HCSC in 2024. Cigna said this sale was their response to the cost trends Cigna forecast for the Medicare market moving forward.

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 Humana is looking for a partner or opportunity to be acquired.

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 start addressing this by the third quarter of 2025 with announcements on service area reductions followed by announcements on 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 knows agents need this information about carriers’ MLR performance, so stay tuned for updates on the Agility blog page.

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

Most expectations are that the ACA and Medicare will require carriers to provide health plans covering 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 great contracting resources assist agents looking for the best partners to meet their clients’ needs with training on these products available. If you have any questions on these products or contracting partners you can access, please reach out now at 866-590-9771 or email support@enrollinsurance.com to assist you.