Choppy waters ahead for health insurers

Politico

15-07-2025

Presented by
With Lauren Gardner and Ruth Reader
Driving the Day
TRIPLE THREAT — Insurers face a number of pressures that could lead to a jump in out-of-pocket health costs for Americans: cuts to Medicaid, federal policy changes that could hit Obamacare enrollment and medical costs rising faster than expected, Kelly reports.
Several health insurers were already on unstable financial footing even before President Donald Trump signed into law the 'big, beautiful bill' — which could lead to millions of people losing coverage. The looming changes now create more uncertainty that could lead to a downturn for the health insurance industry and a jump in premiums for Americans purchasing coverage.
'You have this perfect storm here of very large changes happening all at once,' said Ellen Montz, a managing director with advisory firm Manatt Health and a former CMS official during the Biden administration. 'They're looking at pricing, what is potentially coming down the pike, and we're going to see some very large, both gross and net, premium increases.'
Both Centene and Molina Healthcare slashed their yearly financial guidance over the past few weeks amid unexpectedly high medical costs in Medicaid and Obamacare plans. And health insurance giant UnitedHealthcare lowered its guidance in May because of higher-than-anticipated Medicare Advantage costs.
'As we see these cost pressures continue to mount, as we see them go unaddressed and continue to snowball in their effect, the inevitable result is that we will see higher premiums,' said David Merritt, senior vice president of policy and advocacy at the Blue Cross Blue Shield Association.
Why it matters: The Congressional Budget Office estimated that an earlier version of the 'big, beautiful bill,' combined with the expiration of the enhanced Obamacare subsidies at the end of this year and new Trump administration Affordable Care Act policies that make it more difficult to enroll, could cause nearly 17 million people to become uninsured.
Cushioning the blow: Insurers are pushing Congress and the Trump administration to mitigate some of the fallout, warning lawmakers in competitive districts that their constituents will face widespread coverage disruptions if the policies are implemented. The industry's most pressing concern is the expiration of the enhanced subsidies — which Congress must extend within the next few months to avoid 'very sudden' and 'severe' cost hikes and coverage losses nationwide, said Mike Tuffin, the CEO of health insurance trade group AHIP.
So far, few Republican lawmakers have expressed interest in extending the subsidies, which CBO has estimated at $335 billion over 10 years.
'We know over the last 30 years that when people's coverage is disrupted, their access to health care is disrupted, there's an immediate political response, and both parties have seen that in the past, and we want to prevent that,' Tuffin said.
What's next: Insurers will start posting their 2025 second-quarter earnings over the next few weeks, which will provide some insight into how they might adjust to rising medical costs. It may also shed light on how they're factoring in looming federal changes to their pricing. First up is Elevance Health, which will report its earnings Thursday.
WELCOME TO TUESDAY PULSE. U.S. ice cream makers are pledging to stop using artificial dyes by 2028 — another win for HHS Secretary Robert F. Kennedy Jr.'s Make America Healthy Again initiative. Send your tips, scoops and feedback to [e-mail] and [e-mail], and follow along @kelhoops and @sophie_gardnerj.
In Congress
AUTISM SPEAKS ON THE HILL — Advocates from the group Autism Speaks will head to the Capitol today to urge lawmakers to fund recently reauthorized research and service programs in the wake of the GOP megabill's steep Medicaid cuts.
While the group will acknowledge their concerns about how those cuts could impact autism programs in the states, it plans to focus on the annual appropriations process 'since that's the next thing up, and something that we want to try to ensure that we're at least maintaining the levels of funding for those programs,' David Sitcovsky, Autism Speaks' vice president of advocacy, told Lauren.
Congress reauthorized the Autism CARES Act in December, which Autism Speaks says is the primary federal funding source for monitoring, research, services and training programs in the autism community. The law's programs are spread across the CDC, the Health Resources and Services Administration and the NIH.
The group plans to underscore in their meetings that autism is a lifelong condition — not just a childhood disorder, as often emphasized by Health Secretary Robert F. Kennedy Jr. — for which many people need support as they age.
'It seems like most [of the] conversation about autism has been framed around childhood, and and I think what were really trying to do … is to remind people that [it's a] lifelong issue, and there are many adults who need better understanding and supportive services now,' said Dr. Andy Shih, Autism Speaks' chief science officer.
At the Agencies
DOC PAY OVERHAUL — The Centers for Medicare and Medicaid Services is proposing a boost in funding to doctors who participate in alternative payment models based on the quality of care delivered instead of individual services, POLITICO's Robert King reports.
'We're making it easier for seniors to access preventive services, incentivizing health care providers to deliver real results, and cracking down on abuse that drives up costs,' CMS Administrator Mehmet Oz said in a statement Monday when the agency released its proposed physician fee schedule that details changes to Medicare pay for 2026.
What it means: Doctors participating in the models would receive a 3.83 percent boost to their payments starting in 2026. Doctors not participating in such models would get a 3.62 percent increase.
Why it matters: If finalized, the rule would represent a departure from how CMS traditionally reimburses doctors. The agency typically has one rate update that applies to all doctors serving Medicare patients, regardless of whether they participate in an alternative payment model.
Both Republican and Democratic administrations have sought to shift Medicare reimbursement away from payments for individual items or services.
TECH TROUBLES — The Department of Veterans Affairs told a House panel Monday that it has implemented DOGE-directed cuts to optimize its IT infrastructure. But lawmakers say they want assurances that the agency's past problems with IT modernization won't be its future, Ruth reports.
'For years, this committee has highlighted the wasteful spending, the overbudget projects, poor outcomes that seem to come with all IT projects at the VA,' said Rep. Tom Barrett (R-Mich.), chair of the House Veterans Affairs' Technology Modernization Subcommittee.
Since the beginning of the year, the VA's Office of Information and Technology has lost 1,100 employees — mostly from buy-out and early retirement offers — and its 2026 budget has shaved $500 million from its operating funding. Subcommittee ranking member Rep. Nikki Budzinski (D-Ill.) said she's concerned the cuts will undermine the agency's efforts.
Eddie Pool, the VA's acting assistant secretary and chief information officer, assured lawmakers that more than three-quarters of the people who left the agency were going to retire soon.
Why it matters: Veterans Affairs is in the midst of its latest attempt to update its IT infrastructure, including its electronic medical records system. The agency has been attempting to modernize since 2001 and has failed to do so multiple times, according to the Government Accountability Office.
Carol Harris, the GAO's director of IT and cybersecurity, testified that the VA's IT office hasn't adequately taken stock of its workforce. For example, she said, it doesn't have an inventory of employees' current cybersecurity skills and competencies. The agency also hasn't comprehensively identified its current and future human capital needs, Harris added.
The GAO has 26 open recommendations for improving the VA's IT and cybersecurity that it said the office still needs to complete.
What's next: President Donald Trump recently announced his pick for chief information officer at the VA, Ryan Cote, who served as the Transportation Department's CIO in the first Trump administration. His confirmation hearing hasn't been scheduled yet.
Health Costs
MEDICAL DEBT RULE TOSSED OUT — A federal judge has overturned a Biden administration rule that would have removed $49 billion in medical debt from the credit reports of 15 million people, POLITICO's Katherine Hapgood reports.
U.S. District Judge Sean Jordan of the Eastern District Court in Texas said the Consumer Financial Protection Bureau rule 'exceeds the bureau's statutory authority' and violates the law on permissible purposes of consumer reports. The decision aligns with the Trump administration's stance on the issue.
The rule was finalized by then-CFPB Director Rohit Chopra, but the bureau under the Trump administration reversed its position on the rule and joined credit-reporting groups in challenging it. The rule had been set to take effect at the end of July.
WHAT WE'RE READING
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STAT's Lev Facher reports on an elite rehab center using GLP-1s to treat a range of addictions.