Insurers feeling the pressure
Driving the Day
Q2 RESULTS ARE IN — Over the past few weeks, major health insurers reported their mid-year earnings, and the results have been largely mixed. Some have slashed their yearly guidance amid cost pressures, while others are performing in line with or exceeding their expectations.
But one common theme prevailed across the insurers' reports in the second quarter: Medical costs continue to be elevated. And looming federal policy changes are leaving insurers — especially those with large Medicaid and Affordable Care Act businesses — uncertain about the future of the health insurance marketplaces they operate in.
Why it matters: Insurers will adjust their pricing for 2026 to address those uncertainties — which include the expiration of enhanced Obamacare subsidies at the end of the year, unless Congress acts, and provisions in the GOP's One Big, Beautiful Bill Act that cut Medicaid spending and crack down on ACA enrollment verification. That means consumers are sure to see a jump in premiums for next year.
The latest: On Wednesday, Oscar Health, which mainly offers ACA plans, was the last of the major insurers to report its earnings. The company slashed its yearly guidance a few weeks ago amid elevated Obamacare costs as more people seek out medical care. In the weeks leading up to that, competitors Centene, Elevance Health and Molina Healthcare did the same.
Oscar said Wednesday its medical loss ratio — the percentage it pays out on medical claims compared to administrative costs — was 91.1 percent in the second quarter, up 12 points compared to the same time last year, largely because the enrollee population is sicker. The market will likely have 'double-digit rate increases next year' as a result, said Oscar Health CEO Mark Bertolini during an earnings call.
A key takeaway: An uptick in enrollees seeking out medical care has been a common theme across major insurers in Q2.
UnitedHealth Group, the largest insurer and typically an industry bellwether, has struggled with higher-than-expected medical costs this year, particularly as older adults in Medicare Advantage seek care. Executives partly attributed its cost struggle to insufficient Medicare Advantage payment rates finalized by the Biden administration.
The company also saw elevated cost pressures in its Medicaid and Obamacare businesses, similar to Centene, Molina and Oscar.
Bucking the trend: While all the major insurers noted that medical costs continue to be elevated, some were better positioned to weather that trend in the second quarter, likely because of adjustments to plan pricing and benefit cuts they made last year in anticipation of rising costs.
Humana, a large Medicare Advantage insurer, has taken a more conservative approach to benefits in the past few years after it first noticed a rise in costs as older adults sought out care more frequently. The company's medical costs were largely in line with expectations in the second quarter of 2025.
CVS Health's Aetna, which shook up its leadership last year after it struggled to control costs with more members seeking medical care, has seen continual improvements in cost savings throughout 2025, executives said during its earnings call. And Cigna recently reaffirmed its 2025 guidance, as cost trends were elevated but still in line with its expectations.
WELCOME TO THURSDAY PULSE. Bestselling authors James Patterson and Vicky Ward are teaming up to write a book about the December killing of the UnitedHealthcare CEO and the hunt for the alleged shooter. Send your tips, scoops and feedback to khooper@politico.com and sgardner@politico.com, and follow along @kelhoops and @sophie_gardnerj.
In Congress
DEMS PROBE UNITEDHEALTH — UnitedHealth Group is coming under the microscope of Democratic senators on the Finance Committee, adding to the mountain of congressional, legal and public scrutiny the health care giant has faced this year.
Senate Finance Committee ranking member Ron Wyden (D-Ore.) and Sen. Elizabeth Warren (D-Mass.) are looking into whether the insurance company pads its revenue by encouraging nursing homes to limit the number of hospitalizations of residents enrolled in special needs plans, according to a letter the lawmakers sent today to UnitedHealth Group CEO Stephen Hemsley.
Key context: The inquiry comes after The Guardian reported in May that UnitedHealth has quietly paid nursing homes thousands in bonuses to cut hospital transfers for patients, sometimes risking residents' health. UnitedHealth told The Guardian the allegations are 'verifiably false' and that the bonus payments to nursing homes help prevent unnecessary and costly hospitalizations.
'After a briefing with UHG representatives that focused on allegations outlined in recent reporting, we remain concerned about programs UHG is deploying to reduce all-cause hospitalizations and to set advance directives at its contracted nursing homes,' Wyden and Warren wrote in the letter.
Why it matters: The scrutiny adds to a tumultuous year for UnitedHealth Group. It comes on the heels of leadership on the Senate Health, Education, Labor and Pensions Committee demanding answers from the company earlier this week about how it responded to a recent cyberattack and what steps it will take to prevent another breach.
In December, the CEO of UnitedHealth's health insurance business was shot and killed in New York, igniting a wave of online vitriol from people sympathetic with the alleged shooter. Bipartisan lawmakers in Congress have signaled interest in cracking down on insurers, including UnitedHealth, amid allegations of excessive care denials.
And the Justice Department is investigating its Medicare Advantage business, which has come under scrutiny over its billing practices. Hemsley, who recently took over as CEO after the company's former leader stepped down abruptly in May, acknowledged in June that there could be issues with how the company bills the government.
Meanwhile, rising medical costs have plagued the company this year, sending its stock plunging and leading it to slash its yearly outlook.
What's next: Wyden and Warren requested UnitedHealth send a full written response to dozens of questions on hospitalization policies, advance directives, marketing practices and federal oversight no later than Sept. 8.
In the courts
BUSINESS GROUPS' REJECTION — A federal judge on Wednesday struck down business advocates' bid to scrap the Biden administration's Medicare drug price negotiation program, ruling the groups lacked standing, POLITICO's Lauren Gardner reports.
A three-judge panel of the 6th Circuit Court of Appeals agreed with a lower court's decision that the Dayton area and Ohio chambers of commerce are too 'detached' from the litigation's focus — the constitutionality of a program affecting drugmakers — to challenge the law.
'One could argue, in fact, that the overall standard of living in the Dayton area would actually improve with lower drug prices for its citizenry,' Circuit Judge Ronald Lee Gilman wrote in the opinion.
Background: The U.S. Chamber of Commerce led three state and local chambers in Ohio and Michigan in suing the federal government in 2023. They focused their case on AbbVie, the company behind the cancer drug Imbruvica, which was chosen for the first round of price negotiations.
The groups argued that the Inflation Reduction Act's creation in 2022 of a negotiation process between Medicare and drugmakers violates the First, Fifth and Eighth amendments.
What's next: The chambers could ask the 6th Circuit for a so-called en banc rehearing, during which the court's entire bench would reconsider Wednesday's decision, or they could petition the Supreme Court to take the case.
The U.S. Chamber said in a statement that it's reviewing the decision and 'considering next steps.'
At the Agencies
OD2A UPDATE — The Centers for Disease Control and Prevention will likely be able to fully fund its Overdose Data to Action program, NPR reports.
A former CDC official, granted anonymity for fear of retribution, and Sharon Gilmartin, executive director of the Safe States Alliance, told Sophie they had confirmed the news with current CDC officials.
POLITICO reported Tuesday that OD2A grant recipients had faced uncertainty about when they would receive their full obligation.
Public Health
MAHA MOM PUSH — Moms Across America, an activist group aligned with the Make America Healthy Again campaign, is urging Health Secretary Robert F. Kennedy Jr. to stand firm on regulating pesticides amid mounting pressure from the agriculture industry to soften his stance, Amanda reports.
In a letter sent Wednesday to the MAHA Commission, which Kennedy chairs, the group urged that a moratorium be placed on the pesticide glyphosate in the final MAHA report due next week, which will include recommendations to fight chronic disease.
'Toxic chemicals that pose an unnecessary risk to human health have no place in our food system. …The EPA can, and should, stop the use of glyphosate in agriculture until there is conclusive evidence that no link exists between this chemical and serious diseases such as cancer,' said the letter, which was organized by the nonprofit Public Interest Research Group.
Why it matters: The split between MAHA supporters and the agriculture industry, a key Republican constituency, highlights the tensions facing Kennedy as he vies to turn his MAHA agenda into regulation. The White House assured farm groups earlier this summer that the forthcoming report would include no new policy on pesticides after their draft report in May linked glyphosate to cancer and other health problems.
Names in the News
Sophia Wright is now senior adviser for Medicare programs at the Office of Management and Budget. She most recently was chief of the Medicare branch at OMB.
WHAT WE'RE READING
NPR's Rob Stein reports on the revived quest to create gene-edited babies.
STAT's Veronica Paulus reports on growing state interest in expanding access to restorative reproductive medicine.
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Dressed up as a therapeutic community, Koon thought instead, 'This is like a cult.' Walter believes he wasn't far off. Everyone was required to tattle. Koon had to turn in weekly at least 10 'pull-ups' — written reports detailing rule infractions committed by fellow residents. If he didn't, he could lose points and with them privileges like phone calls, family visits or permission to grow a mustache. Confrontations were public and ritualized: Residents would sit in a circle around one or two people forced to listen as everyone else denounced them. 'They took turns confronting that person, professing their faults and errors, while the person was permitted only to say 'thank you,'' Walter writes. Staff called it 'The Game.' He saw grown men cry. He heard women called bitches and sluts. He realized many employees were former participants enforcing the system that once broke them. Not everyone saw a problem. Many in the legal system embraced tough-love rehab programs, especially judges looking for alternatives to jail. One of Cenikor's biggest champions was Judge Larry Gist, who ran one of the first drug courts, in Jefferson County, Texas, in the 1990s. 'The vast majority of folks that I deal with are basically bottom-feeders,' Gist told the author. 'They've been losers since the day they were born.' Cenikor's extreme model was ideal for 'the right people,' he believed. Cenikor rewarded such loyalty, giving judges and lawmakers steak dinners served by participants and annual awards banquets, complete with gleaming, diamond-shaped trophies. Gist 'proudly displayed his' in 'his chambers, where he liked to host his happy hours with prosecutors and defense attorneys.' Koon was booted out of Cenikor after just two years, for faking a urine sample and contracting a contagious staph infection, but managed to stay sober on his own. He proposed to his childhood sweetheart, Paige, moving in with her two daughters, and finding the stability he'd been chasing for years. He went back to school to learn welding, and the daily rhythms of family life kept him grounded. 'He hasn't taken a drug recreationally for eight years,' Walter writes. Lee's path out took longer, and her recovery was, as Walter writes, 'in some ways a stroke of luck.' She left the house after landing a job at a law firm that helped women reunite with their children in foster care — a world away from the nights she'd once spent tricking at the Blue Moon Hotel but one that barely covered her bills and pushed her just over the poverty line, cutting off assistance. She earned her GED, took online college courses, regained custody of her kids and bought her own home by 2021. 'And yet many days she felt she was teetering on the edge, one crisis or unpaid bill away from making a terrible mistake,' Walter writes. That year, she returned to Kensington, where her addiction had once thrived, bringing fresh food and water to people still living on the streets. As for Cenikor, its time in the shadows ended, at least temporarily. Investigators found evidence of exploitation: residents forced to work without pay, unsafe housing conditions, staff-client relationships, even overdoses inside the facilities. The state of Texas fined Cenikor more than $1.4 million in 2019, but the agency struck a settlement, and it continued to operate. Koon and Lee don't represent everyone who's experienced addiction, treatment or recovery. But they do reflect a system that often promises far more than it delivers. 'When rehab works, it can save lives,' Walter writes. 'It can mend families and be among the most redemptive narrative arcs in a person's life.' But sometimes, rehab not only fails to help people, it actively harms them, recycling them through a gauntlet of relapse, shame and risk: 'Despite the rehab industry's many claims, there is no magical cure for addiction.'
