Trump's spending bill will likely boost costs for insurers, shrink Medicaid coverage
UnitedHealthcare
and CVS Health's Aetna that operate Medicaid health plans, experts say.
As a result, those insurers will likely pull back their
Medicaid coverage
and invest more in existing markets to retain their healthier members, experts said. States contract with insurers, including UnitedHealth Group's UnitedHealthcare, CVS Health's Aetna, Centene and Molina, to operate Medicaid plans that are jointly funded by state and federal governments.
Almost all of Molina's and nearly half of Centene's insurance business is composed of Medicaid members. That portion is smaller for Aetna and UnitedHealthcare which operate large commercial businesses. Seven industry experts say the bill's funding cuts and its stipulation requiring states to verify patients' work status deliver a blow to insurers.
The provision in Trump's One Big Beautiful Bill Act requires low-income adults, in states that have expanded Medicaid coverage under the Affordable Care Act, to prove every six months that they meet work requirements in order to maintain coverage.
State Medicaid departments, grappling with scant operational teams, will have a difficult time carrying out verification protocols, five industry experts said. "The expectation is that states are going to have to be ready by 2026 or 2027, and that's a fast turnaround window," said Nikita Singareddy, CEO of healthcare platform Fortuna Health.
A spokesperson for Centene said it would work with federal and state partners to help patients navigate change.
A spokesperson for CVS Health declined to comment. UnitedHealth Group and Molina did not immediately respond to a Reuters request for comment.
For insurers, the disruptions could result in more sick people enrolled in the Medicaid plans they operate on behalf of the government because those who are more ill are likely to complete the verification process because they have an immediate need for healthcare, industry experts and an investor said.
The Congressional Budget Office estimated Medicaid policy changes in the bill could leave 7.8 million people uninsured by 2034. Mass disenrollments could begin in 2027 on a rolling basis, according to an expert at a state policy organization.
The White House did not immediately respond to a request for comment.
States may choose to pay companies operating health plans at lower rates due to funding cuts, said Eric Levine, a principal consultant at Avalere Health.
Following the COVID-19 pandemic, insurers have said the rates they are paid by states have not caught up to actual cost of care.
Disenrollments of healthy people may exacerbate this misalignment, leading to inaccurate rates paid to plans and squeezed profit margins, according to a spokesperson for a national insurance trade organization and an investor.
'ANOTHER PERIOD OF RETRENCHMENT'
If insurers find the fallout from these changes daunting, they are likely to exit certain markets or pull back on bidding or competing for footprints in new areas.
"Insurers will continue to be more cautious about not just entering any new states, but retrenching just in the states where they have the highest market share, most scale and more profitable business," said Jeff Jonas, a portfolio manager at Gabelli Funds, which owns shares of UnitedHealth Group.
In an effort to keep healthier patients that drive profits enrolled, insurers may employ plan design changes ahead of the bill's finalization, adding perks that can make enrollment more appealing.
This could help insurers retain and attract healthy members, according to Matt Salo, CEO of Salo Health Strategies and founding director of the National Association of Medicaid Directors and two other policy experts.
Hosting volunteer events and job or educational search services are strategies insurers may use to engage members and reduce losses, said Levine.
Health plans are also expected to boost transportation benefits and other social-need benefits for low-income Americans. Jonas and a spokesperson for a national health insurer say this programming will boost administrative costs in the short-term.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
NDTV
an hour ago
- NDTV
14 Million Children Received Not A Single Vaccine In 2024, Says UN
More than 14 million children did not receive a single vaccine last year - about the same number as the year before - according to U.N. health officials. Nine countries accounted for more than half of those unprotected children. In their annual estimate of global vaccine coverage, released Tuesday, the World Health Organisation and UNICEF said about 89% of children under 1 year old got a first dose of the diphtheria, tetanus and whooping cough vaccine in 2024, the same as in 2023. About 85% completed the three-dose series, up from 84% in 2023. Officials acknowledged, however, that the collapse of international aid this year will make it more difficult to reduce the number of unprotected children. In January, U.S. President Trump withdrew the country from the WHO, froze nearly all humanitarian aid and later moved to close the U.S. AID Agency. And last month, Health Secretary Robert F. Kennedy Jr. said it was pulling the billions of dollars the U.S. had previously pledged to the vaccines alliance Gavi, saying the group had "ignored the science." Kennedy, a longtime vaccine skeptic, has previously raised questions about the diphtheria, tetanus and whooping cough vaccine - which has proven to be safe and effective after years of study and real-world use. Vaccines prevent 3.5 million to 5 million deaths a year, according to U.N. estimates. "Drastic cuts in aid, coupled with misinformation about the safety of vaccines, threaten to unwind decades of progress," said WHO Director-General Tedros Adhanom Ghebreyesus. U.N. experts said that access to vaccines remained "deeply unequal" and that conflict and humanitarian crises quickly unraveled progress; Sudan had the lowest reported coverage against diphtheria, tetanus and whooping cough. The data showed that nine countries accounted for 52% of all children who missed out on immunisations entirely: Nigeria, India, Sudan, Congo, Ethiopia, Indonesia, Yemen, Afghanistan and Angola. WHO and UNICEF said coverage against measles rose slightly, with 76% of children worldwide receiving both vaccine doses. But experts say measles vaccine rates need to reach 95% to prevent outbreaks of the extremely contagious disease. WHO noted that 60 countries reported big measles outbreaks last year. The U.S. is now having its worst measles outbreak in more than three decades, while the disease has also surged across Europe, with 125,000 cases in 2024 - twice as many as the previous year, according to WHO. Last week, British authorities reported a child died of measles in a Liverpool hospital. Health officials said that despite years of efforts to raise awareness, only about 84% of children in the U.K. are protected. "It is hugely concerning, but not at all surprising, that we are continuing to see outbreaks of measles," said Helen Bradford, a professor of children's health at University College London. "The only way to stop measles spreading is with vaccination," she said in a statement. "It is never too late to be vaccinated - even as an adult." (This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
Hans India
an hour ago
- Hans India
CM Revanth Reddy Launches Icore Biologics Industry in Genome Valley
In a significant move for the biotechnology sector, Chief Minister Revanth Reddy visited Samirpet's Genome Valley to lay the foundation stone for the Icore Biologics Industry. The event was attended by Ministers Sridhar Babu and Vivek, along with senior officials and various stakeholders. Speaking at the ceremony, CM Reddy highlighted the crucial role that the Genome Valley has played in establishing Telangana as a leader in the biotechnology industry. "The industries in Genome Valley have brought recognition to Telangana. We produce 33 percent of the country's vaccine production from Genome Valley alone. At a time when the world was gripped by fear of Covid-19, we manufactured vaccines here and were able to supply them to countries around the world," he stated. The establishment of Icore Biologics is expected to further strengthen Telangana's position in the global biotech arena and enhance its contributions to vaccine development and production.
Time of India
an hour ago
- Time of India
Trump admin's healthy push: Ice-cream to go dye-free; plant-based colours to be used instead
In what the Trump administration called a 'major announcement', the US dairy industry has agreed to voluntarily remove synthetic dyes from ice-cream products, a shift officials say could lead to healthier options, especially for children. 'This is relevant to my favorite food, which is ice-cream,' said US health secretary Robert F Kennedy Jr. 'Since we came in about five and a half months ago and started talking about eliminating dyes and other bad chemicals from our food, we've had this extraordinary response from our industry,' The Guardian quoted the official. More than 40 ice-cream manufacturers have reportedly signed on to the voluntary agreement, according to representatives from the dairy sector. Kennedy also hinted at upcoming dietary guidelines that will 'elevate' dairy, including full-fat products, to reflect their contribution to children's health. Dr Marty Makary, head of the US Food and Drug Administration (FDA), also revealed that the agency has approved a new plant-based dye, 'gardenia blue', which may serve as a natural alternative. The health benefits of full-fat dairy remain contested. While longstanding guidance has warned against excessive intake of saturated fats, sugars and refined grains, a growing number of researchers argue that full-fat dairy may not be as harmful as once believed. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Providers are furious: Internet access without a subscription! Techno Mag Undo This view is echoed by the dairy industry, which has invested heavily in nutrition research and pushed back on government restrictions on dairy in school meals since the Obama era. In rural farming communities, the debate is more than academic. Farmers have displayed hand-painted hay bales with slogans such as 'Drink whole milk 97% fat free,' underlining the cultural and economic importance of dairy in these regions. The Trump administration's close ties with the dairy sector are well-documented. Back in 2019, former agriculture secretary Sonny Perdue famously toasted dairy lobbyists with chocolate milk to mark the return of flavoured milk to school cafeterias. 'This is a great day for dairy and a great day for 'make America healthy again,'' said Michael Dykes, president and CEO of the International Dairy Foods Association. 'We're so happy with the voluntary industry-led commitment.' Still, the administration's preference for voluntary deals has met resistance elsewhere. Kennedy's efforts to secure similar commitments from confectionery giant Mars, maker of Skittles and M&M's, fell flat. Health experts have also raised doubts on whether voluntary pacts with private health insurers will deliver meaningful change for Americans. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
