Where 6 payers' Medicare Advantage businesses are headed in 2025, per their CEOs

Medicare Advantage plans faced several headwinds in 2024, including rising medical costs, declining star ratings and a tougher reimbursement environment. 

The CEOs of some insurers say they are positioned to come out of the turbulent year ahead, while others are looking at an uncertain 2025. 

Here's what six payer CEOs said about Medicare Advantage on third-quarter earnings calls:

1. On an Oct. 15 call with investors, UnitedHealth Group CEO Andrew Witty said the company is facing headwinds in 2025, but it will lean into investing in things that will drive the next decade for the company. 

That includes further investment in value-based care, Mr. Witty said. The past four presidential administrations have pushed for further development of value-based care in Medicare and Medicaid, he told investors.

"What we're doing for 2025 putting in place what we believe is a really responsible plan, really focused on making sure we don't pull back from investment in the long-term — not shortchanging the next decade," Mr. Witty said. 

Despite the short-term challenges, Medicare Advantage is "highly compelling," Mr. Witty says, and the market could continue to grow for many years. 

Throughout 2024, UnitedHealth Group executives have said the company is well-prepared for challenges in the Medicare Advantage space.

"As we come into this cycle, I think, what we're seeing is the benefits of some very thoughtful, calm, not over reactive planning last year," Mr. Witty told investors.

2. Elevance Health expects its Medicare Advantage business to grow faster than the rest of the industry in 2025, CEO Gail Boudreaux told investors on an Oct. 17 call

"We feel well positioned in MA," Ms. Boudreaux said. "We took a number of prudent actions at the beginning of last year to position the business for the long term. We had a number of market exits, markets where we didn't see long-term sustainability. This year, we continued to look for stability to make sure we are in this business for a long time."

3. Humana's Medicare Advantage outlook for 2025 is murky.

On an Oct. 30 call, CEO Jim Rechtin said the company feels good about its Medicare Advantage products and improving margins in 2025.

Humana exited Medicare Advantage markets where it no longer saw a path to profitability.

The company needs more information on membership numbers, and medical cost trends to make solid predictions for 2025, Mr. Rechtin said.

The company is also investing in improving its star ratings. Humana's average Medicare Advantage star rating dropped significantly from 2024 to 2025. The downgrade is expected to hurt its 2026 earnings. 

"Where we can make good investments to put ourselves on better footing in 2027, we're going to do that," Mr. Rechtin said. "We're going to prioritize leaning into that long-term earnings potential over near-term [earnings] progression where we have good investments to make." 

4. Centene expects its Medicare Advantage membership to decline, but its margins in Medicare Advantage to improve in 2025, CEO Sarah London said on an Oct. 25 call. 

The company exited six Medicare Advantage markets for 2025, and is focused on markets where it can overlap Medicare and Medicaid offerings. 

Though Centene expects its Medicare Advantage membership to shrink, it is making "progress on our path to breakeven in this business," Ms. London said. The business will continue to be important to Centene's strategy moving forward, the CEO told investors. 

"We used 2025 bids as an opportunity to further focus our franchise on lower-income seniors and tighten the alignment between our Medicare Advantage business and our Medicaid footprint," Ms. London said. 

5. The Medicare Advantage market is "particularly challenged" right now, Cigna CEO David Cordani told investors on an Oct. 31 call.

Cigna is planning to sell its Medicare Advantage business to Health Care Service Corp. The sale is expected to close in the first quarter of 2025. 

Mr. Cordani threw cold water on speculation the company could merge with Medicare Advantage-focused Humana. The company will put the proceeds from its deal with HCSC toward stock buybacks, Mr. Cordani said. 

Though Medicare Advantage is facing disruption from rising costs and declining star ratings, Mr. Cordani said he expects to see the market "find its footing again" after a "choppy phase." 

"The leaders in the marketplace will find a way to lead through this," Mr. Cordani said. MA serves a very important value prop from a societal standpoint …  The space is just going through a choppy time right now, and that's what we're trying to call attention to.

6. Newly-appointed CVS Health CEO David Joyner said the business is taking the necessary steps to return to profitable growth in 2025. 

The company did not provide guidance for 2025. CVS faced significant financial challenges in 2024, especially in Aetna's Medicare Advantage business.

CVS "clearly underestimated" rising medical costs in 2024, Mr. Joyner told investors on a  Nov. 7 call, but has made the right actions to course correct

The company expects to lose between 5% and 10% of its Medicare Advantage membership, executives have said, which will allow it to start making progress on margins, CFO Tom Cowhey said. 

"You've seen changes in how we've structured our leadership teams, seen changes in terms of how we structured our risk management and pricing controls, so we believe that we're on the path getting to improved performance," Mr. Joyner told investors. "And so quickly, we can move past 2024 and into 2025, and I think the better we'll continue to be for the collective group." 

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