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Editorial Advisory Board

  • Professor Andrea M. Armani, University of Southern California
  • Ruti Ben-Shlomi, Ph.D., LightSolver
  • James Butler, Ph.D., Hamamatsu
  • Natalie Fardian-Melamed, Ph.D., Columbia University
  • Justin Sigley, Ph.D., AmeriCOM
  • Professor Birgit Stiller, Max Planck Institute for the Science of Light, and Leibniz University of Hannover
  • Professor Stephen Sweeney, University of Glasgow
  • Mohan Wang, Ph.D., University of Oxford
  • Professor Xuchen Wang, Harbin Engineering University
  • Professor Stefan Witte, Delft University of Technology

Best’s Special Report: Challenges to Medicare Advantage Led to $5.7 Billion Underwriting Loss in 2024

Higher utilization since 2023 led to $5.7 billion underwriting loss for the Medicare Advantage line of business in 2024, following gains in at least the preceding five years, according to a new AM Best report.

The Best’s Special Report, “Challenges to Medicare Advantage Will Negatively Impact Profitability,” notes that Medicare Advantage had been a reliable source of earnings for the U.S. health insurance industry, contributing to overall profitability. Underwriting gains from Medicare Advantage made up approximately 40% of underwriting gains from 2019 to 2022, but that decreased to 20% in 2023 before the 2024 underwriting loss. Overall, nearly three-quarters of companies with a concentration in Medicare Advantage business reported an underwriting loss for the line in 2024.

“Medicare Advantage enrollment and premium continue to grow as more people are aging into the program. However, plans have experienced an increase in utilization and medical trends that have persisted longer than expected,” said Jason Hopper. “Changes to the risk-adjustment payment model by the Center for Medicare and Medicaid Services, as well as lower Star Ratings across the industry, also have contributed to recent underwriting losses.”

The report states that in 2025, the number of companies (aggregated by ultimate parent) that had contracts with Star Ratings of four or higher had dropped by more than 25% when compared with 2022. The largest declines were seen among publicly traded and Blue Cross/Blue Shield companies.

“Profitability will most likely continue to be under pressure due to the following reasons: utilization and medical costs are up; medical inflation consistently outpaces the consumer price index; individuals are receiving more medical services, and some treatments are very expensive, such as gene therapy. AM Best expects health insurers to evaluate their position in the Medicare Advantage market for 2026,” said Bridget Maehr, director, AM Best.

To access the full copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=358200.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2025 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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