UnitedHealthcare expects to lose 1.3 million Medicare Advantage members and shrink its individual ACA enrollment by roughly one-third in 2026, reflecting a strategic pullback from two major lines of business as the company prioritizes margin recovery over growth, executives said April 21 during UnitedHealth Group’s first-quarter earnings call.
The 1.3 million Medicare Advantage membership decline — which is in line with previous guidance — reflects a deliberate effort to reprice the company’s Medicare Advantage book of business rather than defend volume amid elevated medical cost trends, according to UnitedHealthcare CEO Tim Noel.
“Our 2026 approach prioritized margin recovery and product stability, with a deliberate trade-off on membership growth, particularly in Medicare and commercial markets,” Mr. Noel said.
The pivot comes as UnitedHealth Group reported $6.28 billion in first-quarter profit, down slightly from $6.3 billion in the same quarter last year. First-quarter revenue increased 2% year over year to $111.7 billion.
At UnitedHealthcare, revenue grew 2% year over year to $86.3 billion, while operating earnings rose 9% to $5.7 billion. The segment’s operating margin increased to 6.6% from 6.2% a year ago, driven in part by repricing efforts tied to elevated medical cost trends. The company’s overall medical cost ratio was 83.9%, down 90 basis points year over year.
Cost trends in Medicare Advantage remain elevated and consistent with the company’s expectations for 2026.
“The quarter’s medical cost performance overall was driven primarily by net reserve development, better mix and enrollment dynamics in government programs,” Mr. Noel said. “As we monitor underlying utilization trends, they remain consistent with the high levels we saw in the prior year … [and] we anticipate [the] trend to remain at the anticipated levels for 2026.”
Mr. Noel said UnitedHealthcare priced its 2026 Medicare Advantage plans for roughly 10% medical cost growth and is seeing slightly better-than-expected performance so far, though he cautioned it is too early to draw firm conclusions.
“We continue to see the utilization patterns continuing with high, elevated levels that we experienced in 2025,” he said. “Right now, the takeaway is modest favorability in government programs, progressing at those elevated high levels. We are not seeing any inflection point, and we are really comfortable with the pricing posture that we had coming into 2026 based on how things are playing out in the early innings.”
To address elevated cost pressures, the company is leaning more heavily into HMO-based products, which allow for tighter management of outlier utilization, according to Mr. Noel. UnitedHealthcare is also deploying earlier clinical interventions, payment integrity programs and, in some cases, network actions to address the billing and acuity patterns that drove higher costs in 2025.
Company executives said the 2027 Medicare Advantage rate increase — 2.48%, or more than $13 billion — is a step toward better aligning payments with rising healthcare costs. However, they noted the increase still falls short of keeping pace with projected medical cost trends.
“The widely expected medical trend for 2027 is still meaningfully above these funding levels,” Bobby Hunter, president of Optum Financial Services, said. “So consistent with our strategy in 2026, we will remain focused on financial sustainability, product durability and then the path to margin recovery.
Mr. Hunter said the company’s goal for 2027 is to reach the upper half of its 2% to 4% long-term Medicare Advantage margin range.
The company’s individual ACA business is contracting just as intentionally. Mr. Noel said total ACA membership is projected to decline by about one-third in 2026, consistent with prior guidance.
“Our approach in the ACA market continues to be directed toward the bronze and gold tiered products, where member mix and utilization rates are largely aligned with plan,” he said. “We pledge to refund any 2020 profits from these plans, and our first quarter results reflect this pledge.”
Total domestic membership at UnitedHealthcare stood at 49.1 million at the end of the first quarter, down from 49.8 million at the end of 2025.
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