The health insurance industry is facing a major downturn, driven by escalating issues in the Medicaid and ACA markets, as well as growing scrutiny of prior authorizations and pharmacy benefit managers, according to J. Mario Molina, MD, former CEO of Molina Healthcare.
“There are problems with Medicaid and Marketplace that will only get worse with the budget bill passed by the Senate. Health plans are under attack over prior authorizations and relaxing the prior authorization requirements will lead to further deterioration in margins. PBMs are under siege,” Dr. Molina wrote on LinkedIn on July 2. “This is not a ‘blip,’ but just the beginning of a major downturn in an industry that has ignored consumer sentiment, thumbed their noses at government regulators and treated employers with contempt.”
Dr. Molina served as CEO of Molina from 1996 to 2017. In his post, he pointed to Centene and UnitedHealth Group pulling their earnings guidance for 2025 due to lower-than-expected growth. Centene cited aggregate ACA market morbidity and slower performance in 22 of its 29 marketplace states, while UnitedHealth attributed its pulled outlook to higher-than-anticipated healthcare usage, particularly within its Medicare Advantage business.
“What is happening right now does not surprise me. Things don’t happen in isolation,” Dr. Molina wrote. “Other companies will protest that they are fine. I doubt it.”
On July 1, the Republican-led Senate passed a revised version of the “One Big Beautiful Bill Act,” which proposes nearly $1 trillion in Medicaid spending cuts over the next decade, potentially increasing the number of uninsured individuals by 11.8 million. The bill also does not extend ACA premium tax credits, which could result in significantly higher consumer prices and shrink enrollment by half.
Insurers have urged lawmakers to reconsider the bill, and analysts have downgraded the industry’s outlook, citing expected headwinds from the proposed cuts to public health benefits.
