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DEEP DIVE 📚

For Medicare focused insurance carriers, one of the most important metrics is the Medical Loss Ratio (“MLR” or “Loss Ratio”).

If the MLR gets too high, the insurance company is likely in financial stress and possibly losing money. If the MLR gets too low, the insurance company may be required to pay a refund. Additionally, a small change in the MLR results in a large change in profit/loss.

In recent years, MLRs have been elevated, leading to benefit cuts, plan terminations, market exits, and mid-year shifts in non-commissionable status.

If you are a leader in the Medicare space, understanding what a loss ratio is, and wrapping your arms around recent market and carrier results will put you one step ahead.

Okay, here we go.

The MLR is the ratio of medical claims expense to premium revenue:

[Medical Loss Ratio = Medical Claims Incurred ÷ Earned Premiums]

Note that for Medicare Advantage, “premium” primarily includes capitated, bonus and risk adjustment payments paid by the federal government to the Carriers.

MLRs typically run between 85–90%. That leaves only 10–15% of premium dollars to cover commissions, administrative expenses, and profit. Once those are paid, a carrier operating within normal parameters might retain 3–6% as profit margin.

The leverage here is significant. A carrier earning a 4% profit margin at an 85% MLR sees that margin cut in half if their MLR rises to 87%. A 3 percentage point increase in MLR (what the MA market experienced between 2023 and 2024) can effectively wipe out profitability for carriers that were running thin to begin with.

That context explains why a data point that sounds small produces such visible market disruption.

A Note on the Data → The analysis below is based on data reported in the NAIC A&H Experience Exhibits, and excludes data that is reported exclusively to the California Department of Managed Health Care. A rough estimate is that the analysis is missing ~ 8 - 10% of the total MA market. Additionally, the loss ratios reported to the NAIC are different than the loss ratios reported to CMS. CMS-reported MLRs include additional expense items such as quality improvement expenses and care management/navigation costs, which generally results in higher reported MLRs. (go here for an analysis of CMS reported MLRs for 2023).

Here’s what recent MA loss ratio experience looks like.

Overall Loss Ratios in the MA market increased to 90.3% in 2025, up from 89.2% in 2024, and 85.9% in 2023.

The 2025 results show two important trends. First, the market has not turned a corner, it has simply stopped deteriorating as fast.

At 90.3%, aggregate MA loss ratios are now at their highest level in at least five years.

Second, claims are still growing faster than premiums. In the individual market, earned premiums grew 14.3% in 2025 while incurred claims grew 15.5%. In other words, carriers are still losing margin even after meaningful premium increases for 2025.

The five largest carriers by premium volume each have their own story:

Humana is the one carrier showing stabilization. Their 2025 result of 85.4% is essentially flat with 2024. This is notable given Humana’s high plan terminations in 2025, followed by large enrollment growth in 2026. Will they be able to hold the MLR steady with the influx of new members?

CVS/Aetna showed meaningful improvement in 2025. Their 2024 MLR of 94.4% was the most elevated among large carriers and was likely driven in part by significant enrollment growth in 2024 - newly enrolled members tend to have higher near-term utilization than the incumbent book. The 5.4 percentage point improvement to 89.0% in 2025 is meaningful, though they remain above most peers.

UnitedHealth continues to climb. With a 2.2% loss ratio increase in 2025 (from 86.7% to 88.9%), UnitedHealth saw the biggest MLR increase among its large-carrier peers on this metric. Elevated and worsening MLR pressure appears to be a major driver behind UnitedHealth’s 2026 plan terminations and strategic enrollment pullback.

Elevance and Centene both saw Loss Ratio increases again in 2025, continuing the recent trend.

Loss ratio experience varies significantly by state. The map below shows 2025 combined (Individual + Group) MLRs by state.

Vermont and Wyoming both experienced loss ratios over 100%.

New Hampshire, Massachusetts, Maryland, North Dakota, South Dakota all experienced loss ratios over 95%.

By comparison, Kansas, Delaware and Mississippi all experienced loss ratios under 86%.

ClearSpring Health recently announced their intentions to exit the MA/MAPD market effective June 1, 2026 (link).

What does recent loss ratio experience look like for them?

ClearSpring Health Loss Ratio Experience

Sustained loss ratios above 100% are generally unsustainable in Medicare Advantage. Eventually, carriers must materially reprice, reduce benefits, shrink footprint, or exit the market entirely.

The 2025 NAIC data shows a market that is still under pressure, just not accelerating as fast.

At 90.3% combined (89.6% individual), MA loss ratios hit a five-year high.

The 2024 spike of 3.3 percentage points appears to be a peak. But claims are still outpacing premiums in 2025, and the rate environment ahead isn't ideal. The average 2026 rate increase came in at 5.06% - meaningful relief after two difficult years. The 2027 rate announcement came in at just 2.48%. If utilization trends remain elevated, the 2027 environment could force another round of benefit reductions, footprint changes, and tighter distribution strategies heading into AEP.

Some carriers appear to be stabilizing, while others continue to deteriorate. Humana stabilized. UnitedHealth continued climbing. CVS is recovering from a 2024 spike driven by rapid enrollment growth. The loss ratio is the leading indicator for who pulls back on benefits, who exits markets, and who grows aggressively.

If you want to understand carrier behavior heading into AEP 2027, start with the MLR.

If you’re ready, here are some ways we can help you: