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Here is what you’ll find in this week’s newsletter!
Important links 🔗 - the best articles we found this week about the Medicare Market along with links to Jared’s recent LinkedIn posts.
Deep Dive 📚 - UnitedHealth Group Q2 2026 Results
Sponsor Snapshot 🚀 - brought to you by VRI
It’s only a 5 minute read, but it will make you 10x smarter.
Here are IMPORTANT LINKS 🔗 for the week:
CY 2025 Part C and Part D Program Audit and Enforcement Report - (link)
CENTENE CORPORATION REPORTS SECOND QUARTER 2026 RESULTS - (link)
Medicare Advantage enrollment share to reach 57% by 2036: CBO - (link)
4 more Medicare Advantage contracts get 5 stars in revised ratings - (link)
Value-Based Payment Models Underrepresent Black, Hispanic Medicare Beneficiaries - (link)
CMS Proposal May Increase Inpatient Admission Scrutiny for IPO-Removed Services - (link)
Industry survey finds MA enrollees have lower out-of-pocket costs than those in traditional Medicare - (link)
Study shows one-fifth of prescribed cancer drugs initially denied coverage in Medicare were overturned when reviewed - (link)
Humana plans more market exits for 2027, CFO says - (link)
Jared’s recent LinkedIn posts:
DEEP DIVE 📚
UnitedHealth Group Q2 2026 Results
UnitedHealth Group is the largest player in the Medicare Advantage and Medicare Supplement markets, and a bellwether for the industry as a whole. When UNH moves, it tends to signal where the rest of the market is heading.
So each quarter, we take a look under the hood.
In this week's Deep Dive, we look at membership, revenue, and profitability trends across UnitedHealthcare and Optum, and reconcile how a company can post near-zero revenue growth and a 55% profit jump in the same quarter.
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Membership Trends
Every major membership segment UNH reports declined year-over-year in Q2.
Medicare Advantage membership fell 9.4% (7.565M vs. 8.350M). A continuation of the strategic plan terminations and benefit reductions that began showing up in Q1's 8.4% MA decline.
Medicaid membership fell 9.5% (6.780M vs. 7.490M), the sharpest decline of any segment and the clearest sign that redetermination-driven attrition is still working through the book.
Medicare Supplement declined 1.0%, and Commercial was roughly flat (-0.2%).
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Revenue Trends
UNH reports revenue in two major verticals: UnitedHealthcare (insurance) and Optum (services), with eliminations between the two.
UnitedHealthcare segment revenue declined slightly year-over-year (-0.1%, $86.02B vs. $86.10B). Medicare & Retirement revenue itself declined 0.5%.
Employer & Individual revenue grew 1.1%; Community & State revenue declined 0.3%, consistent with the Medicaid membership pressure.
Note: Optum Bank results moved from Optum Health to Optum Insight beginning Q1 2026, which inflates the Optum Insight growth rate and understates Optum Health's on a like-for-like basis.
Optum total revenue declined 2.3% year-over-year ($65.66B vs. $67.23B) — a wider decline than Q1's -0.2%, and the second straight quarter of Optum revenue contraction.
Combining UnitedHealthcare, Optum, and including eliminations, results in the company's Total Consolidated Revenues.
Total combined Q2 revenue grew just 0.4%.
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Operating Income Trends
Despite the revenue slowdown, total Q2 operating income grew 55.2% year-over-year. UHC operating income nearly doubled (+90.0%), and Optum's combined operating income also grew (+31.7%), a full reversal from Q1, when Optum's operating income fell 15.3%.
Note: Optum Bank results moved from Optum Health to Optum Insight beginning Q1 2026
Optum Health operating income grew 87.1%, Optum Insight grew 37.2%, and Optum Rx grew 3.4% — all three segments improved, unlike Q1's across-the-board Optum decline.
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Medical Loss Ratio and Profitability Trends
The Medical Loss Ratio improved 274 basis points year-over-year, from 89.4% in Q2 2025 to 86.7% in Q2 2026.
MLR rose from Q1 2026's 83.9% to Q2 2026's 86.7% — consistent with UNH's normal seasonal pattern of loss ratios climbing through the year as deductibles are worked through.
The combination of a much-improved loss ratio and flat expense growth drove operating margin to 7.1% in Q2 2026, up 252 basis points from 4.6% in Q2 2025. Margin stepped down from Q1's 8.0%, but the year-over-year improvement is the headline.
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Bottom Line
Membership decreased in all insurance lines YoY with MA shrinking 9.4%
As a result, Revenues were flat
Despite that, profitability improved sharply. Operating income was up 55.2% and MLR improved 274 basis points
This is a common theme in the current MA market. Improving profitability is done by improving MLR, which is done by plan terminations, benefit reductions, and trimming unprofitable membership.
Will this trend continue into 2027?
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