The number of health plans reporting operating losses is growing: report

Health insurance companies are grappling with mounting financial difficulties, with a rising number of plans reporting operating losses, according to a recent report. The number of insurers posting an operating loss surged from 54% in 2023 to 70% in 2024, and then jumped to 73% in 2025, the report revealed. Smaller, regional plans and Blue Cross Blue Shield (Blue) plans are particularly affected, with 72% of regional insurers and 83% of Blue plans reporting an operating loss in 2025.

The financial strain isn't limited to smaller insurers, as national carriers are also experiencing a rise in operating losses, with 43% of them reporting a loss in 2025, a significant increase from 14% in 2023 and 2024. Experts attribute the financial woes to high medical costs, changes in government programs, and growing affordability issues.

Despite efforts to control costs, rising medical expenses have outpaced improvements in administrative expenses, leaving many plans without sufficient capital reserves to rebound. Those that can invest capital are able to innovate and pursue strategic priorities, but others face contraction, exit, or affiliation. To build greater resilience, the report suggests three strategic priorities: treating capital reserves as a strategic asset, prioritizing capital allocation based on potential returns, and making portfolio decisions like exits or affiliations when needed.

Additionally, insurers should focus on capabilities such as population health management, modernized prior authorization, and stronger partnerships with providers. By aligning with providers based on their ability to influence medical trends rather than just contract negotiations, insurers can better manage utilization, site-of-care decisions, and costs.

The report emphasizes that long-term financial resilience requires more than mere cost reductions and calls for fundamental changes in capital allocation, trend management, and provider relationships.