Elevance Health Cuts Profit Forecast Amid Rising Healthcare Costs

Elevance Health has become the latest major U.S. health insurer to lower its profit forecast for 2025 due to increased healthcare utilization among its members, particularly in its Affordable Care Act (ACA) plans and Medicaid business. The company cut its full-year profit outlook by 13%, citing higher-than-expected costs driven by sicker patients and greater healthcare use. This trend is reflective of an industry-wide challenge, as other major insurers including UnitedHealth, Centene, and Molina have also revised their financial outlooks downward or withdrawn guidance amid similar pressures.

Elevance's Medicare Advantage business performed in line with expectations, differing from UnitedHealth's experience, which has faced more scrutiny related to Medicare Advantage coding practices under government review. The cost pressures for 2025 and into 2026 are heightened by the upcoming expiration of the ACA enhanced premium tax credits, expected to impact coverage for millions of Americans and potentially increase care utilization at the end of 2025. On the Medicaid front, cost increases stem from the post-COVID-19 eligibility rechecks that reduced enrollments, leaving a sicker remaining population that uses more services such as long-term care and behavioral health. Elevance attributes the higher expenses to both a morbidity shift—sicker patients—and increased utilization, including emergency room visits, behavioral health, and specialty prescriptions, alongside more aggressive provider coding and use of the No Surprises Act dispute resolution. The company reported a 14% increase in second-quarter operating revenue but a 24% decline in profit compared to the prior year. Analysts view 2025 as a challenging year for health insurers given persistent elevated costs and anticipate more stable conditions might return in 2026, contingent on reimbursement changes and utilization trends.