During Q1 2025 earnings calls, several publicly traded health insurers pointed to elevated trends in their MA and Part D businesses.^1,2 Insurance companies also finalized their 2024 statutory financial statements in the last few months, which include detail on revenue, claims, and loss ratios by line of business in the Accident & Health (A&H) Policy Experience Report. This Milliman brief explores the reported financial results for MA and standalone prescription drug plan (PDP) business.

High-level impacts

Figure 1 summarizes the average MA prescription drug (MAPD) and PDP loss ratios for 2023 and 2024. On average, both MAPD and PDP loss ratios increased in 2024 compared to 2023:

• For MAPD, the average increase was nearly 3%.
• For PDP, the average increase was 10%+.

While the PDP loss ratio increase is material, most of this was driven by a large increase in both claims and revenue for standalone Part D plan sponsors in 2024 due to regulatory and legislative changes. The direct subsidy increased from $1.97 in 2023 to $29.58 in 2024, with aggregate PDP revenue on a per-member-per-month (PMPM) basis increasing by nearly 70% over 2023, based on the reported statutory financial statements.^3,4

Underwriting margin (UWM), defined as total premium revenue less total claim costs, is the portion of revenue for insurers that can be used to cover administrative costs, capital/surplus contributions, and profit margin. For PDP carriers, UWM only declined slightly year over year, despite the large increase in loss ratio. For MAPD carriers, UWM decreased by nearly 20% on average. Figure 2 summarizes the average UWM PMPM for 2023 and 2024 by line of business.

Medicare Advantage

Diving deeper into the MA financial results, there are some material differences in loss ratios between national and regional carriers. Figure 3 summarizes the average MAPD loss ratio for each year across the entire market, as well as for national and regional carriers. A few key observations:

• MAPD loss ratios for regional carriers were approximately 5.5% higher than those of national carriers in both 2022 and 2023.
• On average, financial headwinds for national carriers were larger in 2024 (+3.1%) than regional carriers (+1.7%), but a large gap remains (4.1% spread).
  • The unfavorable impacts for national carriers are primarily driven by a single payer with a 10% increase in loss ratio in 2024 versus 2023. Excluding this one payer results in a +2.0% increase in the average loss ratio for national carriers, more in-line with regional carriers.

These loss ratio changes translated to a reduction in UWM for national carriers (20%) and regional carriers (15%). Figure 4 summarizes the average MAPD UWM for 2023 and 2024 for each carrier type on a PMPM basis.

MA is often hyper localized, with different products and experience in different counties and states. As such, drilling further into regional impacts is often necessary, as national trends do not always translate to specific areas. This will be particularly important for 2025, given the volume of plan terminations and service area changes causing meaningful disruption.⁵

Starting in 2022, health insurers were required to report state-specific revenue, claims, and loss ratios by line of business in the A&H Policy Experience Report. Figure 5 summarizes a heatmap of 2024 MAPD loss ratios by state. A few key observations:

• Twenty-six states, plus Washington, D.C., had average loss ratios exceeding 90%.
• Six states had average loss ratios exceeding 100%:
• Delaware (116%)
• Vermont (106%)
• Wyoming (104%)
• Maryland (103%)
• Idaho (101%)
• Connecticut (101%)
• Two states had average loss ratios at or below 85%: Tennessee (84%) and Oklahoma (85%).

Standalone PDPs

In the PDP market, five carriers dominate the landscape, representing 90% of total revenue in 2024. Figure 6 illustrates the reported loss ratios for 2023 and 2024 for the top five PDP carriers versus all other carriers. A few key observations:

• Both the top five’s and all other carriers’ loss ratios increased by 10%+ in 2024 relative to 2023.
• There is a large gap in loss ratios (6.5% in 2023, growing to 7.4% in 2024) between national and regional carriers.

As noted previously, despite the overall increase in PDP loss ratios, the UWM for PDP carriers remains largely unchanged. However, this only occurs for the top five carriers, with the UWM decreasing for all other carriers by 44% in 2024 relative to 2023 on a PMPM basis. Figure 7 compares the UWM PMPM for the top five versus all other carriers in 2023 and 2024. This figure emphasizes the challenges non-top five carriers face in this market and may also support recent market exits for several carriers (e.g., Elixir, Mutual of Omaha, Clear Spring Health).^6,7

Similar to MAPD, there is material volatility in PDP loss ratios by state in 2024. This volatility is likely to persist in the next few years due to:

1. Large changes to specific carriers’ PDP product strategies for 2025
2. Carriers exiting the market
3. Materially different impacts of changes stemming from the Inflation Reduction Act (IRA) for specific regions, member profiles, and product types⁸

Figure 8 summarizes a heatmap of 2024 PDP loss ratios by state. It is worth noting that PDPs are priced separately in 34 regions. Specific states may reflect a single region; however, many regions include multiple states. A few key observations on the state-specific loss ratios:

• Eight states had average loss ratios exceeding 90%:
• Connecticut (102%)
• Oklahoma (98%)
• Montana (95%)
• Arizona (94%)
• Minnesota (92%)
• North Dakota (92%)
• South Dakota (92%)
• Vermont (92%)
• Sixteen states, plus Washington, D.C., had average loss ratios at or below 85%.
• Four states had average loss ratios at or below 83%:
• Maryland (82%)
• New Jersey (82%)
• New Mexico (83%)
• North Carolina (83%)

Future financial outlook

While the 2024 financial results are not favorable for MA and Part D carriers, there are additional headwinds in 2025 and beyond that will affect insurer financials, including:

• Elevated medical cost trends into 2025. UnitedHealthcare reported utilization trends increased at twice the level observed in 2024.⁹ This was particularly impactful for physician and outpatient services. CVS Health also indicated trends remain high for inpatient, outpatient, and medical pharmacy, but indicated overall trends may show “early signs of stabilization.”¹⁰ If elevated trends persist or accelerate, this could further decline MAPD financials for 2025 and potentially beyond. Financial results may improve if trend stabilization does occur.
• High specialty drug trends. Emerging Q1 2025 Part D claims data indicate a large increase in non-low income (NLI) specialty drug utilization and costs relative to 2024 (which also experienced high trends).¹¹ The magnitude of these changes may have been unexpected, which could drive further deterioration in MAPD and PDP loss ratios. However, Part D risk corridors should provide some downside risk protection against higher Part D specialty trends.
• Plan management controls. Traditional plan management controls, including utilization management (UM) techniques, such as prior authorizations, are under scrutiny by government officials and the public.¹² Removing or lessening these controls may increase costs for insurers.

Having acknowledged the headwinds, there are also tailwinds on the revenue side that should help MA and PDP carriers. For Part D, this includes the direct subsidy, which increased by over $100 in 2025 to $142.67 PMPM, and is likely to increase even more in 2026.^13,14 In addition, the 2026 Rate Announcement, released in April 2025, included an increase in MA revenue of about 3% relative to the proposed revenue increases initially released in January 2025. For carriers that are able manage their costs below these revenue increases, there may be an opportunity to drive more UWM.

Methodology and limitations

To perform this analysis, we relied on reported earned premium and incurred claim costs for the “Medicare” (i.e., MA) and “Medicare Part D – Stand-Alone” lines of business from the A&H Policy Experience Exhibit from carrier’s statutory financial statements. This is a supplemental exhibit required for all insurance companies that offer A&H policies to report, regardless if they file as a health, life, or property and casualty insurance company. We also identified medical incentive pools, and bonus payments appeared to be excluded from this report, so these were pulled from the supplemental healthcare experience exhibit for the “Medicare Advantage Part C and Medicare Part D Stand-Alone Subject to ACA” line of business to be added to incurred claims.

We relied on an online database of these metrics, obtained through S&P Capital IQ Pro, to access the financial statement information to create these summaries:

• For MA, we included 532 individual statutory entities that reported non-zero revenue in 2023 to form these summaries and aggregated the results by parent organization based on a mapping developed by S&P. Total member months were 304 million and total covered lives were 25.6 million in 2024, representing ~90% of total individual MA membership in 2024, based on a comparison against the Centers for Medicare and Medicaid Services (CMS) enrollment by plan files (where total individual MA enrollment was 28.6 million in December 2024).¹⁵
• For PDP, the process was similar but instead included 47 statutory entities with non-zero PDP revenue in 2023. Total member months were 216 million and total covered lives were 18.1 million in 2024, representing 99%+ of total individual PDP membership in 2024, based on a comparison against the CMS enrollment by plan files (where total individual PDP enrollment was 18.3 million in December 2024).¹⁶
• For both MA and PDP, we kept the company list consistent between 2022 and 2024.

Note loss ratios are calculated as reported claims over revenue, which does not consider other items in the medical loss ratio (MLR) calculation, such as certain expenses that are reflected (e.g., quality initiative expenses, premium taxes) and Part D federal reinsurance (which is included in the numerator and denominator for the MLR calculation).

We did not audit the financial statement data but did review for general reasonableness. To the extent that the data and information provided is not accurate, or is not complete, the values summarized in this brief may likewise be inaccurate or incomplete. Notably, the data excluded statutory entities domiciled in California, which follow a separate reporting structure, as the same exhibits were not available. We excluded California from our state-specific summary, but it is possible that the results may be different if California was included. Territories, including Puerto Rico, are also excluded.

Kevin Pierce, Julia Friedman, and Madeleine Cline are consulting actuaries with Milliman. We are members of the American Academy of Actuaries and meet the Qualification Standards of the American Academy of Actuaries to render the actuarial opinion contained herein. To the best of our knowledge and belief, this report is complete and accurate and has been prepared in accordance with generally recognized and accepted actuarial principles and practices.

¹ UnitedHealth Group. (2025, April 18). Q1 2025 Earnings Call. Transcript summarized by Seeking Alpha. Retrieved April 25, 2025, from https://seekingalpha.com/article/4775952-unitedhealth-group-incorporated-unh-q1-2025-earnings-call-transcript.

² Centene. (2025, April 25). Q1 2025 Earnings Call. Transcript summarized by Seeking Alpha. Retrieved April 25, 2025, from https://seekingalpha.com/article/4778252-centene-corporation-cnc-q1-2025-earnings-call-transcript.

³ Centers for Medicare and Medicaid Services (CMS). (2022, July 29). Annual Release of Part D National Average Bid Amount and Other Part C & D Bid Information. Department of Health and Human Services (HHS). Retrieved April 25, 2025, from https://www.cms.gov/files/document/july-29-2022-parts-c-d-announcement-pdf.pdf.

⁴ CMS. (2023, July 31). Annual Release of Part D National Average Bid Amount and Other Part C & D Bid Information. HHS. Retrieved April 25, 2025, from https://www.cms.gov/files/document/july-31-2023-parts-c-d-announcement-pdf.pdf.

⁵ Friedman, J. (2024, October 22). Medicare Advantage under pressure: How MA-PD plans are responding in 2025. Milliman, Inc. Retrieved April 25, 2025, from https://www.milliman.com/en/insight/medicare-advantage-ma-pd-plans-2025.

⁶ Cline, M. & Klaisner J. (2023, November 27). Low income disruption and the $0 premium introduction: 2024 individual Medicare PDP market turbulence. Milliman, Inc. Retrieved April 25, 2025, from https://www.milliman.com/en/insight/low-income-disruption-0-dollar-premium-introduction-2024-individual-medicare-pdp-market .

⁷ Cline, M. & Klaisner J. (2024, October 23). Demonstrations and consolidations: A first view of the 2025 PDP market. Milliman, Inc. Retrieved April 25, 2025, from https://www.milliman.com/en/insight/demonstrations-and-consolidations-2025-pdp-market .

⁸ Cline, M. & Klaisner J. (2024, October 23). Demonstrations and consolidations: A first view of the 2025 PDP market. Milliman, Inc. Ibid.

⁹ UnitedHealth Group. (2025, April 18). Q1 2025 Earnings Call. Transcript summarized by Seeking Alpha. Op. cit.

¹⁰ CVS Health. (2025, May 1). Q1 2025 Earnings Call. Transcript summarized by Seeking Alpha. Retrieved April 25, 2025, from https://seekingalpha.com/article/4780475-cvs-health-cvs-q1-2025-earnings-call-transcript .

¹¹ Duke, D., Cline, M., & Liner, D. (2025, April 15). Early 2025 Medicare Part D claims show continued increase in non-low income specialty drug spend. Milliman, Inc. Retrieved April 25, 2025, from https://www.milliman.com/en/insight/2025-medicare-part-d-increase-specialty-drug-spend .

¹² Bell, A. (2025, March 14). Dr. Oz addresses concerns, discusses prior authorizations, at CMS confirmation hearing. Benefits Pro. Retrieved April 25, 2025, from https://www.benefitspro.com/2025/03/14/dr-oz-addresses-concerns-discusses-prior-authorizations-at-cms-confirmation-hearing/.

¹³ CMS. (2024, July 29). Annual Release of Part D National Average Bid Amount and Other Part C & D Bid Information. HHS. Retrieved April 25, 2025, from https://www.cms.gov/files/document/july-29-2024-parts-c-d-announcement.pdf.

¹⁴ Centene. (2025, April 25). Q1 2025 Earnings Call. Transcript summarized by Seeking Alpha. Op. cit.

¹⁵ CMS. (n.d.). Medicare December 2024 Monthly Enrollment by Plan File [Dataset]. HHS. Retrieved April 25, 2025, from https://www.cms.gov/data-research/statistics-trends-and-reports/medicare-advantagepart-d-contract-and-enrollment-data/monthly-enrollment-plan/monthly-enrollment-plan-2024-12.

¹⁶ CMS. (n.d.). Medicare December 2024 Monthly Enrollment by Plan File [Dataset]. HHS. Ibid.