US health insurers are confronting significant underwriting pressures in 2026, driven by persistently high claims utilization and escalating medical costs that have eroded profitability.
According to an AM Best report released March 5, 2026, the US health insurance segment’s net income fell nearly 20% through the first three quarters of 2025 compared to the prior year, largely due to higher-than-expected utilization, elevated claims costs, increased acuity, and rising cost of care across all lines.
Over the past two years, underwriting profitability has suffered from escalating medical cost inflation, sustained heightened utilization post-COVID, and surging drug expenses; particularly for GLP-1 medications and high-cost treatments in cancer, autoimmune diseases, and gene therapies. Provider price inflation and broader economic factors have compounded unit costs, pushing medical loss ratios above target levels and negatively affecting results.
AM Best warns that underwriting results in 2026 will remain pressured, with trends continuing above historical norms. Behavioral health utilization has stayed elevated as a key contributor to unfavorable claims experience.
Fitch Ratings issued a deteriorating outlook for the sector in late December 2025, projecting commercial group medical costs to rise nearly 9% in 2026—the highest rate in over a decade—fueled by inpatient cost inflation, provider consolidation, and specialty drug spending. Medical loss ratios for major public insurers are expected to climb further.
PwC’s medical cost trend analysis projects an 8.5% trend for the group market and 7.5% for the individual market in 2026, unchanged from 2025 but well above pre-pandemic levels, with pharmacy trends adding extra pressure.
Insurers face challenges in managing these headwinds while maintaining affordability. Many are intensifying utilization management, payment integrity programs, and efforts to control high-cost claims amid ongoing structural cost drivers like aging populations and chronic condition prevalence.
Industry experts indicate that without effective mitigation, these pressures could further strain margins and prompt premium adjustments across commercial, Medicare Advantage, and marketplace plans throughout 2026.
