For financial professionals, the key takeaway from the leadership change at UnitedHealth Group is that the cost of the company's Medicare Advantage plans could go up a lot in 2026.
The giant Minnetonka, Minnesota-based health insurer announced today that Andrew Witty, who took over the company's CEO in 2021, had resigned for personal reasons.
UnitedHealth Chairman Stephen Hemsley, who had served as CEO from 2006 to 2021, has returned to the CEO post.
UnitedHealth also said that it has suspended its 2025 financial outlook because health care claims have been much higher than it expected when it set its 2025 rates, especially for Medicare Advantage plan enrollees, and especially for enrollees who have joined UnitedHealth Medicare Advantage plans this year.
"We are incorporating these higher cost experiences and expectations in our 2026 Medicare Advantage bid, which is due in a few weeks," John Rex, UnitedHealth's chief financial officer, said today during a public conference call the company held with securities analysts to discuss the CEO change.
Most of the increase in claims is related to bills for physician services and outpatient hospital care, not inpatient hospital care, Rex said.
Rex and Hemsley, who was also on the call, did not give any other details about why medical claim costs are up, and they did not provide any numbers indicating how high the costs are.
But Rex said the excess costs are high enough that UnitedHealth will not be able to report earnings in the range it has been using in performance forecasts for the year.
The company should be able to operate within the targeted range in 2026, Rex said.
Hemsley said UnitedHealth will work to get control over costs by talking to patients and making sure they are getting the right high-value care.
"We are gaining momentum on these things," Hemsley said.
UnitedHealth's views about Medicare Advantage plan claims could have a big effect on the overall Medicare Advantage plan market, which provides coverage for 34 million of the 64 million Medicare enrollees, because it covers 9.9 million Medicare Advantage enrollees, or 29% of the total, according to data from Mark Farrah Associates.
Tom Cowhey, the CFO of CVS Health, a company that has 4.1 million Medicare Advantage plan enrollees, said during a CVS Health earnings call May 1 that Medicare Advantage claims have been "persistently high."
Mark Kaye, the CFO of Elevance Health, a company with 2.2 million Medicare Advantage plan enrollees, said April 22, during its call, that claims "developed in line with expectations that high-cost trends would persist in 2025."
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