Early this week FitchRatings posted its take on the implications of the Budget Reconciliation Law (P.L. 119-21) for the “Big Five” insurers— Centene, CVSHealth/Aetna, Elevance Health, Molina Healthcare, and UnitedHealth Group—that together account for half of the Medicaid managed care market:

U.S. health insurers managing coverage for state Medicaid programs will face revenue headwinds due to the One Big Beautiful Bill Act (OBBBA) that we expect to pressure earnings…. Potentially higher acuity in the Medicaid pool because of new work requirements will necessitate higher capitation rates from states to stabilize the already thin profit margins generated by the business. Over the longer term, increased market uncertainty and insufficient returns could drive consolidation and exits from unprofitable markets.

This outlook is considerably less rosy than the view expressed by the CEO of Molina during the company’s Q1 Earnings Call on April 24, about a month before initial House passage of the bill:

“Turning now to the political and legislative landscape. In Medicaid, we continue to believe that any changes to the Medicaid program in the near term will be marginal. The general perception is that Congress and the current administration will implement Medicaid program changes through possible combinations of various funding reduction approaches in order to meet federal spending targets. There are many credible estimates of the potential impact of these various approaches. We continue to believe that any impacts to membership volume or the acuity of the risk pool will be manageable and will not disrupt the earnings trajectory of our business. You are all well aware of the complex legislative process, which will ensue over the coming months, to reconcile the Senate and House resolutions to a final bill. While we await a definitive legislative framework, we continue to believe that neither side of the aisle wants to see an increase in the number of uninsured, a significant reduction in benefits for those relying on government assistance, or the inevitable related impact to providers.”

With the enactment of the Budget Reconciliation Law on July 4, it is now crystal clear that one side of the aisle does indeed want to see an increase in the number of uninsured. Here’s the bottom line from FitchRatings (which, unlike House Leadership, considers Congressional Budget Office estimates to be reliable):

Medicaid will see a significant reduction in enrollment and lower premium revenue under OBBBA due to stricter, more frequent eligibility determinations and work requirements that will take effect in expansion states by year-end 2026. Nearly eight million fewer people will have Medicaid coverage over the next 10 years and 4.0 million Affordable Care Act (ACA) exchange enrollees will lose coverage due to the changes contained in the bill, according to the most recent CBO estimates. An additional 4.2 million ACA enrollees will lose coverage if the enhanced Premium Tax Credits (PTCs) are allowed to expire at year-end 2025.

Clearly, Medicaid is at an inflection point, and not just for beneficiaries. Q2 closed on June 30, and the “Big Five” will release their results over the next few weeks. We’ll see what they have to say about their prospects going forward. In the meantime, here are their results for Q1, which marked the two-year anniversary of the start of the PHE Unwinding. You could think of it as the pre-implementation baseline for the damage that the Budget Reconciliation Law will unleash.

As shown in Figure 1, Medicaid enrollment for the “Big Five” has essentially plateaued at just under 37 million, down 7.6 million, or 17 percent, from a high of 44 million at the conclusion of the continuous eligibility period in March 2023. For context, total national Medicaid enrollment declined by 15.9 million, or 18 percent, between March 2023 (87.2 million) and December 2024 (71.3 million). This plateauing reflects the end of disenrollments driven by redeterminations of eligibility during the Unwinding.

Table 1 presents Q1 Medicaid enrollment for each of the “Big Five.” These figures are net of disenrollments, re-enrollments, and new enrollments; they reflect both and contractions in market footprints. All of the companies experienced a decline in net Medicaid enrollment since the beginning of the Unwinding, but three—Elevance (-25.5%), Centene (-20.6%), and CVSHealth/Aetna (-14.3%)—saw percentage declines in the double digits, while Molina’s dropped less than 1 percent.

Only Centene, Molina, and UnitedHealth Group reported Medicaid revenues for Q1 (Table 2). While net Medicaid enrollment for each of these companies has declined since March 2023, Medicaid revenues for each have increased. In Centene’s case, the increase is small (0.3%); in the case of Molina (up 28.1%) and UnitedHealth Group (up 23.0%), the increases are much larger. One contributing factor is what Centene and Molina managements characterized as a better “alignment” between capitation rates they are receiving from state Medicaid agencies and the “acuity” (i.e., need for health care) of the enrollees whose care they have contracted with those agencies to manage.