UnitedHealthcare, the nation’s largest health insurer, said rate increases of more than 25% and “targeted service area” reductions could reduce its Obamacare customer base by about “two-thirds,” the health insurer’s CEO said Tuesday, October 28, 2025. In this photo, UnitedHealthcare (UHC) health insurance company signage is displayed on an office building in Phoenix, Arizona on July 19, 2023. (Photo by Patrick T. Fallon / AFP) (Photo by PATRICK T. FALLON/AFP via Getty Images)
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UnitedHealthcare, the nation’s largest health insurer, said rate increases of more than 25% and “targeted service area” reductions could reduce its Obamacare customer base by about “two-thirds.”
Addressing Wall Street analysts Tuesday morning while discussing parent company UnitedHealth Group’s third-quarter earnings, executives from UnitedHealthcare said they are grappling with elevated costs due to sicker than expected patients. Thus, medical care providers need higher payments from bigger claims being submitted to the insurer, triggering UnitedHealthcare to ask regulators for double-digit rate of 25% or more in the 30 states where the company sells individual coverage under the Affordable Care Act, also known as Obamacare.
“We have submitted rate filings in nearly all of the 30 states where we participate that reflect 2025 morbidity and experience,” UnitedHealthcare chief executive Tim Noel said. “These include average rate increases of over 25%”
UnitedHealthcare has about 1.7 million enrollees in its Obamacare plans, the company confirmed. In all, UnitedHealthcare has more than 50 million health plan enrollees so if executive calculations play out according to projections, more than 1 million Americans who buy Obamacare from UnitedHealthcare may be forced to pick a different health plan.
“Where we are unable to reach agreement on sustainable rates, we are enacting targeted service area reductions,” Noel said. “We believe these actions will establish a sustainable premium base — while likely reducing our ACA enrollment by approximately two-thirds. These actions should drive margin improvement in our Employer and Individual segment in 2026 — though still below our targeted 7–9% range.”
The rising medical costs is an industrywide problem and comes at a time the federal government is shut down in large part because Congress won’t agree to extend tax credits beyond this year that would make Obamacare more affordable. The standoff is between the Donald Trump White House and his fellow Republicans who control Congress and are largely opposed to the subsidies and Democrats who support them.
Without subsidies, UnitedHealthcare’s Obamacare enrollees will on average face premium increases of 25% or more, based on UnitedHealthcare executives’ disclosures Tuesday. Consumers who plan to enroll in Obamacare for 2026 will get their first glimpse of health insurer benefit offerings as well as costs of premiums when open enrollment begins November 1.
Obamacare is among the government-subsidized health insurance UnitedHealthcare sells that also includes Medicaid coverage for low income Americans and Medicare Advantage for older adults. UnitedHealth’s third-quarter net income tumbled to $2.3 billion as the giant provider of health benefits and services works toward a recovery from rising costs of providing health insurance
UnitedHealth, which brought back Stephen Hemsley to be chief executive officer earlier this year, remains focused on “accelerating growth in 2026 and beyond,” executives said Tuesday in a statement accompanying the company’s third quarter earnings report.
In May, UnitedHealth Group suspended its financial outlook for the rest of the year and replaced its top executive, Andrew Witty, as the parent of UnitedHealthcare grapples with rising healthcare costs in its government-subsidized health insurance businesses.
“In Medicaid, the path to recovery will be more challenging,” Noel told analysts Tuesday. “States have not funded in line with actual cost trends, so funding levels are not sufficient to cover the health needs of state enrollees. While we’re making steady progress in bridging this gap with states, the mismatch between rate adequacy and member acuity will likely extend through 2026.”
Source: https://www.forbes.com/sites/brucejapsen/2025/10/28/unitedhealthcare-may-lose-two-thirds-of-obamacare-enrollees-after-price-hikes/
