The “Big Five” have reported their financial and enrollment results for the first calendar quarter of 2026. The “Big Five” are the five largest publicly-traded insurers, measured by enrollment, in the Medicaid managed care market. Four of them—United Health Group, Elevance, CVSHealth/Aetna, and Centene, in that order—were also the four largest commercial health insurers by enrollment in 2025. The fifth, Molina, is by far the smallest of the “Big Five” in total enrollment, but has by far the highest percentage of Medicaid enrollees (Table 1).
In early July of last year, the budget reconciliation bill (H.R. 1) became law. According to CBO, H.R. 1 will be the primary driver of the decline in Medicaid enrollment of children (-3 million), traditional adults with dependent children (-1 million), and expansion adults (-7 million) between 2026 and 2034.
Figure 1 tracks total net Medicaid enrollment for all five companies combined for the six-year period Q1 2020 (the beginning of the COVID-19 epidemic) through Q1 2026. (Net Medicaid enrollment reflects disenrollments and new enrollments as well as mergers, acquisitions and market exits). Briefly, total net enrollment rose during the COVID epidemic, when eligibility redeterminations were suspended, and fell during the Unwinding, when redeterminations resumed. Since the enactment of H.R. 1 at the end of Q2 2025, total net enrollment has declined by 1.4 million, or 3.8 percent, from 36.2 million to 34.8 million. These declines are likely to accelerate with the January 1, 2027 implementation of work reporting requirements and 6-month redeterminations (each of the “Big Five” operates MCOs in at least 10 expansion states).
Table 1 shows net enrollment changes between the enactment of H.R. 1 and Q1 2026 by company. Each company experienced a net enrollment decline, ranging from 3.1 percent (Centene) to 5.8 percent (Molina). These declines are consistent with the 4.1 percent decline in Medicaid enrollment overall from 70.9 million in June 2025 to 68.0 million in January 2026.
Table 2 presents Medicaid revenues and medical loss ratios (MLRs) for each of the companies for which these data are available. The MLR is the percentage of a company’s Medicaid revenues that the company spends on covered services for its Medicaid enrollees. (This “simple” MLR formula is different than the MLR formula used by Medicaid).
Four of the “Big Five” now report revenues from their Medicaid lines of business. Since Q2 2025, just before the enactment of H.R. 1, the Medicaid revenues of Centene and UnitedHealth Group increased, while those of Molina decreased slightly.
Only two of the “Big Five” report MLRs for the Medicaid lines of business. The Medicaid MLR for Centene in Q1 2026 was 93.1 percent; for Molina, 92.0 percent. These MLRs are slightly higher than the insurance industry average Medicaid MLR of 91 percent in 2024 as calculated by KFF researchers.
Management-Analyst Q&A
As in Q4 2025 and previous quarters, the questions posed by financial analysts at the Q1 earnings calls relating to Medicaid focused on the projected impact of H.R. 1 on enrollment and the implications for company margins and earnings. Each of the companies expects some losses in Medicaid enrollment this year, although the estimated percentage declines vary depending in part on the states in which they operate subsidiaries.
At the Centene call, a new issue was raised: the potential impact of fraud on MCO capitation rates. The CMS Administrator have been extremely active on fraud against Medicaid, instructing states to “swiftly revalidate” high-risk providers and taking deferrals of federal matching funds against Minnesota ($350 million) and California ($1.3 billion). As chair of the White House Task Force on Eliminating Fraud, the Vice President has been particularly aggressive, personally announcing the two major deferrals that CMS has taken so far. This suggests that the issue is not likely to fade away before the midterms.
Following is an excerpt from the Centene Management-Analyst Q&A:
Q. George Hill, Deutsche Bank: “As we think about your guys’ initiatives in fraud, waste, and abuse, in particular in ABA, as we’ve had conversations with state representatives, when those issues get addressed, they tend to come out of the rate from a state perspective. So, actually, fixing fraud, waste, and abuse winds up being a headwind to rate from the state perspective. I want to know is that something that you guys see and is that a headwind that you guys navigate? And would just love to understand how those conversations go on with your state counterparts.”
A. Sarah London, CEO of Centene Corporation: “I think there are probably two components to that. So, one is where we see excess use or fraudulent behavior. And unfortunately, we have seen a lot of that, both in terms of—and I think we went into quite a bit of detail on this on the last call—but as an example, providers who were just prescribing the maximum number of hours every single week for every single patient. And so, within that and then frankly all the way down the continuum to more fraudulent behavior, that is a real opportunity to save taxpayer dollars and make sure that the fidelity of the rates that are in place for ABA are actually going to the right care. And then I think similarly making sure that whether units per utilizer or the number of utilizers are getting correctly prescribed the right therapy path and getting the right amount. So, a lot of what we’ve been focusing on is what I would call sort of “excess trend.”
And then to your point, ultimately if there is a tightening of the benefit design, that would then allow for some degree of savings in rates, but I think we’ve got a ways to go before we get to that point. And it’s really making sure that, you know, the state is paying for the right therapy for the right members at the right level. And that’s all good, right? That is exactly what we want to have happen but our focus has been in what we consider that kind of “excess trend” domain. And frankly we’re also seeing states, as I mentioned earlier, take more direct action and intervention on some of these suspect or fraudulent ABA providers—not even relying on the MCOs, but actually doing that directly because of an acknowledgement of I think the drag that that is creating on the system overall.”
Q. Dave Windley, Jefferies LLC: “I wanted to come back to the fraud, waste, and abuse topic. And a follow up to George’s question, we’ve heard some consultants suggest that fraud targets in state rate development can actually create a “go-get” for the plans in terms of the savings that you need within the rate development. I wonder if you see any of that, Sarah? … Thanks.”
A. Sarah London: “If I take a big step back on fraud, waste, and abuse, we haven’t I don’t think we’ve explicitly seen the dynamic you’re describing, where states are kind of holding back on rate and saying instead you can make up the difference in fraud, waste, and abuse. But frankly I don’t think we would be against that, right? The idea that states would let us operate more fulsomely against our mandate, which is literally to preserve program integrity, there are a lot of places where I think we are handcuffed on a relative basis, and where we could I think, again, preserving all the right benefits and the quality and the member experience, preserve taxpayer dollars. And so that’s a dialogue that I think we would be open to and you know I think as states start to think about ways to make program changes that don’t necessarily require more rate changes, that’s a perfect example of one.
And we feel like, I mean we’ve hit this a couple of times, but we feel like this is a place where we have really, really focused, where we are applying the fact that we’ve got 30 states’ worth of data, we aggregate that data, not just to look at best practices but frankly to find fraudulent providers who hang out a shingle and then get kicked out of a program and show up in another state. And so, we uniquely have an ability to get ahead of that. [Our CFO] talked about that in his remarks as well in terms of where we’re deploying AI and some of those daily algorithms that we run. And so again, I do think that there is opportunity for program reform that doesn’t necessarily create a rate headwind but creates overall continued margin improvement opportunity and stronger program integrity for our state partners.”
It’s clear that MCOs are required to report potential fraud, waste, or abuse to the State Medicaid agency’s Program Integrity Unit and to report any potential fraud directly to the State Medicaid Fraud Control Unit. What’s less clear is the implication for setting capitation rates if the MCOs detect and disrupt significant amounts of fraud by their network providers. CMS’s current capitation rate development guide doesn’t speak specifically to this. In theory, if bad actors are identified in MCO networks and terminated from participation, then the resulting drop in fraudulent claims would be reflected in encounter data that is used for rate setting in future years. The analysts’ questions suggest that some state Medicaid agencies, in response to budget pressures, may be considering increasing the savings expected of MCOs due to fraud detection and assuming those savings in current rates.
The allocation of any savings from reductions in fraud against MCOs between state Medicaid programs and MCOs is not the only issue. Aggressive MCO fraud detection efforts could result in more administrative burden on all network providers, which may discourage participation by good actors. Whatever the outcome in any particular state, these Q1 earnings calls are not likely to be the last word on this subject.