HealthScape Advisors report: Capital strength is becoming the defining competitive advantage for health plans

New analysis finds nearly three-quarters of health plans reported operating losses in 2025. With sustained losses, revenue growth alone can't offset rising medical costs.

CHICAGO, Aug. 6, 2026 /PRNewswire/ -- HealthScape Advisors, a leading payer advisory firm and a Chartis company, today released its annual 2026 health plan financial performance report, which demonstrates that sustained operating losses are accelerating the divide between financially resilient and financially vulnerable organizations in this new financial era for the health plan industry. Long-term competitiveness increasingly depends on an organization's ability to preserve capital, manage medical trend, and continue investing even when competitors retrench.

The report found mixed signs of improvement in 2025. Forty-two percent of health plans improved their operating margins over the prior year, and 16% of organizations that reported losses in 2024 returned to profitability. Yet nearly three-quarters of health plans still reported operating losses, underscoring that today's financial pressures are structural rather than cyclical.

"Health plans can no longer focus on growth alone," said Dan Delaney, Managing Partner at HealthScape Advisors. "Capital has become much more than a balance-sheet measure. It increasingly determines which organizations can invest in the capabilities that influence medical trend, respond to market changes, and build long-term competitive advantage."

Key findings include:

• Health plan operating losses are sustained and growing—and are most common among regional and Blues plans, but national plans are not immune.
• Nearly 75% of health plans reported operating losses in 2025. Premium revenue grew; however, medical costs outpaced those gains.
• 42% of health plans improved operating margins over 2024, and 16% of health plans that experienced losses in 2024 returned to profitability in 2025.
• Health plans with strong capital positions experienced median annual medical expense growth of 9.4%, compared with 11.6% for capital-constrained peers.
• Approximately 25% of financially vulnerable health plans announced affiliations, acquisitions, partnerships, or market exits during 2024 and 2025.

Financial resilience requires more than operational improvement

Most health plans are actively managing costs, and administrative expense trends have begun to stabilize across much of the industry. Those improvements, however, have not been enough to offset rising medical costs, which remain the primary driver of financial performance.

Organizations with stronger capital positions continue investing in provider partnerships, specialty pharmacy management, analytics, artificial intelligence, and other capabilities that help influence medical cost trend. Capital-constrained organizations have limited capacity to invest in the capabilities that would strengthen their financial resilience.

Three priorities for long-term resilience

The report concludes that sustainable performance will depend on three interconnected priorities: treating capital as a strategic asset, building more comprehensive approaches to managing medical cost trend, and strengthening provider strategy through deeper collaboration and alignment.

Together, these capabilities reinforce one another, enabling organizations to preserve financial flexibility, improve affordability and outcomes, and continue investing even during periods of sustained market pressure.

This analysis is based primarily on year-end 2025 statutory financial filings from US health plans. Read the full report and methodology at HealthScape.com. 

About HealthScape

Every payer strives for better. At HealthScape Advisors, we help them achieve it. We partner with payers to deliver better member experiences, build better provider partnerships, and realize better health outcomes. We help health plans, healthcare organizations, investors, and innovators accelerate growth, improve affordability and quality, optimize operations, communicate with purpose, and unlock the power of data. Our experience across thousands of engagements gives us an unmatched understanding of the payer landscape. When payers want meaningful results, they turn to HealthScape Advisors. Learn more at www.healthscape.com.

SOURCE The Chartis Group