DRG Fingertip’s latest health plan enrollment data – to be released later this month – shows health insurance exchange and Medicaid enrollment have both declined, demonstrating the effect of government policies reducing the number of Americans covered by publicly funded insurance. As a result, access to care and prescription drugs are being impacted.
In response to these payer dynamics, insurers are making strategic moves to scale back offerings and service areas in different geographic markets across the U.S. At the same time, Medicare growth continues as baby boomers age into the program.
Exchange policies create churn in 2026
The expiration of marketplace enhanced subsidies coupled with changes to eligibility criteria for premium tax credits are reducing exchange enrollment, though the initial impacts are less precipitous than anticipated. As of January 2026, exchange enrollment was down 3.2 percent compared to six months prior, which represents a decline of less than 1 million enrollees nationally.
While some states have remained hands-off to mitigate enrollment declines, others offer qualified consumers state-funded subsidies to help reduce the financial burden. This could bolster future exchange enrollment, particularly among healthy individuals who may have dropped coverage due to financial constraints.
Payers are responding to the shifting policies for the exchange market by revising their strategies for better positioning. Aetna completely exited the marketplace in 2026, dropping coverage in 17 states after years of losses. Other payers, including Centene, have also reduced their exchange enrollment by either limiting their plan offerings or exiting the exchange completely. An exception is UnitedHealthcare, which elected to keep its exchange footprint for 2026, though its strategy may change depending on the resulting outcomes.
Rising costs impact commercial landscape
Commercial enrollment reported by health plans dropped by 0.6% as of January 2026 compared to six months prior. Fully insured enrollment – including health insurance exchange lives – was down 3.6%, while self-insured enrollment was up 1.9%.
Many regional health plans across the country are facing mounting financial pressure as healthcare costs continue to rise and competition within the market intensifies. These challenges have made it difficult for smaller regional payers to maintain sustainable margins, resulting in several regional payers scaling back operations, exiting certain markets, or closing entirely. For example, Health Alliance Medical Plan ceased all operations as of January 1, 2026. Larger payers have been able to remain stable in the commercial market or have even grown by focusing on self-insured products.
For employers, the price of group health insurance is rising at its fastest pace in 15 years, and industry leaders don’t see a slowdown ahead. As cost-sharing increases, employees and dependents may face tough choices regarding care and prescription drugs.
Medicaid declines but shows signs of stabilizing
Medicaid enrollment dropped by nearly 2 million, which is a 2.3% decline, including a 2.1% reduction for managed care plans. Despite this decline, the market has shown signs of stability following almost six years of unprecedented operational and eligibility-related disruption.
While broad national trends suggest moderation in overall enrollment movement, the underlying drivers remain highly state-specific and continue to vary significantly across medical and pharmacy lines of business. States differ widely as some face funding gaps or new work requirements.
The takeaway is that each state’s situation is unique. Managed care procurement activity, state policy changes, fee-for-service transitions, pharmacy carve-out structures and Medicaid adjacent coverage programs (such as the Basic Health Program) are all contributing to evolving enrollment dynamics. As a result, market shifts in 2026 are indicators of broader structural and operational transformation occurring across the Medicaid ecosystem.
Medicare fee-for-service growth outpaces Medicare Advantage
Medicare enrollment increased by 3.0% with growth concentrated in fee-for-service coverage as Medicare Advantage (MA) enrollment stalls amid less favorable government policies for managed care plans in this sector.
Like the health insurance exchange sector, MA carriers have pulled back their offerings and reduced their enrollment. Squeezed by high medical utilization trends, regulatory changes and increased benefits, major MA carriers – including UnitedHealth, Aetna and Centene – made strategic changes to plans for 2026, reducing their enrollment in the space. A notable exception is Humana, which increased its MA membership and retained its service area.
At the same time, provider organizations have tightened their acceptance of MA plans. The Mayo Clinic dropped both UnitedHealth and Humana for 2026. Other health systems have avoided certain plan designs; one example in Washington state is MultiCare, which stopped accepting all non-employee Medicare Advantage PPO plans for 2026, focusing solely on HMOs. Coupled with proposed slowing rate increases, health systems and Medicare Advantage carriers could be further at odds going forward.
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This post was written by: Jodi Tonkin, Manager, Healthcare Research & Data Analytics; Sarah Wilson, Senior Product Manager; and Joshua Kelley, Director, Product Management.
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