Molina Healthcare stock plummeted over 20% due to a disappointing third-quarter earnings report. The company’s adjusted EPS of $1.84 missed analyst expectations by over 50%. Molina also slashed its fourth-quarter guidance to $0.35, far below expectations.

The main issue for Molina is its medical care ratio (MCR), which was 92.6% in the third quarter. This means the company had only 7.4 cents per dollar of premium revenue left after paying for medical expenses. ACA plans have been a significant challenge for Molina.

Molina’s ACA-specific MCR was 95.6% in the third quarter, well above analyst predictions and Molina’s own ratio from the previous year. Other insurers, like Centene, are also facing rising expenses for ACA plans.

The government shutdown could make things worse for ACA insurers as federal subsidies are set to end. Premium costs for enrollees are expected to double, potentially leading millions of Americans to forgo coverage.

Insurers like Molina, Centene, and Oscar Health could face challenges as ACA plans make up a significant part of their portfolios. Rising healthcare costs have contributed to the difficult environment for these companies.

If federal subsidies for ACA plans sunset, insurers may lose premium revenue due to declining enrollment. Customers with serious medical conditions may be less likely to go without coverage, impacting insurers’ bottom lines.

High-cost claimants, who made up a small fraction of the population but accounted for over 30% of medical expenses in 2024, are a significant factor in rising healthcare costs for insurers like Molina.

Costs are increasing across the board for insurers like Molina Healthcare, posing challenges for the industry as a whole. Molina’s premium-to-expense ratio for Medicare and Medicaid coverage rose to 93.6% and 92% in the second quarter, compared to last year. Centene’s health benefits ratio increased to 93%, while Oscar Health saw a jump to 91% in the second quarter. UnitedHealth Group faced pressure from investors after cutting its earnings forecast.

UnitedHealth’s stock price dropped 22% after slashing earnings forecasts, the biggest single-day move since 1998. Their premium-to-expense ratio rose to 89.4% in the second quarter. Molina expects cost trends to level out in 2026 to increase margins. UnitedHealth will report third-quarter figures on Oct. 28.

Molina’s leaders aim to stabilize cost trends in 2026 to improve margins. UnitedHealth faces investor pressure after lowering earnings forecasts. Centene and Oscar Health also saw increases in their health benefits ratios. UnitedHealth’s stock price dropped 22% after the earnings forecast cut. UnitedHealth will report third-quarter figures on Oct. 28.

Read more at Yahoo Finance: Molina Healthcare stock falls as medical costs spike, Obamacare worries mount