On July 18, Unitedhealthcare reported its second quarter (Q2) financial earnings, kicking off the Q2 cycle in which health insurers will announce their quarterly results, detail major financial gains and losses, and provide insight into how they expect to perform over the following quarter. While the audience for these reports is mainly financial analysts, and calls are carefully scripted to reassure investors, stakeholders in the health policy community can use them to gain a better understanding of how insurers are reacting to Affordable Care Act (ACA) implementation and the ongoing threats of repeal and replace.

Over the last few quarters, we have reviewed the financial reports of the seven largest publicly traded insurers, and have noticed an emerging trend. Many insurers are beginning to see signs of marketplace stability. Last quarter, several insurers reported that their 2017 losses are expected to be “significantly less” (Aetna) than in 2016, with some believing they will “break even” (Anthem) and others characterizing the market as “a very good business” (Centene). Other experts have confirmed that while insurers’ financial performance was rocky in 2014 and 2015, their 2016 results showed signs of improvement. Most recently, the Kaiser Family Foundation published a Q1 analysis showing that insurers are “regaining profitability.” Medical loss ratios—the share of premium dollars spent on medical care – are starting to decline and gross margins per member per month are increasing. Both are important indicators of financial health. State insurance regulators have taken note of the positive change. For example, Insurance Commissioner Teresa Miller last week commented, “Pennsylvania’s market really is stabilizing.”

So why the dire headlines? Despite insurers’ cautious optimism that their marketplace business is leveling out, insurers are now grappling with a tremendous amount of uncertainty, as the Trump Administration and Congress attempt to repeal the ACA. Many insurers have said that the failure to guarantee funding for cost sharing reductions and questions about individual mandate enforcement have directly contributed to their increased premium rate requests for 2018. Others have stated that without certainty over federal policy by summer, they may “reduce service area participation” (Anthem).

With open enrollment less than four months away, states are now evaluating rate requests and insurers are making final decisions regarding their 2018 participation. With the President declaring that we should “let Obamacare fail,” insurers’ Q2 reports are likely to provide a glimpse into how the next few months will play out. We’ll be tracking these calls to see if evidence of stabilization holds up beyond Q1 and hope to provide updates along the way. You can also access earnings materials as they occur by following the investor page links below.