ACA Market 2026: Meltdown or Market Correction? What Employers and Brokers Need to Know

A few weeks ago, a report sent shockwaves through the individual health insurance market: the Wakely National Risk Adjustment Reporting (WNRAR) study. Since its release, Centene has withdrawn its earnings guidance and watched its stock fall nearly 40 percent. Oscar, Molina, and Elevance have all posted concerning Q2 earnings. Bloomberg has described the situation as a possible health insurer meltdown.

Behind the scenes, we’ve been combing through the data and speaking with contacts at insurance carriers and actuarial firms. Everyone is trying to answer the same question:

What is going on in the ACA Market?

In this week’s ICHRA Insider, we break down what we’ve learned and what it means for the future of the ICHRA market.

What Is the WNRAR and Why Does It Matter?

The Wakely National Risk Adjustment Reporting (WNRAR) is a widely respected report from Wakely Consulting Group, one of the most trusted actuarial firms in the ACA individual market. The report forecasts how health plans are likely to perform under the ACA’s risk adjustment program, using proprietary models and data submitted by carriers.

Because nearly every major insurer contributes data, Wakely has a uniquely comprehensive view of the market. The WNRAR is not just another report. It is the industry’s first look at where statewide risk scores are headed and, by extension, which carriers are about to face significant payables or receivables.

Quick Primer: The ACA Risk Adjustment Program

The ACA individual market is built on a few key rules:

• Insurers must accept everyone, regardless of pre-existing conditions.
• They cannot limit how much they will pay for your care, even if it costs $1 million.

That’s great for consumers. But for insurers, it introduces serious financial risk. To help balance that, the risk adjustment program redistributes money between carriers. Plans with healthier enrollees pay into the system. Plans with sicker members receive funds. It is a zero-sum system, which means for every winner, there is a loser.

Timing matters too:

• Diagnosis codes must be submitted by April 30 of the year following the benefit year.
• CMS pays final settlements in late June of that same year.
• This means revenue or liability tied to a plan year is not realized until 6 to 18 months later.

That is where Wakely comes in. Their forecasts provide carriers with a preview of how the numbers are likely to turn out.

Sound complex? It is.

And yet, the ACA usually operates with a certain rhythm and some predictability. As described by Wesley Sanders of Evensun Health:

“Carriers [have] tended to over-estimate their payable (or underestimate their receivable) at year end. This makes sense: carriers want to be conservative about their estimates – regulators looking at their financials want to be sure carriers have enough assets to continue to pay the claims they have promised to pay, and having a big nasty surprise in June from risk adjustment undermines regulators' confidence in a carrier and may lead to some unwelcome scrutiny.”

All of this raises a simple question: If the market had been relatively stable for years: what’s driving the current market swings?

We have three theories...

Theory 1: Regulatory Shock Is Destabilizing the Market

Back in June, Wakely released a white paper projecting the impact of HR.1 (the One Big Beautiful Bill) and the Marketplace Integrity Rules.

The outlook was grim. If enacted, Wakely forecasted:

• Enrollment could drop by 47 to 57 percent by 2026
• Premiums could rise by 7 to 11.5 percent, driven purely by worsening morbidity

In short, the ACA market could become smaller, sicker, and more expensive. If insurers respond by raising rates or exiting markets and healthier individuals drop coverage first, we could be looking at the early stages of a classic death spiral.

Theory 2: We're Witnessing a Market Correction

Here’s the counter view. Maybe this is not a collapse and death spiral. Perhaps it is a course correction.

From 2019 to 2021, the ACA market proved profitable for many carriers, prompting a wave of re-entry from insurers who had previously exited. To gain market share, some priced their plans aggressively -- particularly when competing with budget-focused players like Centene and Molina, who operate lean, cost-efficient networks by leveraging their Medicaid infrastructure. These two carriers have competitively priced premiums in the ACA market in recent years, increasing premiums by just 3% (overall) for 2025. The result? They’ve won on enrollment.

Some national carriers re-entering the market leveraged their large commercial provider networks to build new individual market plans. This gave them a unique selling point: access to popular health systems that consumers want. But it also meant significantly higher provider costs compared to budget carriers like Centene or Molina. The problem is that those budget carriers effectively anchor the market rate. There’s little room to charge more, even when your costs are higher. The result: national carriers offered “competitive” premiums that didn’t cover the actual cost of claims. In a zero-sum risk adjustment system, such underpricing becomes a financial drain. Some point to Aetna’s exit from the ACA market this year as a clear example of this dynamic.

Theory 3: The Market Is Genuinely Getting Sicker

The WNRAR gave health plans their first look at how 2025 risk scores are trending. The results were not encouraging.

• Centene withdrew its earnings guidance, citing that Wakely’s risk scores were “significantly higher than, and materially inconsistent with” expectations.
• Oscar reported $228 million in Q2 net losses, citing an increase in medical costs.
• Elevance reported rising costs in both the ACA and Medicaid.

The 2024 Risk Adjustment Report appears to confirm this theory: the number of enrollees with risk-adjustable conditions (HCCs) increased compared to previous years.

Wildcard: Fraudulent Enrollments

Another explanation gaining traction is fraudulent enrollment. According to estimates from the Paragon Health Institute, between 4 and 5 million people may have been improperly enrolled in ACA plans. With enhanced subsidies, some plans cost as little as $10 a month. Brokers can earn up to $30 per enrollee per month. For a few bad actors, that became a business model.

The new ACA Marketplace Integrity Rules are designed to crack down on this type of abuse, and CMS is implementing them with force.

The following 12 to 24 months will reveal the true scope of the issue: what was real, what was inflated, and how much it contributed to the overall stability of the ACA market.

What This Means for ICHRAs

Here’s the thing: ICHRA is only as strong as the ACA market beneath it. And the ACA market relies on one critical ingredient: regulatory predictability.

We are ICHRA optimists, cheerleaders even. But we will be the first to admit that the current uncertainty is troubling.

Some of this may be strategic posturing as Congress enters the summer legislative season. In healthcare, fear is an easy political tool. Some lawmakers are pushing to extend enhanced APTCs, while others are still trying to dismantle the ACA. The result is mixed signals, market confusion, and jittery stakeholders. Maybe it’s just noise. Perhaps it’s politics. But even if it is, the consequences for families are very real.

But there is still time to act and correct course.

In next week’s edition of the ICHRA Insider, we will share specific policy recommendations that regulators can adopt to support a stronger, more resilient employer market. We are calling for action because report after report tells the same story. Employers are facing the most significant cost increases in years.

For many employers, ICHRA remains a vital option, offering the ability to save substantial money. However, for ICHRA to reach its full potential, we need a steady foundation, clear rules, and a consistent signal that the ACA market is stable.

If we get that right, we have a once-in-a-generation opportunity to transform our healthcare system. One that is centered around families and built for affordability.