Shifts in the Payer Landscape with Jakob Emerson

Summary

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Becker’s Healthcare Podcast – Episode Summary

Episode: Shifts in the Payer Landscape with Jakob Emerson
Date: September 27, 2025
Host: Scott Becker
Guest: Jakob Emerson, Healthcare Journalist

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Overview

This episode explores fast-moving changes in the health insurance (payer) industry, focusing on government policy shifts, payer strategy, and pressures in Medicare Advantage and the ACA Marketplace. Guest Jakob Emerson provides expert insights into major recent acquisitions, legislative debates, and the financial and structural challenges facing both payers and the broader healthcare system.

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Key Discussion Points & Insights

1. Major Stories in the Payer Landscape

[00:58]

• Extension of ACA Premium Tax Credits:
  Lawmakers are debating whether to extend enhanced Affordable Care Act (ACA) premium tax credits, a decision with major ramifications for insurers and patients.
• Healthcare Service Corporation (HCSC) Expansion:
  HCSC’s acquisition of Cigna’s Medicare business positions it as a top Medicare Advantage (MA) player. Coverage of how this deal shifts industry dynamics and sets HCSC apart from competitors.

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2. HCSC’s Strategy & Market Shifts

[01:58 – 04:47]

• Acquisition Details:
  • HCSC, parent of five Blue Cross Blue Shield plans (including Illinois and Texas), acquired Cigna’s Medicare business for $3 billion in March.
  • Enrollment jumps from ~1 million to over 4.5 million in Medicare products.
  • HCSC becomes a top-ten (potentially top-five) Medicare Advantage provider in the U.S.
• Contrarian Expansion:
  • While major payers like United, Aetna, Humana, and Elevance scale back or exit some MA markets due to financial pressures, HCSC doubles down and aims for growth.
  • HCSC’s mutual (member-owned) structure means profits are reinvested into benefits rather than paid to shareholders.
  • Company touts high compliance amid increased regulatory audits and scrutiny over practices like upcoding.
• Notable Quote (Jakob Emerson, [03:56]):

  "HCSC is saying, ‘No, we're going to play the long-term game here... They basically see this as a huge growth engine for them, and they're getting in at a time when a lot of insurers are backing away.’"

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3. Regulatory Pressures and Compliance

[04:47 – 05:30]

• HCSC historically operates under the radar with few compliance issues compared to other payers.
• Regulatory scrutiny and DOJ investigations into larger for-profit MA providers contrast with HCSC’s focus on compliance.
• HCSC’s dominance in Illinois and Texas discussed.

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4. The Conflicted Status of Medicare Advantage

[05:30 – 08:02]

• Despite provider frustrations and federal investigations, Medicare Advantage remains extremely popular with seniors and continues to grow.
• Seniors are “voting with their feet” ([05:45]), even as some insurers retrench.
• Notable Quote (Scott Becker, [05:01]):

  "It seems like the federal government still seems to be full speed ahead on Medicare Advantage, notwithstanding the fact that providers don’t love it and lots of people are not that positive about it."

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5. Upcoming ACA Tax Credit Expiration Crisis

[06:10 – 08:02]

• Tense negotiations in Congress over ACA tax credits, amid a looming government shutdown. Democrats push for an extension; Republicans may allow a temporary measure, but permanent changes appear unlikely.
• Without legislative action, ACA plan premiums will spike in 2026, causing more uninsured Americans and increased uncompensated care at hospitals.
• Health systems and insurers both worry about higher uninsured rates, emergency room strain, and broader access issues.

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6. Broader Systemic Challenges: Cost, Access, and Quality

[08:02 – 10:52]

• Traditional “pick two” trade-off (quality, cost, access) is failing. All three fronts seem to be deteriorating:
  • Costs: Skyrocketing premiums and out-of-pocket expenses.
  • Access: Not everyone can find or afford care, even if insured.
  • Quality: Linked to access; as access suffers, so does quality.
• Notable Quote (Scott Becker, [08:16]):

  "Now it feels like... we seem to be increasingly struggling in all three in our nation. That’s a challenge."

• Families face unsustainable coverage costs—for many, a $25,000/year health plan is not viable ([10:52]).

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7. The Cost Dilemma: Unsustainable for Families and the System

[10:52 – 12:11]

• National average annual health coverage costs: ~$25,000 per family.
• Most families make less than $100,000/year, making these expenses unsustainable.
• Employers cover the majority, but out-of-pocket and cost-sharing remain high for families.
• The Congressional Budget Office (CBO) estimates it would cost $350 billion to extend current ACA subsidies for a decade—highlighting the difficult tradeoff between government expenditure and uninsured rates.
• Notable Quote (Jakob Emerson, [09:44]):

  "Coverage can mean one thing, but then the actual expenses can mean an entirely different thing... the sheer rise in premiums that's going to happen without any action congressionally... just seems unaffordable for everyone involved here."

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Memorable Moments & Quotes

• Jakob Emerson ([03:56]):

  "They basically see this as a huge growth engine for them, and they're getting in at a time when, as I said, a lot of insurers are, are backing away from Medicare Advantage."

• Scott Becker ([08:16]):

  "It used to be that we felt like we could win on two or three of these things... now it feels like... we seem to be increasingly struggling in all three in our nation."

• Scott Becker ([10:52]):

  "Those numbers are just not sustainable in a country where most people don’t make $100,000 a year."

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Timestamps for Important Segments

| Timestamp | Segment | |-----------|-----------------------------------------------------------------| | 00:58 | Key stories: ACA tax credits and HCSC's Medicare move | | 01:58 | HCSC becomes major Medicare Advantage player | | 04:47 | HCSC’s compliance culture vs. other payers | | 05:30 | Complexity of Medicare Advantage’s popularity and regulation | | 06:10 | ACA subsidy negotiations and hospital/insurer concerns | | 08:02 | “Quality, cost, access” tradeoff breaks down | | 10:52 | Unsustainable costs for families and employer-sponsored plans |

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Tone & Flow

• The episode is informed, conversational, and analytical. Scott Becker’s style is succinct and direct; Jakob Emerson provides detailed, data-driven insights.
• Both express concern about costs, access, and the direction of policy, drawing on both data and real-world implications for providers, insurers, and patients.

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Conclusion

The episode expertly explores shifting sands in the payer market: on one side, a bold expansion by HCSC into Medicare Advantage against the industry’s retreat; on the other, looming policy changes that may price millions out of coverage. The discussion clearly lays out the stakes for patients, insurers, providers, and the healthcare system as a whole.

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Transcript

[A]

Exciting things are happening at Beckers Healthcare Stay ahead of industry trends with the new Beckers CFO plus Revenue Cycle Podcast your go to source for insights from top healthcare finance leaders. Tune in wherever you get your podcasts and don't miss the 10th annual Health IT Digital Health RCM Conference happening September 30 to October 3, 2025 in Chicago. Join thousands of executives, engage with industry leaders and explore the future of healthcare Innov. Learn more about our upcoming [e-mail] See you there.

[B]

This is Scott Becker with the Becker's Healthcare Podcast. We're thrilled today to be joined by Jacob Emerson. Jacob covers the payer landscape better than anybody else that we know or that we follow. Just a brilliant, brilliant journalist and thinker. Jacob, tell us what stories you're watching in the payer world currently. What is top of mind?

[C]

Sure. It's great to speak with you, Scott. So I think two of the big stories that we've been following this week, or certainly actually longer for that is the ACA enhanced premium tax credits and whether those will be extended next year or some version of those extended going into next year as we see lawmakers in Washington debate some of the policies around that topic. And then as we go into the Medicare Advantage enrollment period next month, there's a new player or somewhat of a new player on the scene in terms of how large they become. It might be one that you've never heard of before, and that's Healthcare Service Corporation, which is based here in Chicago and owns a few Blue Cross plans. They're now one of the largest Medicare Advantage companies in the country because they just purchased Cigna's Medicare business. And so they're getting ready to roll out those plans across the country. And so we talked with them this week and got some details there on on what that acquisition has been like and, you know, merging those those two businesses.

[B]

Yeah. So Healthcare Services Corp, of course, is the famous Blue Cross payer that's located in Illinois. I'm located in Illinois as you are. So we're very familiar. What's the company again that they purchased? And this would make them one of the biggest Medicare Advantage providers in the country.

[C]

Correct. So Healthcare Service Corporation, like you mentioned, based here in Chicago, they're the parent company of five Blue Cross Blue Shield plans, including the one here in Illinois. And back in March, they closed on a $3 billion acquisition of Cigna's Med Medicare business. So that basically grows them from having around 1 million people enrolled in Medicare products to over 4 and a half million people virtually overnight as they get these things approved regulatory wise. And they want to keep growing that business. So that easily puts them into the top 10, potentially even the top five largest Medicare businesses in the country. And you know, that changes the landscape significantly when we're even thinking about providers contracting with Medicare Advantage plans going into next year. But I also think it's, it stands in contrast to what we're seeing a lot of the largest insurers do, Scott, that you and I have talked about. United, Aetna, Humana, elevance, all the biggest players and certainly a lot of the smaller ones as well, pulling back from a lot of Medicare Advantage markets or with some of the smaller plans even shutting down entirely just because of the, the financial pressures that have really hit this market. And yet here, in contrast, HCSC is saying no, we're going to play the long term game here. We talked with their government markets about this and basically how they're looking at it is that Medicare eligible, the Medicare eligible population is going to continue to grow significantly over the next few years and decades. And so they want a piece of that. They basically see this as a huge growth engine for them and they're, they're getting in at a time when, as I said, a lot of insurers are, are backing away from Medicare Advantage. So it just really stands in contrast, it's very interesting. I think it's also interesting because it's a, it is a mutual status company. So it, it's, it's member owned versus being traded. And that's something that they really tout too is that ultimately they have to reinvest a lot of their profits back into, back into their benefits. And, and they also mentioned to me that they have a really high compliance culture. So basically saying that, you know, in a time of high regulatory oversight and a lot of audits being done in Medicare Advantage, they feel very strongly that they're going to get through a lot of this much better than, you know, some of the larger players have. And, and you know, that that issue of upcoding that we've seen, talked a lot about that we know is investigating with some of these bigger players. So like I said, just kind of an interesting contrast company compared to some of the wider trends we're seeing in this market.

[B]

No, I think that's absolutely fascinating and certainly from an Illinois perspective, we have not seen Blue Cross Blue Shield here, Healthcare Services Corporate of Illinois generally under the radar for those types of issues and violations. So yeah, I think that's a fair statement. With them, at least is how they've lined up traditionally and so forth. And, and well put. They are, they are certainly the dominant payer in the state of Illinois. So people watch that for sure. But no, they've not gotten themselves in different kinds of trouble that you've seen with some other payers. I think that's a fair statement. Thank you. So that's fascinating to watch them doubling down on it when others are moving away from it a little bit. And it seems like the federal government still seems to be full speed ahead on Medicare Advantage, notwithstanding the fact that providers don't love it and lots of people are not that positive about it.

[C]

Sure. And you know, and to your point, Scott, too, with them being a pretty big player, I mean, they also own Blue Cross of Texas. So it's a massive company. I think it just sometimes goes a little bit under the radar because it is a, is a parent company brand. But yeah, I mean, the Medicare Advantage conversation is, it's so complicated. I mean, we've got parts of the government, the doj investigating some of the big players and what they're doing in the market. But of course, you know, it is, it is very popular with seniors. It continues to grow every year a little bit slower last year compared to this, compared to this year. But seniors are voting with their feet. They're enrolling in these plans. And, and that's exactly what we're seeing with some of these companies. They, they want to invest so that they get a bigger piece of that market. But, you know, I know I mentioned earlier on the call as well that we're seeing a lot of conversations right now happen around the ACA tax credits going into next year. And that's something that we're hearing a lot about from, from our, from our audience in terms of both the insurers and the hospitals and what that could mean for their businesses because of course, you know, the insurers offer these plans on the ACA Marketplace, so they make a lot of money from these, from these products. But then the health systems that we're talking to are also very concern that as we go into next year and we don't see some kind of solution here, some kind of either extension, even if it's not permanent, some kind of off ramp even then, you know, they're going to see uninsured rates go up, they're going to see uncompensated care go up, they're going to see a lot more people in their ERs. On top of the fact that we already know that's going to be happening coming down the pipeline because of the, the one big beautiful bill act and the Medicaid cuts. So that's also what we're keeping our eye on right now. These conversations especially, you know, Democrats are really pushing for this as part of a stopgap measure to avoid a government shutdown. Republicans do seem open to some kind of solution here, though. The, the possibility of a, an actual, a full extension and certainly a permanent one does seem to be pretty much off the table at this point. And we'll see if anything about this makes it into the actual, you know, stopgap bill versus something later on this year. But regardless, all over the country, rates are being approved with an expiration in mind. And so as of now, you know, rates are going to explode for these, for these ACA products all over the country for 2026 coverage. And that's not good for both sides of the equation here in terms of the insurers and the hospitals.

[B]

No, it seems like it's going to be a challenge. And certainly we're seeing the kind of thing in our nation where you are just seeing healthcare costs continue to escalate. And, you know, we often talk about in our country, quality, cost and access. And it used to be this constant discussion that you get two out of three of those, you know, and win on two out of three. But the hard thing was to win on all three. And it increasingly feels like cost is going poorly, access is going poorly, and it seems like quality is getting more challenging in large part because there's just not the availability of supply to take care of everybody that we have in our country. And just a, just a real challenge. So it used to be that we felt like we could win on two or three of these things. You know, for example, we can get access and quality, but cost would go up. We can get access and cost down, but quality will go down. Now it feels like on these three, this triumvirate that we've always talked about, we seem to be increasingly struggling in all three in our nation. And that's a challenge. And of course, at some point, access and quality go together, because if you can't get access, then healthcare quality, it dives as well. And so it really seems like a challenging time. And these rate increases, when people have already been feeling rates being so high, are just really, really challenging.

[C]

I think, certainly. And I think to your point, Scott, just because somebody has coverage, you know, it doesn't necessarily mean that they have good healthcare access or outcomes, because coverage can mean One thing, but then the actual expenses can mean an entirely different thing. And that's really what we're going to see next year for a lot of people, for a lot of famil ways of technically having health insurance coverage through the ACA, but having no ability to actually afford it or to afford the deductibles or whatever the cost sharing shifts that happen under these raising premiums as well. And you know, some of the predictions that we're seeing are, are just honestly staggering in terms of what certain markets, certain states, just the, the sheer rise in premiums that are, that's going to happen without any action congressionally. So, so we'll see. But on the other, on the flip side of things, the, the CBO has put out estimates of just would be to continue to offering these, these subsidies as they currently stand. So just a full permanent extension over the next decade would be $350 billion for the company or for the country. And it would ensure a lot more, millions more people. But it's just, it's so extremely expensive. So that it really, at the end of the day, really seems to come down to there's a lot of money that has to be spent here, either congressionally or by people on the ground in terms of premiums and some of the CO pays and things like that. So, you know, it's a really interesting. We'll see how this all shakes out, but it just seems unaffordable for everyone involved here.

[B]

Well, I think that's exactly hitting the nail on the head. I saw it just recently, the average cost per family of about $25,000. There are a very small number of families in our country, not that small number, but the great, great majority of families make less than 100,000 a year. If you're looking at true coverage of 25,000 a year. And of that 25,000 a year, what I saw for employer covered plans was 18, 19,000 paid by the employer, 6 to 7,000 paid by the family. Those numbers are just not sustainable in a country where most people don't make 100,000 a year. It just doesn't work. And so it's just way too much spent on health care cost. And I don't know how we solve that. I've got some ideas. If I was czar, as I would solve it, but I am not czar. So I don't think we're getting there. It is what it is. Well, Jacob, thank you. It's a fascinating situation. We got it. We have to do something to figure out these healthcare costs, and I don't know that anybody's got a great answer to it. And on top of it, we do have this increased access and supply and demand problems. So you're looking at a number of different challenges. Jacob, thank you for joining us today on the Beckford Healthcare Podcast. We always learn something fascinating on the growth in the doubling down of Healthcare Services Corp. Of Illinois. Fantastic by them. And then the healthcare cost issue and the insurance room is going up every place. That is a real challenge for our nation and for everybody.

[C]

Thank you, Scott. It was good to talk with you.