Medicaid Attrition Rose to 0.5% in August, Jefferies Reports

Medicaid enrollment attrition accelerated to 0.5% in August, reversing a near-flat performance in July and returning to levels seen in the first half of 2026, according to a new analysis by investment firm Jefferies.

The increase in members losing coverage brings the disenrollment rate above the 2026 monthly average of 0.3%.

August Data and MCO Performance

The investment firm's tracker, which is based on approximately 41% of expected data, showed a broad-based increase in attrition across the sector. Five of the six major managed care organizations (MCOs) tracked by Jefferies experienced total enrollment attrition between 0.4% and 0.7% in August.

Humana (NYSE:HUM) was the primary exception, with the firm reporting its results as the most favorable with approximately flat enrollment for the month. For four of the six MCOs, August's attrition rate exceeded their year-to-date averages.

Quarterly Outlook and Market Impact

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Despite the August spike, overall third-quarter attrition is tracking lower than the first-half run rate. The combined average for July and August stands at 0.2%, compared to 0.3% in the first six months of the year. Jefferies therefore expects Centene (NYSE:CNC), Elevance Health (NYSE:ELV), Molina Healthcare (NYSE:MOH), and UnitedHealth (NYSE:UNH) to post lower quarter-over-quarter attrition in Q3.

Jefferies continues to view the disenrollment trend as a driver of a morbidity shift, where lower-acuity members (those with fewer health needs) are more likely to lose coverage. This could potentially leave insurers with a sicker, more costly membership base. However, the firm noted that recent commentary from Centene, UnitedHealth, and Molina suggests the trend remains manageable and that cost performance is generally tracking to expectations.

State Policy Changes Driving Churn

The enrollment churn is being driven by several states implementing Medicaid eligibility policy changes that began in July 2026. Key examples cited by Jefferies include:

• New York: Eliminated continuous eligibility protections for certain adult beneficiaries.
• Montana: Launched work and community engagement requirements.
• Arkansas: Initiated a soft launch of a similar program ahead of its formal enforcement in January 2027.