Top Challenges and Priorities in 2026 for Health Plans with Government LOB 

The healthcare payer landscape is undergoing a seismic transformation, as revealed by the 2026 HealthEdge® Annual Payer Report. HealthEdge surveyed more than 550 health plan executives, including 348 leaders focused on Medicare, Medicaid, and Dual-Eligible populations. This year’s findings highlight business growth and competitive pressure – as well as costs—as the top challenges for government plans.

Challenge 1: Growth, Competition, and the Cost Crunch

For the second consecutive year, “managing rising costs” remains the leading concern across all payers surveyed (52%). However, “business growth and competitive pressure” have surged, up 16 percentage points year-over-year, to tie as the top challenge.

Among government plans, “business growth and competitive pressure” is the number one challenge. This is a 47% increase from the previous survey, signaling a maturing market where differentiation, retention, and strategic partnerships are critical for long-term viability. According to respondents, workflow automation, artificial intelligence (AI), and advanced analytics are favored strategies for achieving a competitive advantage.

Challenge 2: Regulatory Pressures and Technology Modernization

The regulatory landscape has intensified, especially following the enactment of the One Big Beautiful Bill Act (OBBBA). Nearly 90% of payers focusing on government plans report “moderate to significant” impacts on their costs and overall margins due to changing regulatory requirements.

When it comes to technology, the biggest compliance challenge is no longer fee schedules but a lack of internal IT staff and resources. Only about half of health plan leaders report being fully operationalized or making progress to meet key regulatory guidelines—underscoring the urgent need for vendor partners that can deliver foundational offerings that can automate new rule integration and improve regulatory compliance.

Challenge 3: Value-Based Care and Provider Engagement

Siloed data and legacy systems continue to hinder the scalability of value-based care (VBC) models. While 93% of payers who focus on Medicare, Medicaid, and Dual-Eligible populations have VBC arrangements in place, and 72% expect these contracts to increase, integration challenges persist.

Thirty percent of payers cited “integrating provider data across systems” as their biggest challenge in provider data management. VBC growth now depends on breaking down data silos and modernizing digital infrastructure. When it comes to improving provider relations, government plans place the highest priority on increased provider collaboration and VBC contracting (26%).

Challenge 4: Member Satisfaction—Vulnerability and Opportunity

Member satisfaction is both a growing vulnerability and a strategic opportunity. Seventy percent of government health plans cite high out-of-pocket costs and premiums as the top challenge to member satisfaction, followed by claims denials (55%), and network access issues (53%). To address these pain points, 42% of health plans are prioritizing faster, more accurate claims payments to boost engagement.

Yet, a perception gap persists: only 53–60% of government plan members view their health plan as a partner as reported in the 2025 HealthEdge® Consumer Survey, compared to 77–81% of payers who believe they are perceived that way. Improving member experience is the first step for closing the trust gap and driving long-term engagement.

The Path Forward: Modernization, Personalization, and Partnership

To stay competitive, health plans must modernize their technology ecosystems and leverage business models such as BPaaS (business process as a service) to help streamline workflows, scale operations, and maintain compliance readiness.

In addition, prioritizing member experience through personalized outreach, digital tools like mobile apps and chatbots, and clear communication is vital to long-term improvements in clinical outcomes and member retention.  Ultimately, success hinges on transforming operations from transactional to relational, delivering value at every touchpoint and securing sustainable growth.

To explore the full findings and actionable insights specifically for leaders of government plans from the 2026 HealthEdge Annual Payer Report, watch our webinar with ACAP on-demand now: The Shifting Priorities of Health Plan Leaders: Key Insights from the 2026 HealthEdge Payer Survey.