By Megan R. Wilson

Listen to this briefing

In today’s issue:

• What the health industry should watch as the Iran war drags on
• The Medicare Advantage pay increase finalized by regulators pleased Wall Street, but health insurers are still warning about potential cutbacks amid rising costs

Good afternoon, and welcome to Health Brief. While Congress is still out on spring break, the U.S. government is ramping up its threats against Iran.

Aside from the overall implications of the conflict overseas, there could be specific health care-related impacts within the United States. Let’s take a step back and explore some of the potential challenges that could ripple across the U.S. health industry.

Send your health policy tips, scoops and goss to megan.wilson@washpost.com. If you prefer to message me securely, I’m also on Signal at megan.434.

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As the war with Iran stretches on, health care costs are expected to rise alongside fuel prices. (John Raoux/AP)

	The Lead Brief

The potential risks for the medical supply chain and the U.S. health care industry are likely to increase as fighting becomes more intense in the Middle East.

The top issue to watch is the overall price of health care, driven in large part by spiking energy costs. The conflict, now in its sixth week, has spurred history’s largest supply shock to the global oil market, according to Fatih Birol, the head of the International Energy Agency.

As supply and transportation costs rise, medical products and health services are also likely to become more expensive.

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Why it matters: Those cost increases are transmitted through every step of the health system — including manufacturing, hospital operations and, finally, the price a patient or insurer pays for a product or service. That could also have an impact on federal health spending on Medicare and Medicaid.

• Ingredient costs: BASF Pharma Solutions, a leading global supplier of the chemicals that make drugs, announced last week that it would be raising prices on some of its offerings by up to 20 percent. This includes the inactive ingredients, known as excipients, that go into medication and certain active pharmaceutical ingredients (API).

“The adjustment supports BASF’s commitment to maintaining a reliable supply of high-quality products across its portfolio amid rising global energy and raw material costs,” the company said in a statement.

• Energy costs: Hospitals, on average, spend $3.16 per square foot on their energy costs each year, the Environmental Protection Agency estimated last year — or roughly $9,800 per bed. More than 40 percent of hospitals have at least 100 beds, according to health research organization KFF. That could translate to nearly $1 million in energy costs alone. As providers worry about the increased cost of labor and supplies — even before the conflict — the jump in energy costs adds an extra financial burden.
• Logistics costs: Transportation and shipping costs have risen sharply along with fuel prices, driving up the cost for the health care system to obtain key supplies and treatments. FedEx, UPS and other carriers have begun to implement surcharges of up to 27 percent to offset the massive increases in fuel costs.

→ An issue that’s largely flown under the radar is the war’s potential strain on hospitals and diagnostic laboratories that rely on helium, a by-product of natural gas extraction.

Helium, best known for filling party balloons, is used in medical imaging and therapies for some respiratory illnesses. Consumption for MRI machines makes up 17 percent of the U.S. demand for helium, which is used as a cooling agent.

However, the war with Iran is squeezing supply as QatarEnergy — a dominant helium supplier — announced last month that it has stopped producing liquefied natural gas and “associated products” following attacks on its facilities.

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Helium companies have begun to warn customers that they may not be able to fulfill contracts due to the conflict, but certain industries — such as health care — will be prioritized in the event of a shortage. (The tech industry also uses helium to make semiconductors.) But if some hospitals eventually cannot get get helium, it could take MRI machines offline and disrupt care.

→ What could be next: Conflict near crucial chokepoints such as the Strait of Hormuz has already disrupted energy flows. Next, the war’s disruption on the supply chain and shipping routes could eventually prompt bottlenecks or shortages in medical supplies, pharmaceuticals, and other goods.

While experts are saying these shortages haven’t yet materialized, the early signals — including the cost increases and the helium squeeze — suggest that the health care industry has entered a volatile period with even more potential supply shocks.

	Market Moves

The Trump administration’s finalized rate boost for Medicare Advantage plans came out after the markets closed Monday. Although stock prices of major insurers jumped in after-hours trading, Tuesday’s increases provided a clearer picture of investor reaction.

Here is a breakdown of the one-day increases per share, ranked in order of Medicare Advantage market share:

1. UnitedHealth Group: $308 (9 percent increase)
2. Humana: $197 (8 percent increase)
3. CVS Health: $78 (nearly 7 percent increase)
4. Elevance: $312 (3 percent increase)
5. Centene: $36 (nearly 3 percent increase)

“This update is significantly better for [the insurance] industry for plan year 2027 setting up potentially two years of earnings growth,” Raymond James analyst Chris Meekins wrote in a client alert Monday.

As I covered in Monday’s Health Brief, the Centers for Medicare and Medicaid Services finalized a 2.48 percent payment bump for Medicare Advantage plans — equivalent to $13 billion more for plans next year.

When the Trump administration proposed a 0.09 percent payment boost in January, the stock prices for insurers tumbled. For the largest companies, Tuesday’s gains haven’t yet made up for those overall losses.

Insurers had warned that the proposed pay bump ultimately amounted to a cut that could lead plans to exit markets, reduce benefits or raise costs for consumers. Meekins in January said it would be “political suicide” for the administration to finalize a payment rate that spurs Medicare Advantage cuts in a midterm election year.

What to watch: It’s unclear whether plans will further contract their benefit offerings or retreat from certain markets despite the pay raise. Health care costs continue to rise faster than overall inflation, insurers have warned.

“While the final rate notice is an improvement, pressure on the Medicare Advantage program remains. Health care costs continue to rise, driven by higher utilization, workforce shortages, and inflation across the health care system,” the Better Medicare Alliance said in an alert on Tuesday. “Even with this stronger final rate, the program will continue to face real financial pressure that can make it harder to preserve affordability and maintain benefits for beneficiaries.”

→ The picture will become clearer in the coming weeks as health insurers kick off their first-quarter earnings calls: UnitedHealth Group is scheduled to brief investors on April 21, Humana is having its Q1 call on April 29, and CVS Health has its first earnings call of 2026 scheduled for May 6.

During a first-quarter earnings call in February, Steve Nelson, the president of CVS Health-owned Aetna, told investors that the company has made changes to absorb the hit from the lower-than-anticipated proposed rate. Nelson said at the time that the company is “well positioned” despite the proposal.

→ In addition to raising the amount Medicare Advantage plans can expect to receive, CMS decided to delay some of the changes it had proposed to the way reimbursement rates are calculated. This also helped bump up the amount insurers can expect to receive next year.

Administration officials would not clarify when they would reconsider that reform.

	Jobs Report

Research!America, a medical and health research advocacy nonprofit, has named Russ Paulsen as its next president and chief executive officer. Paulsen, who begins the new role on May 4, is joining from UsAgainstAlzheimer’s. He’s led the Alzheimer’s patient advocacy group since February but had been with the organization since 2019. Paulsen will succeed Mary Woolley, who is retiring.

	What We’re Reading

“‘Nobody answers’: The unraveling of a patient care research agency,” Roll Call’s Jessie Hellmann writes.

“FDA backs proposals to entice pharma companies to test, make drugs domestically,” John Wilkerson and Lizzy Lawrence write at STAT.