Health and Medical Insurance Carriers

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 950 heath and medical insurance carriers offer financial protection against medical expenses by pooling risks and providing coverage for healthcare services in exchange for premium payments. Most Americans have health insurance coverage through private employer-sponsored plans. Individuals may purchase coverage directly from an insurance company or through federal or state marketplaces. Federal and state governments contract with private insurance carriers to offer Medicare (for adults age 65+ and the disabled) and Medicaid (for low-income and disabled individuals) policies.

Underwriting Risk

Profitability for healthcare insurance companies is directly related to an ability to predict, price for, and effectively manage medical costs.

Highly Regulated

The regulatory environment in the health and medical insurance industry is complex and involves a myriad of federal, state, and local requirements that impact operations and profitability.

Industry size & Structure
Industry Forecast
Health and Medical Insurance Carriers Industry Growth
Source: Vertical IQ and Inforum

Recent Developments

Jun 16, 2024 - Labor Costs Increase
  • Health and medical insurance carrier industry employment was unchanged during the first four months of 2024, according to the US Bureau of Labor Statistics (BLS). Average hourly earnings of production and nonsupervisory employees increased slightly during the first four months of 2024, according to the BLS. Health and medical insurance industry sales are forecast to grow at a 6.52% compounded annual rate from 2024 to 2028, faster than the growth of the overall economy, according to Inforum and the Interindustry Economic Research Fund, Inc.
  • A small portion of the population is responsible for a very large percentage of total health spending in a given year, according to an analysis of Medical Expenditure Panel Survey (MEPS) data by Health System Tracker. People aged 55 and over accounted for 55% of overall health spending in 2021 despite making up only 31% of the population. People under age 35 made up 44% of the population but were responsible for only 21% of health spending. Average healthcare spending per person for enrollees ages 60-64 in large employer plans was higher than average spending for traditional Medicare beneficiaries ages 65-69.
  • The Centers for Medicare and Medicaid Services finalized a 0.16% cut to the benchmark Medicare Advantage rate for 2025. The benchmark rate excludes risk adjustment payments. Health insurance companies may carry out threats to scale back benefits, hike premiums, and reduce provider payments as a result, according to Modern Healthcare. Centene and CVS Health, which owns Aetna, threatened to reduce benefits if the base rate did not increase. Elevance Health said it would offer fewer Medicare Advantage plans if the payment reduction took effect. It was the second consecutive year that the agency reduced payments and the first time since 2018 that it didn't offer a higher rate in the final rule than it proposed. The lower base rate partially reflects the continued three-year phase-in of a new risk-adjustment model, and Medicare Advantage insurers should expect a similarly low rate in 2026 for the same reason, according to Dean Ungar, vice president and senior credit officer at Moody’s Ratings. Many health insurance companies say that the benchmark rate is not actuarially sound because it does not account for the higher medical costs that they experienced at the end of 2023, according to Modern Healthcare. Hospitals and technology companies also reported that Medicare Advantage utilization rose in the final months of the year.
  • More than two dozen states have considered legislation designed to minimize prior authorization delays and denials, and nine states have enacted new laws, according to the American Medical Association. Insurers have long required doctors to obtain approval before they’ll pay for certain drugs, treatments, and procedures. Many doctors and patients say that insurers have increased the use of prior authorization, causing delays and denials of care that are harming or even killing people, according to the Stateline news site. Insurers argue that prior authorization ensures that doctors only prescribe therapies and treatments that are medically necessary, protecting patients and lowering health care costs. Prior authorization “is designed to ensure that clinical care aligns with evidence-based recommendations — not to deny or discourage patients from getting the care they need,” Robert Traynham, a spokesperson for AHIP, a trade group formerly known as America’s Health Insurance Plans, told Stateline. Some who support curbs on prior authorization caution that the new state laws might not make a significant difference, largely because they lack strong enforcement mechanisms.
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