Health Insurance Profits Expected to Remain Stable in 2018

A recent report from AM Best, an insurance credit rating industry, predicted that health insurance profits should remain stable in 2018 despite disruptions to the ACA marketplace and other policy changes.

The report found that specific sectors of the health insurance industry, such as employer-sponsored insurance and Medicare Advantage plans, will help buoy other low-performing sectors of the market—stabilizing the overall market. The sectors of the market that are likely to perform less than or neutral to 2017 include Medicaid and private individual health insurance.

The authors at AM Best noted that any major policy changes to the ACA or other sectors of the health insurance market will not take effect until at least 2020—giving payers enough time to adjust. Additionally, the report noted that changes like the removal of the individual mandate should not have much of an impact. 

“Insurers have been able to handle the challenges facing the industry so far, and we do not expect any significant deterioration in market conditions over the next year,” they wrote.

The authors highlighted Medicare Advantage as an area that is likely to gain more profitability in 2018. Recent CMS policy has fostered higher enrollment rates in Medicare Advantage; furthermore, growth in the number of Medicare eligible patients is expected to increase in the coming years. 

“Health insurers remain focused on Medicare Advantage, given the large number of individuals aging into Medicare every day, a trend that will persist as the baby boomers turn 65,” the authors wrote.

The report also noted that the individual health insurance marketplace will likely remain stable in 2018, despite claims that it is collapsing. AM Best noted that while some payers exited the ACA Marketplaces in 2017—other payers had steady enrollment. 

They also noted that market stability will help payers manage their population health better in 2018.

“This stability provides insurance companies an opportunity to engage members in population health management and to aid in improving an individual’s health and to prevent unnecessary hospitalization owing to untreated medical conditions,” they wrote. “Furthermore, consistent membership can improve the predictability of claims experience.”

—David Costill