Dive Brief:
- Operating performance among large, geographically diversified health insurers is “very stable,” according to a new report from Fitch Ratings.
- The group of insurers — which includes UnitedHealth Group, Elevance Health, Cigna and Humana — are aided by strong market share in largely metropolitan areas across the U.S., which gives them negotiating power with providers. They also benefit from scale and a growing number of product offerings, including commercial and individual plans, Medicare Advantage and Medicaid offerings, dental and vision plans and an increasing presence in outpatient care.
- The credit ratings agency found operating performance has become significantly more stable over the past two decades as insurers gained access to consistently updated and granular claims data that helped them predict cost and utilization.
Dive Insight:
Health insurers reported significant profits during the COVID-19 pandemic as patients put off care and avoided in-person contact.
But as the pandemic wanes, staffing shortages and high inflation are continuing to pressure healthcare providers, which could eventually impact payers. A Fitch Ratings report from last week found financial performance of the seven largest publicly traded insurers was still stable, but contract negotiations with providers could result in increased premiums.
The latest Fitch report noted UnitedHealth, Elevance (formerly Anthem), Cigna and Humana benefit from a strong competitive position that could aid them in negotiations with providers.
“Although no company has a majority share of the U.S. market, share within the metropolitan areas on which they generally focus can be high,” Fitch’s Bradley Ellis and Douglas Pawlowski wrote. “This provides these companies with significant negotiating leverage with local providers, which often have very strong market shares as well. These characteristics typically result in competitive provider networks for large insurers.”
UnitedHealth reported record revenue in the first quarter, boosted by growth in its UnitedHealthcare insurance business and its Optum health services arm. It posted $5.8 billion in profit in the quarter, up 12% year over year.
Elevance reported an 11% year-over-year increase in profit in Q1, while both Cigna and Humana raised full-year guidance after reporting earnings.
