Health plans enjoyed record results in 2020, according to a June
11 report from A.M. Best. The report concludes that the high earnings were
driven by the pandemic-driven drop in health care utilization and bolstered by
the industry's "highest level of net premiums written, with all lines of
business reporting premium growth, including commercial business."
What's in the report:
- In 2020, carriers took in $41.6 billion in underwriting
gains — 77% more than they did in 2019, when they took in $23.5 billion.
- Underwriting income in the commercial business
increased approximately 33%, from $11.3 billion in 2019 to $15 billion in
2020.
- Underwriting income for Medicare Advantage grew
approximately 53% year over year, from $9.2 billion to $14.1 billion.
- Managed Medicaid reported the highest rate of
year-over-year growth in underwriting income, which increased to $7.1
billion compared with just $300 million in 2019.
- The decline in claims for non-COVID conditions helped
offset the impact of COVID treatment and testing claims. The majority of
individuals diagnosed with COVID were not hospitalized, but instead
isolated at home, which resulted in relatively modest claims costs.
Industry expert's view:
- "Obviously, underwriting growth is not going to
continue at the rate that it has. It will moderate," according to
Michael Abrams, a principal and co-founder of Numerof & Associates.
- He adds that the ongoing conversation about population
health, public health and social determinants of health is a critical
takeaway. Yet, "I will be surprised if all the talk matures into
meaningful action given the track record of the industry. Unfortunately,
this is an industry with a culture that thinks that talking about things
is the same as doing something," he says.
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