Chalkboard with insurance words on it Government-funded plans such as Medicare and Medicaid,which are administered by insurance carriers, will remain a focusfor carriers in 2020. (Photo: Getty)

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Two market reports on the health insurance industry showsimprovement in the individual market and continued growth amonginsurance segments.

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The two reports are the McKinsey and Company's "Insights into the 2020 Individual market," andthe "Best's 2020 Review/Preview" market segmentreport, released by the AM Best credit rating agency.

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Related: 7 questions about health insurance for2020

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The two reports on the whole contain good news: Best noted thathealth insurers' earnings reached record highs in 2019, and theMcKinsey report found that the U.S. individual health insurancemarket is seeing increased choice for consumers along withdecreased premiums.

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McKinsey: stronger markets, more choices

The McKinsey report found that carrier participation in the ACA exchangemarkets continues to increase. The number of insurance carriers inthe market grew both in 2019 and 2020, after three years ofdeclining participation, the report said. In 2020, there are atotal of 245 carriers in the ACA exchanges, with 27 new entrants,and only one plan exiting. This is the highest number of entrantsin a single year since 2016. Overall, the last two years have seen52 new entrants into the ACA exchanges, and only two carriersexiting the market.

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Consumer access is also increasing; the report found that theproportion of counties with only one carrier available decreasedfrom 36 percent of counties in 2019 to 25 percent of counties in2020. Presently, McKinsey's analysts estimate that 9 percent ofconsumers in the U.S. have a single carrier offered in theircounty, while 66 percent can choose from at least 3 carriers. About25 percent of Americans have two carriers available to choose fromin their county, the report said. The percentage of those with 3 ormore carriers to choose from is the highest since 2016.

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In addition to increased access to plans, consumers saw premiumsdecline for 2020. The McKinsey report found that in both 2019 and2020 premiums for all levels of individual plans decreased by about1 percent (2 percent in 2019 for the bronze plans). The Platinumplans—the plans with the most generous benefits in the individualmarket–saw increased premiums in those two years, but at much lowerrates than in previous years. Since 2015, platinum premiumincreases have been at +23 percent, +22, + 18, +2, and +3 for2020.

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AM Best: insurance segments continue to be profitable

The Best report said that U.S. health insurance companies willremain profitable in 2020 after earnings in 2019 reached recordhighs and credits the strength of the ACA markets as a reason forthat trend. "Key drivers of the growth in earnings includecontinued improvement in the individual Affordable Care Act (ACA)exchange market business; broad-based decline in utilization; andpersistent lower medical cost trend, especially for prescriptiondrugs," the report said. "Premium revenue for the publicly tradedsegment grew by 13 percent on average, driven mainly by premiumincreases as overall membership remained essentially flat."

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The report also said government-funded plans such as Medicareand Medicaid, which are administered by insurance carriers, willremain a focus for carriers, since so many Americans are on theseplans. The company expects Medicaid earnings to remain profitablethis year, even though enrollment has been declining. Growth amongMedicare plans is expected to continue "for the foreseeablefuture," although some types of plans could have relatively smallprofit margins, the Best report said.

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