Health Insurer Financial Insights Volume 4

As we present the fourth edition of our Health Insurer Financial Insights newsletter, we continue to operate in the midst of unprecedented times.

This newsletter focuses on profitability trends for public and non-public health insurers, including their claims experience through the third quarter of 2020. Section 4 provides insight into how health carriers are reporting the impact of COVID-19. Our aim is to keep you abreast of key market trends and dynamics that impact health insurer financial results. We hope you enjoy the newsletter and find it informative. 

Newsletter Highlights

Q3 YTD 2020 Statutory Financials – Individual, Group, Medicare, and Medicaid Markets 

Overall, health insurers continue to report improved profit margins in 2020. Incurred claims in third quarter were higher compared to second quarter of 2020 and are more in line with expected claims levels following the reduced levels in the second quarter. However, loss ratios remain low on a year-to-date basis due to the impact of COVID-19 on emerging claims experience. 

Individual Market: MLR Rebate Trends 

Continuous increases in premium rates for ACA-compliant plans in the Individual market helped improve loss ratios and margins from 2015 to 2018. However, this trend also increased MLR rebates for 2019 coverage. These rebates totaled about 1.9% of earned premiums, or $1.7 billion. We estimate that the overall MLR rebate payments following the 2020 experience year to be about $3.1 billion, or 3.2% of the 2020 Individual market premiums, due to favorable COVID-19 claims experience.

Public Companies Financial Performance

Public Companies continue to perform well. We reviewed the profitability of their insured blocks of business and noted that margins decreased, as loss ratios increased, in Q3 2020 relative to Q2 2020 as a result of increased utilization. 

COVID-19 Impact Carrier Insights

The 3rd quarter earnings calls of major public carriers provide some insight into how health carriers are viewing the impact that COVID-19 had on healthcare costs, utilization patterns, and membership, as well as details about how they are assisting their customers during this difficult period.

Health Insurer Financial Insights Volume 4