Publicly traded U.S. health insurance companies saw a 22% increase in net income in 2020 to $39.5 billion, due in large part to the decline in medical claims for non-COVID conditions and significantly lower utilization, according to a new AM Best special report.
The Best’s Special Report, "Manageable COVID Costs, Delayed Care Improve Health Insurers’ Profitability," notes that as states lifted restrictions in the third and fourth quarters of 2020, utilization began to rise and elective procedures and routine care claims increased closer to their average levels before the pandemic. However, the uptick was not enough to counter the drop in utilization in the second quarter. The lower utilization and deferral of elective and routine care also more than offset the impact of COVID-related claims.
Other highlights in the report include:
Total industry revenue grew year over year by more than 13% to $773.4 billion, as a result of 14.4% growth in premium revenue, 11.8% growth in fees and commissions and 10.9% growth in other income;
With earnings at record levels, share repurchases were at the highest level of the past five years, at $15.6 billion, a 30% increase from 2019;
Enrollment for Managed Medicaid, which accounts for roughly three-quarters of total Medicaid enrollment, rose significantly from year-end 2019, with overall Medicaid enrollment rising by 14% compared with the previous year; and
The Medicare Advantage sector maintained favorable enrollment growth through year-end 2020. COVID-19 has not had a significant impact on enrollment trends; however, declines in utilization bolstered earnings for the segment. Commercial enrollment declined by 2.4% in 2020, largely due to the COVID-19-driven unemployment rate spike and loss of coverage for fully insured customers, although enrollment declines were lower than expected.
To access the full copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=307722.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
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