Financial volatility ahead for health insurers, Fitch says

Health insurers can expect some volatility in their quarterly earnings next year because of the COVID-19 pandemic, ratings agency Fitch Ratings said Dec. 7. 

Varying costs for COVID-19 testing, treatment and vaccination will make it increasingly difficult for health insurers to accurately price premium rates. While these challenges will diminish as a COVID-19 vaccination is widely distributed, Fitch expects that health insurers will face long-term effects from the pandemic, especially as delayed services lead to more severe chronic conditions and higher healthcare costs down the road.

"Fitch anticipates increased quarterly earnings volatility among sector participants in 2021, driven by difficulties associated with incorporating the ongoing, uncertain impact of COVID-19 into premium rates," Brad Ellis, senior director of insurance at Fitch Ratings, said in a news release shared with Becker's

Fitch added that health insurers' performance could be affected if the incoming Biden administration expands the ACA to include a public insurance option, though such an option wouldn't take effect in 2021.

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