Fitch: Large payer finances stable, but pressures mounting in 2023

The nation's largest payers saw generally stable financial results in the first quarter of 2023 despite economic uncertainty throughout the broader healthcare industry, according to a June 6 analysis from Fitch Ratings shared with Becker's.

Despite general insulation in 2022 from the cost pressures facing providers, payers should expect more attention being paid over the next few years to rising healthcare costs because of ongoing contract negotiations with providers and subsequent premium rate increases.   

"Cost pressures are being addressed in ongoing provider contracting negotiations, and we expect them to begin to emerge in reimbursement rates and follow through into premium rate increases over the next few years," Fitch analysts wrote. "The result is expected to be heightened public discourse around healthcare costs for consumers."

Three notes:

  1. For the seven largest payers, revenues increased 10.5 percent in the first quarter year over year. Profits rose 7.7 percent in the first quarter compared to 7.6 percent during the same period in 2022.

  1. Large, geographically diverse payers are seeing stable performances, while less diversified insurers are more varied and subject to local market conditions.

  1. Financial leverage for large insurers increased to 43 percent in the first quarter, compared to 41 percent year over year, or an increase of 11 percent in outstanding debt to $167 billion. 

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