Fitch Ratings is expecting U.S. health insurers to weather the effects of high inflation and rising interest rates amid its expectation of a mild recession in 2023.
Four things to know:
1. Fitch said in its Dec. 20 report that payers are "somewhat protected from rapidly increasing healthcare costs," thanks to the typical three-year duration of contracts with hospitals and providers. These contracts — which include negotiated payment rates — give insurers time to incorporate higher costs into premium rates.
2. Fitch said operating performance is expected to be challenged by "commercial enrollment weakness and volatile utilization rates driven by ongoing waves of COVID-19 infections, a severe flu season and elevated cases of RSV."
3. Fitch said diversity of enrollment should benefit payers, as the expected decline in enrollment that is typically seen during recessions will likely be partially offset by increased Medicare and Medicaid enrollment.
4. Fitch estimates between 5 and 14 million could lose Medicaid coverage once states start the eligibility redeterminations at the expiration of the COVID-19 public health emergency. A significant number of current enrollees are anticipated to obtain replacement coverage on state exchanges, and most large payers have greatly expanded participation in the individual market over the past few years.