McKinsey's predictions for payers in the next 3 years: 6 things to know

While increased utilization and labor costs will be short-term challenges for payers, profits will continue to grow through 2026, according to an analysis from McKinsey published Jan. 9. 

Here are six things to know about McKinsey's predictions for the payer segment: 

  1. Payer mix will continue to shift toward Medicare as the population ages. The over-65 population is expected to grow by 3 percent over the next five years. 

  2. Medicaid enrollment will decline as states begin redeterminations in April 2023. McKinsey analysts predict Medicaid enrollment could decline by 10 million over five years. 

  3. Commercial segments faced slowed growth in 2021 as members returned to care deferred during the pandemic. McKinsey analysts predict commercial profit margins will return to historical averages by 2026. 

  4. McKinsey analysts predict profit pools for government insurance sectors will be 50 percent higher than commercial segments by 2026. 

  5. Payer profits are expected to have a compound annual growth rate of 11 percent through 2026, reaching a $75 billion profit in 2026. 

  6. Labor and administrative costs will reduce payer earnings in 2022 and 2023, McKinsey analysts predict. Providers pushing for increased reimbursement rates will also put pressure on payer earnings.

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