Here are six things to know about McKinsey’s predictions for the payer segment:
- 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.
- Medicaid enrollment will decline as states begin redeterminations in April 2023. McKinsey analysts predict Medicaid enrollment could decline by 10 million over five years.
- 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.
- McKinsey analysts predict profit pools for government insurance sectors will be 50 percent higher than commercial segments by 2026.
- Payer profits are expected to have a compound annual growth rate of 11 percent through 2026, reaching a $75 billion profit in 2026.
- 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.
