Medicare Advantage profits will likely be stable in 2023 but could face pressure from rising utilization rates in 2024, according to commentary from AM Best published June 30.
These trends could be widespread across the U.S., with some variation by state, Jason Hopper, associate director of AM Best said in a June 30 news release.
"MA expenses related to hospital and medical benefits, other professional services, emergency room visits, and prescription drugs have all increased by double digits in the last two years, exceeding premium growth in 2021 and dampening profitability," Mr. Hopper said.
UnitedHealthcare and Humana did not change their earnings guidance based on rising utilization, but both companies expected medical loss ratios to fall at the high end of their estimated ranges.
"Given the growing share of MA earnings in the overall industry's balance, a deterioration in MA profitability would negatively impact overall industry results," Sally Rosen, senior director of AM Best said in the news release. "AM Best believes that the health insurance industry and the MA segment will remain profitable in 2023, although 2024 profitability may be pressured."