Insurers' outlook is stable for 2023, but high Medicare Advantage utilization rates could present challenges, Moody's said in a Nov. 20 report.
Moody's rated the health insurance industry as stable for 2023, but it likely will see lower revenue growth than the 12% rate the industry saw in 2022.
Medicare Advantage utilization rates have slowed growth, according to Moody's report. With the exception of Centene, every major insurer reported higher medical loss ratios in the third quarter of 2023 than in the same period in 2022.
Here are three other headwinds from Moody's report:
- The 2024 Medicare Advantage star ratings were positive for Aetna but negative for Centene, according to Moody's report. These ratings will affect bonus payments from CMS in 2025. Aetna improved the number of overall members in contracts rated four stars and above. Elevance Health saw the number of members at four stars and above contracts decline and Centene made improvements, but overall results remained poor, Moody's noted.
- GLP-1 drugs present an opportunity and risk for insurers. Demand for the high-priced weight-loss and diabetes drugs is growing. Clients are looking for ways to manage the cost of these drugs, but the risks are high for self-paid employer clients, Moody's said.
- Declining enrollments due to Medicaid redeterminations are one factor behind slowed revenue growth, Moody's said. The analyst expects most members disenrolled to enroll in employer-based or individual market coverage.