The health insurance industry in 2019: 4 things to know

While merger and acquisition activity, elevated policy risk, and legal issues continue to pressure the health insurance market, favorable business conditions, financial factors and less near-term legislative uncertainty balance the challenges to create a stable outlook for the health insurance industry in 2019, according to S&P Global Ratings.

Four things to know:  

1. Strong payroll employment continues to boost payers' commercial segments, while the aging of Baby Boomers fuels Medicare Advantage growth, according to the credit ratings agency. In addition, states are increasingly moving high-acuity populations into managed Medicaid programs, while the ACA exchange business shows signs of stabilization and new competition.

2. "U.S. health insurers' operating performance reflects sustained earnings strength and improved earnings quality," S&P Global Ratings said. "However, we expect profitability to moderate somewhat in the current year."

3. S&P Global Ratings analysts expect to see health insurers place more emphasis on payment and delivery reform initiatives in 2019.

4. "With incentives under a value-based system coming more in line across the market, we expect greater collaboration and cooperation among payers and providers to address the next stage of market evolution," according to the credit ratings agency.

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