The potential impact is seen as “relatively modest” as the industry is better positioned than it was during the 2008 recession.
Slowing economic growth and inflation are the most likely headwinds for health insurers going forward, but their impact on the industry is not expected to be severe, according to Moody’s Investors Service.
The August Economic Report analyzes the healthcare sectors’ biggest challenges and when it comes to payers, Moody’s notes that supply chain issues, higher interest rates and labor shortages are secondary concerns.
A slowing economy, however, threatens to dampen commercial listings if jobs are lost. For example, Moody’s cites that in 2020, at the start of the COVID-19 pandemic, the number of commercial members fell by 2.7 million, or 2.4%. A 5 million increase in Medicaid enrollments offset the decline in enrollment.
Government programs like Medicaid and Medicare Advantage are claiming a much bigger slice of the pie than they did in 2008, and that, along with greater portfolio diversity, should better protect payers in today’s economic downturn.
One issue that insurers are always sensitive to is rising costs due to increased claims if commercially insured people accelerate care utilization again due to fear of being laid off, as they did in 2008.
Inflation, on the other hand, has the potential to be a problem for payers if it is long-term, lasting two years or more. Moody’s says continued inflation could cause providers to demand higher trade reimbursement, which insurers may not be able to recoup through higher member premiums. If commercial premiums exceed the rate of inflation, small businesses with less than 50 employees could drop their coverage because they are not required to provide insurance.
“Therefore, inflation could indirectly exert downward pressure on commercial listings, a key revenue driver for the industry. In a scenario characterized by both higher unemployment and higher inflation, pressure on commercial listings could intensify,” concludes Moody’s.
Paymasters have their own ideas about their top challenges, according to a HealthEdge survey. More … than 300 respondents identified manage costs and operational efficiency as the top priorities of healthcare plans today.
These obstacles ranked fourth and fifth, respectively, in the previous survey for 2021, with the change in ranking attributed to an increase in the volume of claims after the pandemic, rising costs due to delays in care and administrative systems. obsolete.
While payers are somewhat insulated from economic pressures, at least compared to other areas of healthcare, the industry has its own set of challenges to overcome.
Jay Asser is associate editor for HealthLeaders.