The pandemic continues to generate uncertainty for U.S. health insurers for the remainder of 2021 and beyond, but operating margins were surprisingly stable for full year 2020, despite quarterly volatility driven by waves of COVID-19 testing and treatment, according to a new report released by Fitch Ratings.
The health insurance sector’s collective full-year operating performance was heavily supported by an unexpected level of government and market-driven deferral of low-intensity and elective healthcare services, which was critical in offsetting an enormous increase in healthcare utilization related to COVID-19. Absent this deferral of care, Fitch believes that the sector would likely have faced intense margin pressure during the year.
Health insurers entered the 2021 premium pricing season equipped with far more information than they had the previous year in terms of COVID-19 testing and treatment costs and the pandemic’s influence on the behavior of healthcare consumers. Insurers have also incorporated expectations for a surge in healthcare utilization due to previously delayed elective procedures and the likelihood of elevated severity of disease diagnosis due to delayed routine physician visits and diagnostic testing.
However, significant uncertainty remains around the ultimate success of the U.S. vaccination campaign, particularly in terms of the percentage of the population that becomes fully vaccinated and the effectiveness of currently available vaccines on existing SARS-CoV-2 variants and those that have yet to emerge. The durability of vaccine protection over time and the extent to which “pandemic fatigue” will work against COVID-19 mitigation strategies are also concerns. Fitch believes these uncertainties could drive continued quarterly volatility in the operating performance of health insurers into 2022.
“U.S. Health Insurers’ 2020 Results and 2021 Expectations: A Relatively Stable End to a Turbulent Year, But Uncertainty Lies Ahead” is available at www.fitchratings.com or by clicking the link above.
Source:-https://www.fitchratings.com/research/insurance/us-health-insurer-margins-remarkably-stable-in-2020-2021-uncertainty-remains-05-05-2021
