The Pulse

COVID Impact To linger Into 2024

The direct and indirect effects of COVID-19 from public health and public policy standpoints will continue to influence top- and bottom-line results across a wide range of businesses

2023 U.S. Accident & Health Insurance Market Report from S&P Global Market Intelligence focuses on key measures of growth and profitability for accident, major medical, government-associated health and supplementary health insurance written by U.S.-domiciled property and casualty, life and managed care insurers that file annual statements with the National Association of Insurance Commissioners. View the full analysis, including report methodology, here.

Though the most dramatic fallout from the pandemic on claims payments may be in the past, the forthcoming rollback of lingering emergency public policy initiatives will have a significant impact on premium volumes within specific U.S. accident and health, or A&H, business lines. Medicaid rolls swelled as the Biden Administration renewed the COVID-19 public health emergency on multiple occasions, including as recently as Jan. 11, but they could begin to contract as soon as April under legislation that passed Congress at the end of 2022. Many of those Americans who will be disenrolled from Medicaid in the next 18 months may transition to private or employer-sponsored health plans, but the extent and timing of uptake remain uncertain.

S&P Global Market Intelligence projects that overall U.S. A&H premiums earned will increase between 2021 and 2026 at a compound annual rate of 5.0%, approximately 1.6 percentage points below the pace of expansion during the previous five- and 10-year periods. Growth will be uneven across lines as the expected downward pressure on individual Medicaid business in 2023 and 2024 mitigates a variety of other factors that favor top-line expansion, including the migration of recipients into private plans. Outsized growth in Medicaid premiums helped push the overall premium growth rate to nearly 8.1% in 2021; the absence of redeterminations in 2022, we estimate, likely helped support a slightly higher level of expansion in 2022.

Key findings from the new report include:

The ratio of incurred claims to premiums will remain above 83% through the course of our projections, not far removed from pre-pandemic historical averages but well above the 2020 low of 80.3%.

S&P Global projects that the rate of growth in A&H business linked to government programs, including Medicaid, Medicare, Federal Employee Health Benefits and the Children’s Health Insurance Program, or CHIP, will lag the overall industry for the first time in more than a decade in 2023 as a result of the effects of Medicaid redeterminations. Their projection for government programs earned premiums growth of only 2.6% in 2023 compares to an outlook for 4.5% expansion across all A&H lines.

S&P Global’s outlook for the individual and group comprehensive major medical lines assumes half of the resulting expansion will hit in each of 2023 and 2024, indexed for business that we expect could move to California entities outside of their coverage universe. This will lift the rate of growth in premiums earned for the combination of the comprehensive major medical lines to 9.3% in 2023, they project, from an estimated 1.7% in 2022. The fastest annual growth rate in those lines during the previous 10-year period was 6.6% in 2021. After another year of outsized growth in 2024 at 7.9%, S&P Global projects a return to low single-digit rates of expansion in 2025 and 2026.

S&P Global expects premiums in the group protection lines to rise annually by between 3.3% and 4.0% from 2023 through 2026. This outlook does not anticipate a severe recession during that period nor a material rise in long-term disability claims from unresolved medical conditions attributable to previous COVID-19 infections.