Here are five takeaways for the health insurance sector:
1. The sector’s strong operating performance will be driven by strong employment, moderate medical costs, growth in Medicare Advantage enrollment and CMS reimbursement rate increases.
2. Fitch predicts a significant reduction in consolidation activity in 2019, although “another significant vertical integration-related transaction is not beyond the realm of possibility.”
3. In 2019, transactions in the health insurance sector will likely be focused on building out care delivery in various regions, creating care management initiatives or pursuing a deal among Medicaid specialists.
4. Insurers are planning for strong Medicare Advantage enrollment in 2019, amid growth in eligible Medicare beneficiaries, the consumer appeal of MA products and government pay rate increases. However, the private Medicaid market is less enticing from a margin and growth perspective.
5. Operating performance for participants in state health exchanges stabilized in 2018. However, the elimination of the individual mandate in 2019, as well as other changes expected to take place, calls into question whether the stability will continue.
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