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Best’s Market Segment Report: AM Best Maintains Stable Outlook on U.S. Health Insurance Market Segment

AM Best is maintaining its stable outlook on the U.S. health insurance market segment for 2024, noting its continued favorable earnings, the positive impact of interest rates on investment-related financial results, in addition to growth in the Medicare Advantage (MA) business.

The U.S. health insurance industry reported flat underwriting income through the first half of 2023, after generally increasing year-over-year for the past several years, according to the new Best’s Market Segment Report, “Market Segment Outlook: U.S. Health Insurance.” This came on the heels of reduced utilization of the overall health care system during the COVID-19 pandemic, as some delayed care, which bolstered operating results. However, this trend has changed notably moving through 2023, as COVID spikes have lessened. However, several health insurers have reported greater pent-up demand for certain types of procedures in the MA segment, which has caused some elevation in utilization for this line of business, although earnings for MA have remained profitable.

The health insurance industry is well-positioned for 2024, even as it faces challenges, according to the report. Margins are expected to narrow, as the profitability of government programs (Medicaid managed care and MA) is expected to return to more normal levels.

“Earnings in both government lines of business have been above normal the past few years, driving increased profitability for some insurers and for the industry as a whole,” said Joseph Zazzera, director, AM Best. “Health insurers continue to look for ways to lower overall health care spend, focusing on improving patient health outcomes through initiatives such as value-based care models.”

Health insurers are prioritizing cost control initiatives, directing care to high-quality/low-cost locations in an effort to bend the cost curve. To encourage plan adoption, insurers are introducing strong financial incentives while still allowing members to choose their preferred place of care, whether in the doctor’s office, at home, or an alternate site of care.

“This approach is complementing the use of other initiatives such as the use of narrower networks to control costs, the combination of which could have a pronounced impact on trend-related rate increases over time.” said Sally Rosen, senior director, AM Best.

To access the full copy of this market segment report, please visit

To view a video with AM Best Associate Director Bridget Maehr about the U.S. health insurance market segment outlook, please visit

Leading AM Best analysts will review 2023 market segment outlooks for the U.S. insurance industry’s major segments, the global reinsurance industry and the delegated underwriting authority enterprises (DUAE) segment in an online briefing scheduled for Tuesday, Dec. 12, 2023, at 2 p.m. (EST). To register for the complimentary briefing, please go to

To view current Best’s Market Segment Outlooks, please visit

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit

Copyright © 2023 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.


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