Three Health Plan Predictions for 2022

It seems 2021 was another good year for the health insurance industry. While patient volumes ticked up slightly, claims still haven’t reached pre-pandemic levels, and payors have the profits to prove it.

Now, with 2021 behind us, here are three predictions for what’s to come in 2022. Already, these three health insurance trends are shaping up to make 2022 a year of good fortune for a few – and a year of angst for most of the rest of us.

The winners will almost certainly be the big for-profit insurers and other companies poised to take even more control of our healthcare system next year.

The clear losers will be, well, the rest of us. Patients will continue to see costs rise and coverage shrink, especially as the number of physicians who own their own practices dwindles, and hospital and health systems struggle to keep their margins from declining even more in 2022.

Here are three health plan predictions for the year ahead.

1. Revenues will become even more eye-popping

   In 2022, the big six for-profit insurers (Anthem, Centene, Cigna, CVS/Aetna, Humana and UnitedHealth), will become bigger, more profitable, and more powerful than ever.Executives at UnitedHealth, which didn’t even exist as a public company until 1985, recently told investors and Wall Street financial analysts that the company’s revenues will likely exceed $300 billion for the first time next year. Not just by a little bit, either, but by a lot; possibly as much as $20 billion and change.While UnitedHealth’s 2022 revenue forecast got some press, it actually may not be the first of the big six to cross over into $300 billion territory. CVS/Aetna also expects revenues at $306.5 billion in 2022.These companies have grown so fast in recent years that both have catapulted into the top five of the Fortune 500 list of American companies. CVS is #4, and United is right on its heels at #5. It is entirely possible that both will move up and overtake Apple. If that were to happen, only Amazon and Walmart would be bigger than CVS and UnitedHealth in the U.S.It will likely take a few more years before the other four big insurers haul in that kind of dough, but they all are poised to move ahead on Fortune’s list next year. Collectively, those four have posted revenue of $500 billion over the past 12 months. When you add in CVS and UnitedHealth, the six biggest insurers are now taking in more than one trillion dollars a year.

2. Insurers will continue to court Medicare members

   How have the big six managed to pull off such financial feats? In part, due to their new love interest – Uncle Sam. The Medicare Modernization Act sweetened the Medicare Advantage pot when it became law in 2003, incentivizing insurers to spend boatloads of money wooing Medicare beneficiaries into their health plans.Now, every fall, insurers rival drug companies in who can spend the most on TV commercials. But unlike restrictions on pharmaceutical advertising, insurers are under no obligation to tell prospective enrollees what they will be giving up – virtually unlimited access to every health care provider in the country – and what they will encounter – fewer choices and more requirements – if they opt for MA plans instead of traditional Medicare.The return on their investments in marketing has been impressive, to say the least. UnitedHealth, for example, now gets more than 70% of its health plan revenue from Medicare and other government programs.Not only has the federal government paid insurers handsomely to participate in the Medicare Advantage program, but insurers also quickly learned they could get considerably more money by manipulating the program’s risk adjustment mechanism. Insurers occasionally get caught and fined for inappropriate risk scoring, but the penalties are relatively modest and are chalked up as just another cost of doing business.In 2003, only five million Medicare beneficiaries were enrolled in MA plans. That number has now increased to 26 million, and at the current pace of growth, 60-70% of Medicare beneficiaries likely will be enrolled in an MA plan between 2030 and 2040.

3. Employers and individuals will struggle to afford the cost of insurance

   Around 150 million Americans get insurance from an employer or buy it on their own. Not so long ago, the employer-based system of health insurance was the source of most Americans’ coverage and big six’s revenue. But more and more small businesses can no longer afford to offer coverage to their workers. In 2010, 69% of all U.S. companies offered health benefits, according to the Kaiser Family Foundation. By 2020, only 56% did.Individuals face rising cost pressures, too. In the early 2000s, insurers embarked on a strategy to move as many people as possible into high-deductible plans. Now, consumers now pay ever-increasing amounts of money out of their own pockets before their coverage kicks in.According to the Kaiser Family Foundation, deductibles have more than doubled since 2010, and according to the Commonwealth Fund, more than 43 percent of working-age adults had inadequate health insurance, largely because of deductibles they can’t meet, when the COVID-19 pandemic began.Consequently, insurers are able to avoid paying billions of dollars for care they used to cover. It’s little wonder that the pandemic years of 2020 and 2021 have been the most profitable years ever for the big six insurers.

But as good as the past two years have been to those companies, 2022 likely will be even better. And the bigger these payors get, the more able they are to force doctors and health systems to accept lower payments for their services.

Overall, these companies have figured out how to have their way with policymakers and government officials, taxpayers, employers, health plan enrollees, and the doctors and hospitals that treat them (or at least try to).

As a result, two health insurance companies are on the threshold of becoming the biggest companies in America – bigger than any health system, and certainly bigger than any individual hospital.

In 2022, the U.S. faces a healthcare system eroded by two years of a pandemic. The decisions health insurers make will directly impact the recovery of hospitals, healthcare workers, and our own individual health and well-being. Unfortunately, more of the same profit-driving behavior is predicted – regardless of the consequences.