The Health and Medical Insurance industry, which is made up of carriers of private and public health, medical and dental insurance, has been characterized by growth over the five years to 2021. This growth is a result of consistent increases in healthcare expenditure and medical cost inflation, in addition to a sharp decline in the uninsured rate. Industry revenue is correlated with total health expenditure, as operators increase premiums to maintain profitability. Moreover, amid the COVID-19 (coronavirus) pandemic, the industry experienced an influx of enrollment through expanded Medicaid eligibility, in addition to lower operating costs due to lower healthcare utilization. As a result, industry profit has increased over the past five years, while industry revenue has grown an annualized 5.1% to $1.1 trillion in 2021.
In 2017, several of the key aspects of the Affordable Care Act (ACA) were repealed. The most significant for this industry was the repeal of the health insurance mandate, which required all individuals to either purchase health insurance or pay a penalty. Without this mandate, demand for private health insurance has been slowly falling. In response to attacks against the ACA, many politicians have begun pushing for expansions to the program to further integrate it into the regulatory fabric of the country. Moreover, in 2020 and 2021 amid the coronavirus pandemic, demand has partially shifted from private to public sources of income as a large number of individuals lost their jobs and became eligible for Medicaid, which did not count expanded unemployment insurance or one-time stimulus checks from the Coronavirus Aid, Relief & Economic Security (CARES) Act and other fiscal packages as income. As a result, industry revenue is expected to grow 6.6% in 2021 alone.
Over the five years to 2026, revenue is forecast to rise at an annualized rate of 4.4% to $1.4 trillion. Key sources of growth include medical cost inflation and increased demand from the aging US population. As the baby boomer generation ages, more people will need medical coverage, and the retirement of baby boomers will particularly increase Medicare expenditure. The private-sector insurance market will also benefit from the needs of the aging population, specifically from individuals who supplement government coverage with private insurance.
Source: IBIS World