Skip to main content


Earnings Solid for Health Insurers in Q1 Due to Membership Growth

By Jack O'Brien  
   May 24, 2019

Though stable medical cost trends and membership growth has benefited private insurers, there is an increased political risk going forward.

Health insurers posted strong earnings during Q1 2019 thanks to "disciplined pricing," stable membership growth, and moves to handle medical costs, according to a Moody's report released Thursday.

An analysis of seven publicly-traded health insurers, as well as Aetna, found that overall adjusted EBITDA rose 29% year-over-year, though the Moody's report attributed some of the results to mergers and acquisitions (M&A) that took place.

Despite the welcome news about the strength of the sector, Moody's warned about the potential integration risks stemming from M&A activity, as well as the political uncertainty surrounding the push for Medicare for All and the future of the Affordable Care Act.

Related: 13.3M Americans Spent More than 10% of Income on Premiums

Moody's reported that membership growth rose 2% in Q1, driven primarily by Medicare Advantage (MA) and its growing popularity among seniors compared to the traditional fee-for-service options. 

Administrative services only broke with a longstanding flatline trend and jumped by 1.6% compared to Q4 2018, thanks to the strong broader economy. 

The group's median loss ratio deteriorated by 1% year-over-year, due to the increase of medical costs as a percentage of premiums in Q1.

Related: 2019 Sees ACA Marketplaces Stabilize After Turbulent 2018

This dynamic was caused by the suspension of the health insurer fee (HIF) and the continued growth among MA populations, which have higher benefit ratios among new members before those ratios settle to levels similar to existing members.

Moody's stated that the HIF suspension may lower revenues for insurers but has served as a boon for earnings and MA as well. 

Among the insurers analyzed in the report, which all experienced year-over-year growth in adjusted EBITDA for Q1 2019, Cigna led the way at 121.6%. 

Credit implication of insurance companies analyzed:

  • Aetna, Inc. (under CVS Health): Neutral
  • Anthem, Inc: Neutral
  • Centene Corp.: Positive
  • Cigna Corp.: Neutral
  • Humana Inc.: Positive
  • Molina Healthcare Inc.: Positive
  • UnitedHealth Group: Neutral
  • WellCare Health Plans, Inc.: Neutral

Moody's also noted that a key takeaway from Q1 was the ongoing legal battle between Anthem and Cigna over the failed 2017 merger.

Cigna is the plaintiff in the case, seeking nearly $16 billion in damages while Anthem is countersuing for $20 billion, charging that Cigna intentionally sabotaged the deal.

Oral arguments on post-trial briefs are set for September 11. 

Related: Winners and Losers from Healthcare's Q1 Earnings Season

Jack O'Brien is the finance editor at HealthLeaders, a Simplify Compliance brand.


The average year-over-year adjusted EBITDA growth for insurers was 29% in Q1 2019.

Despite the welcome news about the strength of the sector, Moody's warned about the potential integration risks stemming from M&A activity.

Another key takeaway from Q1 was the ongoing legal battle between Anthem and Cigna over the failed 2017 merger.

Get the latest on healthcare leadership in your inbox.