The potential impact is considered "relatively modest" as the industry is better positioned than it was during the 2008 recession.
Slowing economic growth and inflation are the most likely hurdles to trip up health insurers going forward, but their impact on the industry shouldn't be severe, according to Moody's Investors Service.
The August economic report analyzes the biggest challenges to sectors of healthcare and when it comes to payers, Moody's notes that supply chain issues, higher interest rates, and the labor shortage are secondary concerns.
A slowing economy, however, threatens to curb commercial enrollment if jobs are lost. For example, Moody's cites that in 2020 during the early stages of the COVID-19 pandemic, commercial membership fell by 2.7 million, or 2.4%. An increase of 5 million in Medicaid membership offset the enrollment decline.
Government programs like Medicaid and Medicare Advantage claim a much bigger slice of the pie than they did in 2008, and that, along with more portfolio diversity, should protect payers better in an economic downturn today.
One issue that insurers are still susceptible to is rising costs through increased claims if commercially-insured individuals once again accelerate utilization of care due to the fear of being laid off, as they did in 2008.
Inflation, meanwhile, has the potential to be a problem for payers if it's long term, lasting two year or more. Moody's states that persistent inflation could lead to providers demanding higher commercial reimbursement, which insurers might not be able to recoup through higher premiums for members. If commercial premiums exceed the rate of inflation, small businesses with less than 50 employees could drop coverage as they're not required to provide insurance.
"Therefore, inflation could indirectly put downward pressure on commercial enrollment, a key driver of earnings for the industry. In a scenario that features both higher unemployment and inflation, there could be intensified pressure on commercial enrollment," Moody's concludes.
Payer executives have their own ideas as to what their top challenges are, according to a survey from HealthEdge. More than 300 respondents identified managing costs and operational efficiencies as the biggest priorities for health plans today.
Those obstacles ranked fourth and fifth, respectively, in the previous survey for 2021, with the change in rankings attributed to an increase in claims volume after the pandemic, rising costs due to delays in care, and outdated administrative systems.
While payers are somewhat insulated from economic pressures, at least in comparison to other areas in healthcare, the industry has its own set of challenges to navigate.
Jay Asser is an associate editor for HealthLeaders.