Moody’s Ratings downgraded its assessment of the health insurance sector from "stable" to "negative" on Friday.
High medical costs and utilization are expected to continue challenging Medicare Advantage, Medicaid and commercial insurance carriers this year, Moody’s Ratings projects. A report published Friday cites inflation, pharmaceutical spending and higher mental health utilization as headwinds.
Related: Hospital margins may see modest improvement in 2025: Moody's
The chances that Congress will send legislation to President Donald Trump that would squeeze pharmacy benefit managers influenced Moody's Ratings' conclusions, especially for three largest PBMs and their parent companies: CVS Caremark and CVS Health; Express Scripts and Cigna; and OptumRx and UnitedHealth Group, the report says.
Rising enrollment in Medicare Advantage and health insurance exchange plans, and the end of the Medicaid redeterminations process that took millions off the program, would counterbalance these negative trends, Moody's Ratings reported. Yet the report also notes that enhanced subsidies for marketplace plans are due to expire at the end of the year.
Elevance Health is the only insurer out of 10 Moody's Ratings assessed that earned a positive outlook. The credit agency designated Health Care Service Corp. and Humana as negative, while CVS Health subsidiary Aetna, Blue Cross and Blue Shield of Minnesota, Centene, Cigna, Highmark, Molina Healthcare and UnitedHealth Group are seen as stable.