As the health insurance reform debate has taken center stage in 2009, health insurers’ net income has continued to decline and profit margins are at their lowest level in years.
According to a new analysis released Dec. 21 by Highline Data, the health insurance industry reported a decline of 12.4% in net income, to $8.2 billion, as of Sept. 30 compared to the same period in 2008.
More than a third of health companies (335) reported underwriting losses in the third quarter, with larger market players considerably outperforming their smaller competitors. 35% ($2.8 billion) of total industry net income in the first nine months of the year was earned by the top 1% of companies ranked by 2008 total assets.
Underwriting costs, which primarily include health benefit payments, increased by 6.9% year-over-year and totaled $332 billion as of Sept. 30. Underwriting costs showed a five-year CAGR of 9.5%, outpacing total revenue, which showed a five-year CAGR of 9.2%.