U.S. health insurers are starting the year in a precarious position, according to analysts at Fitch Ratings.
The rating agency announced in early December that its analysts had classified the outlook for the sector as “deteriorating,” and it ended 2025 by emphasizing that the analysts continue to believe that U.S. health insurers face substantial cost and healthcare utilization headwinds.
“Utilization has risen due to more costly and frequent provider visits,” the firm said in a commentary released recently.
Medicaid plans, Medicare Advantage plans and individual commercial health insurance policies are all coping with new regulatory problems.
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The rules for employers’ group health plans might have been more stable. But Fitch analysts think their medical costs will increase by about 9% this year.
The impact of Wegovy and other GLP-1 agonist weight-loss drugs worries Fitch analysts enough to get a mention in the new commentary.
But the analysts have noted that some of the pressure comes from the cost of treating very sick patients who need extremely expensive “specialty drugs” and inpatient hospital care.
“Utilization continues to reflect complex, high-cost claims,” along with an increase in the percentage of people who are living with chronic conditions, Fitch said.
AM Best gave a similar gloomy assessment of health insurers’ situation last year.
Stop-loss providers—companies that write insurance that protects employers’ self-insured plans against catastrophic losses—have also talked about seeing an increase in the number of very big claims as well as rising costs for ordinary healthcare, including the number of claims for $1 million or more per 1 million covered people.
Sun Life U.S. said the $1 million claim rate increased 29% between 2023 and 2024, to 221.
Tokio Marine HCC said the $1 million claim rate at plans it serves was 4.3 times higher in 2024 than in 2013.
What it means: Health insurers may not leap to offer employers good rates to win their business this year.
Executives at the insurers and stop-loss providers have repeatedly emphasized that they intend to focus on “price discipline” over any efforts to increase, or even maintain, market share.
