How Many Health Insurance Companies Are There in the US? 2020 Edition

Last modified: December 7, 2020

There are currently hundreds of health insurance companies based in the US. Find out what makes this lucrative market so profitable with these latest stats and facts.

  • In 2017, the number was estimated to be at around 907 health insurance companies. In total, there were 5,654 insurance companies registered throughout the US

Since its inception, the global insurance market has grown exponentially, reaching profits of over 3.6 trillion euros annually. This is certainly understandable seeing how people around the world want to be covered against risks to avoid paying higher costs.

This article will focus on health insurance, more specifically, on understanding how many health insurance companies in the US operate in this broad, yet lucrative field of insurance. If you want to find out more about health insurance (and insurance in general), just keep on reading.

 

What Is Health Insurance?

A definition of health insurance is long overdue. In general, health insurance is one of the main types of insurance and it works by covering the medical expenses of a person by spreading the risk over a large number of people. In other words, a person might not need healthcare for several years, yet their monthly health insurance payments (alongside those of other people in the same scenario), allow the insurance company to easily fund the medical treatment required.

This brings us to our next question: “just how big is the health insurance industry?”

Very. Overall, it’s a highly competitive market with a plethora of large businesses vying for their slice of the pie. As a result, the most important feature of an insurance company is to estimate the risk of healthcare and the overall healthcare expenses over a total risk pool. By doing so, health insurers can create routine financial structures — usually in the form of a monthly premium or payroll tax — to obtain the money required to fund medical expenses, as specified in the insurance contract.

This article will, therefore, shed some light on the various types of health insurance offered by US-based providers, while also highlighting the size of the industry and its profitability.

US Health Insurance Industry Overview

To this day, the US lacks a uniform healthcare system, making it quite unique when compared to other developed countries. From a theoretical standpoint, the US health insurance market is a hybrid system since healthcare funding comes from numerous sources and there is no standard across the 51 states.

This hybrid status makes the US healthcare and health insurance markets highly-inefficient (and also hard to understand), leading to the appearance of numerous challenges. For instance, millions of US citizens currently lack insurance due to the high cost of insurance premiums. State-sanctioned policies have been adopted to help reduce the number of uninsured; they’ve had some success, yet the battle is far from over.

So, how many health insurance companies are there in the US?

In 2017, the number was estimated to be at around 907 health insurance companies. In total, there were 5,654 health insurance companies registered throughout the US.

US Healthcare Expenses

Lacking health insurance exposes US citizens to high risks, granted that US healthcare is some of the most expensive around the world. For instance, a simple visit to the doctor’s office can cost hundreds of dollars, whereas a broken hand might entail spending a few thousand. On the other hand, complex surgeries and treatments are estimated to cost hundreds of thousands of dollars.

This represents the main reason why numerous US citizens take part in a phenomenon that’s called “medical tourism,” making our question “how many health insurance companies are there in the us” almost irrelevant.

Basically, what people do is travel to other regions of the world where healthcare is cheaper to get their treatments and return to the US once they’ve recovered. Studies into this phenomenon have indicated that the cost associated with traveling to another country (flights, hotels, food), alongside the actual treatment plan can still be much cheaper when compared to the US-based alternative. On the other hand, not everyone follows these health insurance industry trends and many people in the US still choose to carry out their treatments in the States (sometimes there is no viable alternative), leading to huge medical expenses that translate into medical debt.

Luckily, the US is known for its superior quality of healthcare, therefore patients can rest assured that they are receiving some of the best healthcare in the world, according to current standards.

What do US health insurance plans cover?

Naturally, our health insurance industry overview must also include the health insurance plans that this insurance policy covers. As such, the factors outlined above are meant to indicate why health insurance is quintessential if you live in the US. In general, most insurance plans offer a variety of medical services, including but not limited to hospitalization, emergency services, laboratory tests, maternity, new-born care, mental health, prescription drugs, surgery, rehabilitation services, substance-abuse treatment, outpatient care, paediatric services, dental care, vision care, preventive services, and more.

Costs associated with US health insurance

Yet another one in the series of health insurance industry trends in the US includes the payment of monthly or yearly premiums; the general consensus regarding insurance is that if you pay your monthly or yearly premiums, you should be covered. However, the reality is much harsher in the case of US health insurance. Namely, insurers generally add several other costs to their insurance contracts, in the form of cost-sharing, annual deductibles, co-payments, and coinsurance. In simple terms, numerous health insurance plans ask patients to pay a specific amount of money each time medical treatment is required, depending on the terms of the contract.

Health Insurance Companies Profits Graph

A study carried out by the National Association of Insurance Commissioners in the US has reported that in 2018 the health insurance industry earned a total of $23.4 billion, which is an increase when compared to the $16.1 billion net earnings threshold reached in 2017.

Source: NAIC

Similarly, it’s worth pointing out the fact that the profit margin has also increased to 3.3% in 2018, as opposed to 2.4% in 2017.

Based on this data, we can assume that the health insurance industry is growing, according to our health insurance company profits graphIt is also important to mention that the value of MA premiums has also increased considerably, reaching the value of $200 billion in 2017, which is double the value it had been a decade ago. The same study has also reported that between 2017 and 2018, the net earned premium increased by 6.5%, rising to $42.8 billion. Likewise, the expenses of the healthcare industry increased by another 5%, which may have led to higher insurance plan costs for US residents.

Health Insurance Industry Revenue

The actual revenue of the US health insurance industry is considerably higher when compared to its reported profits. Reports indicate that in 2017 the total net premiums of the whole insurance industry were estimated at a staggering $1.2 trillion. What’s more, 52% of this figure covers life and annuity insurance, which also includes health insurers, as reported by an S&P study. As such, it has been reported that the actual health insurance industry revenue in the US, for the year 2017, was approximately $670.1 billion.

Here are a few more relevant statistics concerning the size of the health insurance market in the US:

  • Some 907 health insurance companies were registered in the United States in 2017, according to the National Association of Insurance Commissioners;
  • During 2017, as much as 870,600 people were employed by the health insurance industry, according to the health insurance industry employment statistics. Based on this, we can safely assume that the figures outlined above are accurate, judging by the sheer size of the market;
  • $4.1 trillion were invested (back in 2017) in the life insurance and annuity markets, including health insurance;

Conclusion

It’s clear that US healthcare and health insurance systems need fixing. Currently, too many people face large financial burdens due to the high costs of healthcare and insurance; and judging by the health insurance profits statistics, it shouldn’t be like that. Because of this, numerous studies have shown that many US residents choose to avoid seeking help for their conditions, leading to worsening symptoms and even higher costs later down the road.

To ensure the sustainability of the healthcare and insurance markets, as well as the exceptional quality of life for US residents, it is essential for uniform policies to be adopted to ensure access to healthcare for everyone. Indeed, setting up a universal healthcare system from scratch is difficult, but the current state of affairs is unfair to individuals coming from households that are situated below the US poverty line. Now that we have answered how many health insurance companies are there in the US, it is high time for several improvements in the health insurance industry to take place.