Top 5 healthcare payors

The Affordable Care Act (ACA) and Medicare Advantage (MA) plans continue to drive enrollment for major health insurance companies in the U.S., with ACA marketplace enrollment jumping 21% in 2022 and breaking records in 2023. Medicare Advantage plans are also on a steady climb, accounting for more than half of the eligible Medicare population in 2023.

While scores of companies sell health insurance coverage in the U.S., a handful dominate the market. Here are the top five largest health insurance payors, based on total direct premiums earned in 2022 (the most recent year Consumer Information and Oversight Medical Loss Ratio Reports are available).

What is a healthcare payor?

A healthcare payor (also called healthcare payer) is an organization that pays for the cost of healthcare services administered by a healthcare provider. Payors can be either government or private entities. Examples include commercial insurers and government programs like Medicare and Medicaid. The primary difference between a health plan and a payor is that a health plan pays the cost of medical care, and a payor is an entity responsible for processing patient eligibility, services, claims, enrollment, or payment.

Top 5 healthcare payors by total direct premium earned

Fig. 1 – Data is from the Definitive Healthcare ConnectedCareView product, according to the most recent 12-month interval tracked in our database. Accessed September 2024.

What was the top payor by premiums earned and covered lives?

Many companies sell health insurance in the U.S., but a few large companies control a significant share of the market. Here’s a rundown of the top five largest health insurance payors in the U.S., based on total direct premiums earned in the most recent 12-month interval tracked in our database.

1. Kaiser Permanente Health Plan

Kaiser Permanente Health Plans was the top payor by premiums earned ($57.6 billion) and covered lives (9.1 million) in 2022. Most of its covered lives (7 million) are in the large group segment. Kaiser has 1 million covered lives in each of the individual and small group segments, respectively.

Kaiser Permanente’s membership primarily draws from the states where it operates: California, Colorado, Georgia, Hawaii, Maryland, Oregon, Virginia, Washington, and Washington, D.C. Californians make up most of its membership. This is likely due to Kaiser’s long history in the state.

Kaiser Permanente is a closed-network provider, which means that members must generally see Kaiser Permanente physicians and use Kaiser Permanente facilities to receive covered care.

2. Elevance Health (formerly Anthem)

Anthem changed its name to Elevance Health in 2022. The company offers commercial, Medicare, and Medicaid plans through its affiliates, including Anthem Blue Cross and Blue Shield, Wellpoint, Carelon, and others.

The payor saw $42.6 billion in total direct premiums earned and had over 6 million covered lives in 2021. Plans operate in 14 states: California, Colorado, Connecticut, Georgia, Indiana, Kentucky, Maine, Missouri, Nevada, New Hampshire, New York, Ohio, Virginia, and Wisconsin.

3. UnitedHealthcare

UnitedHealth Group has two subsidiaries: Optum and UnitedHealthcare. It offers insurance under UnitedHealthcare and healthcare products under Optum. In 2022, UnitedHealthcare had $40.8 million in total premiums earned and 7.1 million covered lives.

UnitedHealth Group health plans are available in all 50 states and the District of Columbia. The company offers employer, individual and family, Medicare, and Medicaid health insurance plans.

4. Health Care Service Corporation (HCSC)

Health Care Service Corporation Group is an independent licensee of the Blue Cross and Blue Shield Association. In 2022, the payor saw $35.6 billion in total direct premiums earned and had 5.2 million covered lives. The company sells commercial, Medicare, and Medicaid plans in five states: Illinois, Montana, New Mexico, Oklahoma, and Texas.

5. Guidewell Mutual Holding Group

Guidewell Mutual Holding Group (formerly known as Blue Cross Blue Shield of Florida) is a member of the Blue Cross Blue Shield Association, which is a network of independent Blue Cross Blue Shield health insurance companies. In 2022, the payor saw $20.2 billion in total direct premiums earned and had 2.5 million covered lives. All the company’s covered lives are in Florida.

Payor vs payer

There is some conflict regarding the use of “payer” versus “payor.” Though people often use both spellings interchangeably, “payor” is preferred by the American Medical Association (AMA). Still, the term “payer” is also widely used in the healthcare industry.

How can healthcare payors cut overspending?

All-payor claims databases

As of September 2024, 23 states had an APCD, 11 states were interested in implementing one, and two (Nevada and Indiana) were in the implementation process. To develop an APCD system, state governments must assess the local healthcare market. This includes evaluating the health insurance market and public payors, developing data submission guidelines and managing patient health data.

Though it seems like an immense amount of work and can be costly to maintain, the payoff is significant in population health monitoring and healthcare spending reduction. Because APCDs are statewide systems, they simplify data sharing between payors, providers and regulators. This allows for easy analysis of medical claims and identification of areas to prevent financial waste.

Wasteful spending costs employers up to $2 billion per year or about one-fifth of the total spend, according to a 2017 report from the American Health Policy Institute (AHPI).

APCDs can also educate payors and other stakeholders on areas overutilizing healthcare services or where preventive care could have positively impacted overall spending. Once payors have this data, they can work with providers to deliver more comprehensive care, thus improving care outcomes and reducing costs. For example, an NIH study reviewing APCD data in Virginia found that unnecessary low-cost healthcare services, like lab tests and EKGs, cost more than $586 million annually.

Blockchain

A 2022 CMS report shows out-of-pocket spending accounted for 11% of total national health expenditure. This means patients will have higher expectations for care outcomes, provider communication and data security. Like current EHR systems, blockchain eases communication between providers and payors, making data easily accessible to those who have permission to view it.

Blockchain is an expandable list of electronic records that are connected and secured using encrypting technology. The adoption of blockchain in healthcare has been slow to start but has vast potential as electronic health records (EHR) and electronic medical records (EMR) become virtually omnipresent.

Since EHR systems and healthcare facilities can be vulnerable to cybersecurity breaches, implementing blockchain could save the healthcare industry as much as $100 billion per year by eliminating fraud.

Like APCDs, blockchain compiles massive amounts of patient data, allowing easier analysis. This could allow employers who offer health plans to see the categories of care costing the most money and implement wellness initiatives to combat them. Blockchain could offer a window into why patients seek care, whether smoking cessation, weight loss or other areas.

Learn more

By combining billions of private medical and Rx claims with CMS and proprietary data, Definitive Healthcare empowers its users to better analyze healthcare market trends, develop comprehensive segmentation strategies, identify industry leaders and hone sales and marketing strategies.

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