Managed Care covers health insurers and managed-care organizations. MoatScope covers ten companies here. One has a wide moat, five a narrow moat and four none.
How the industry makes money
Insurers collect premiums from employers, individuals and government programs such as Medicare and Medicaid, and profit when medical costs come in below what they priced. The largest also earn fees from pharmacy benefits and care delivery.
Where the moats are
Cost advantages and intangible assets each appear in five of the six moat-rated companies: scale strengthens insurers' hand in negotiating with hospitals and doctors, and data improves pricing.
- UnitedHealth: scale, a data and care-delivery network, and switching costs across its businesses, though the moat is currently tested by significant operational and regulatory pressure.
The narrow-moat group includes Elevance Health, Cigna, Humana, Centene and Molina. Oscar Health, Clover Health and Alignment Healthcare carry no moat.
What wears moats down
Medical costs can outrun pricing, governments set rates for their programs, and regulation of insurers and pharmacy-benefit managers can change the economics of the business.
What to watch
- Medical cost trends.
- Government program rates.
- Regulation of insurers and pharmacy benefits.
Moat ratings and quality scores on this page update as companies report. Price versus fair value for every company in the industry is in the screener.