Health Insurers May See Profits Continue

by Peter Johnson

As part of their response to the COVID-19 pandemic, many insurers waived member cost sharing for health care services and treatment related to the disease caused by the new coronavirus. Those waivers were generally set to expire in early summer, but some of the nation's largest insurers, such as Anthem, Inc., Cigna Corp. and UnitedHealth Group, have now extended the benefit.

"Relatively few commercial members will have severe cases of COVID, so the likelihood that a large number of members will incur significant costs is highly unlikely," Health Strategy Associates principal Joe Paduda tells AIS Health via email. "More payers will follow suit."

The extended waivers reflect the paradoxical reality that many health insurers are thriving amid the pandemic. Utilization of elective and chronic care remains depressed, meaning most insurers are spending less on claims.

"So far, the estimates of what it would cost payers to deal with COVID-19 have — as we look back — [seem] to be wildly inaccurate," says Michael Abrams, a principal and co-founder at health care consultancy Numerof & Associates. "…what we're seeing is that the cost of decreased utilization is more than offsetting the cost of treatment and the cost of waived patient costs related to treatment for all the major insurers. All of them have reaffirmed their financials for the balance of the year."

However, Abrams hedged his assessment by noting that the ultimate impact of the pandemic is far from certain.

"[Insurers] don’t, at this point, see that this is going to hurt them financially. That still could change if we see a second wave," Abrams adds. "It could change substantially if we see rapid progress towards a vaccine, or a treatment that takes some of the fear out of getting this disease and therefore will lower the barriers to patients coming back for treatment."

Paduda says the favorable climate for insurers so far should insulate them from mild and moderate risk scenarios for the remainder of the year. He expects positive financial results across the sector, and stable premiums in commercial health insurance markets in 2021.

However, Abrams notes that regional payers, particularly those concentrated on the hard-hit Interstate 95 corridor, might be forced to raise premiums.

From Health Plan Weekly