The enormous medical response in America to the coronavirus pandemic has not put an end to US health insurers, which doubled profits in the second quarter of 2020 compared to the same time last year.
The U.S. fight against the virus has been marked by overwhelming hospitalization, testing delays and shortages of personal protective equipment (PPE), but the high gains reported by some insurers have underscored concerns about the U.S. health care model.
The country’s largest health insurer, UnitedHealth Group, reported its second-quarter profit of $ 6.7 billion compared to $ 3.4 billion last year. Anthem’s profits rose to $ 2.3 billion from $ 1.1 billion for the same three-month period in 2019. Humana reported last week that its revenues rose to $ 1.8 billion, compared to $ 940m in 2019.
Dr Steffie Woolhandler, a longtime health advocate for one-payers and a professor at Cuny Hunter College, said in normal circumstances that she considered the billions of insurance companies to be a ‘scandal’.
“It’s particularly glaring and unfavorable in a pandemic,” said Woolhandler, a co-founder of Doctors for a National Health Program.
Last week, the Energy and Commerce Committee said it had launched an investigation into business practices for health and dental insurance companies in response to the profits they have reaped during the crisis.
However, there is a simple explanation for the increases.
After a brief period of uncertainty, it became clear that the cost of providing medical care would be lower by 2020. People avoided the doctor’s office and delayed elective surgeries such as knee replacement. Those with mild symptoms of Covid-19 were initially advised to stay home unless they needed urgent care.
But the money insurance companies collect every month from individuals, known as premiums, stayed in. “Private insurance companies earn money by taking out premiums and not paying for care,” Woolhandler said.
The decline in spending was an advantage for insurers, but has already struggled with independent medical firms and rural hospitals vulnerable to closures and layoffs.
By late July, 20% of clinicians had exceeded or delayed salaries over the previous four weeks and 24% reported recent layoffs as furloughs, according to a survey of 523 physicians by the Primary Care Collaborative (PCC) and the Larry A Green Center .
“That’s not a good system,” said Andy Slavitt, a health official in Barack Obama’s administration. tweeted last week. “It is a system designed for & by insurance companies and pharma companies. Not us. Not doctors and nurses. ”
A decade ago, insurers could have kept all the profits. But under the Affordable Care Act, popularly known as Obamacare, profits are limited.
For every dollar the insurer collects from small businesses and individuals on premiums, it must spend at least 80 cents on health care. For premiums from larger employers, the minimum is 85 cents. The rest can be kept as profit and spent on administration.
Insurers who translate the limit must spend the surplus on discounts to consumers within three years. Some insurers have already started sending the checks.
The cap does not apply to profits made by subsidiaries of insurers, such as companies that manage pharmacy benefits. This means that profits could be even higher than what was reported in earnings call.
The trading group, America’s Health Insurance Plans (AHIP), defended insurers in response to a New York Times story about the profits. AHIP said in a 1000-word blog post that the coronavirus’ response is “a marathon is not a sprint”, and suggested costs could be higher for these companies.
Linda Blumberg, a fellow at the City Institute’s Center for Health Policy, said there is uncertainty for insurers, who do not yet know if there will be an increase in care if people worry less about coronavirus .
Blumberg was part of a research team that surveyed representatives of 25 insurers from April to June for a report by the Urban Institute and Robert Wood Johnson Foundation.
Insurers reported concerns about how much a vaccine could cost, how often people needed it and how companies would pay for regular testing. Some representatives also said they have reduced premiums for customers in financial trouble.
“Insurers are trying to find ways to help people through this what they can do as a result of their stronger financial situation at the moment,” Blumberg said.
But the lucrative companies reporting for the second quarter will certainly add more fuel to calls for a single-pay health program like Medicare for All. Blumberg said this conversation is part of the historic evolution of the American health insurance system.
“We have public insurance for the elderly, for certain segments of the low-income population,” Blumberg said. “There is a very serious conversation that I expect will continue, in order to introduce a public option.”
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