{"id":322,"date":"2020-08-08T00:36:52","date_gmt":"2020-08-08T00:36:52","guid":{"rendered":"http:\/\/tyselimited.com\/?p=322"},"modified":"2020-08-08T00:37:43","modified_gmt":"2020-08-08T00:37:43","slug":"major-u-s-health-insurers-report-big-profits-benefiting-from-the-pandemic","status":"publish","type":"post","link":"https:\/\/tyselimited.com\/co\/insights\/major-u-s-health-insurers-report-big-profits-benefiting-from-the-pandemic\/","title":{"rendered":"Major U.S. Health Insurers Report Big Profits, Benefiting From the Pandemic"},"content":{"rendered":"
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Consumers are probably entitled to millions of dollars in rebates under Obamacare rules that cap companies\u2019 profits.<\/p>\n<\/header>\n<\/div>\n

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Some of the largest companies, including\u00a0Anthem<\/a>,\u00a0Humana<\/a>\u00a0and\u00a0UnitedHealth Group<\/a>, are reporting second-quarter earnings that are double what they were a year ago. And while insurance profits are capped under the Affordable Care Act, with the requirement that consumers should benefit from such excesses in the form of rebates, no one should expect an immediate windfall.<\/p>\n

But the amounts that insurers are retaining have caught the attention of the Trump administration. The Health and Human Services Department\u00a0advised companies<\/a>\u00a0to consider speeding up rebates, and on Tuesday suggested that they reduce premiums to help consumers through the economic downturn caused by the pandemic.<\/p>\n

Just this Wednesday,\u00a0CVS Health<\/a>, which owns Aetna, the big insurer, posted much higher earnings. CVS, which also owns a large pharmacy benefit manager and a drugstore chain, said net income for the second quarter reached $3 billion, about $1 billion more than it reported for the same period of 2019, on revenues of $65 billion.<\/p>\n

Others had already trumpeted blockbuster results, ensuring that their stocks weathered swings in the markets. Anthem\u2019s net income soared to $2.3 billion for the second quarter, from $1.1 billion in 2019, while UnitedHealth reported net earnings of $6.7 billion, compared to $3.4 billion for the same three months last year.<\/p>\n<\/div>\n<\/div>\n

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Although many hospitals have been overwhelmed by the coronavirus outbreaks raging from state to state, insurers have shelled out billions of dollars less in medical claims in the last three months because expensive, elective surgeries have been postponed in many places. Moreover, people have steered clear of doctors\u2019 offices and emergency rooms in fear of contagion.<\/p>\n

The companies\u2019 staggering pandemic profits stand in stark contrast to the scores of small medical practices and rural hospitals that are struggling to stay open. And the earnings are putting a spotlight on the big insurance companies at a time when government officials in many states are facing massive budget shortfalls as businesses collapse, unemployment rises and tax revenues plummet.\u00a0Some states\u00a0<\/a>are discussing cutting payments to insurers that offer Medicaid plans to their residents.<\/p>\n

\u201cThis could tilt the politics against insurers on a whole number of fronts,\u201d said Larry Levitt, the executive vice president for health policy for the Kaiser Family Foundation, a nonpartisan research group.<\/p>\n

And in this presidential election year, the companies\u2019 overly buoyant position could also reignite a discussion among Democrats about \u201cMedicare for all,\u201d a proposal that would replace the current private health care system with a government one that guarantees coverage for all U.S. residents.<\/p>\n

\u201cWe\u2019re looking at the fact that health care can\u2019t be regulated by the marketplace,\u201d said Representative Pramila Jayapal, the Washington State Democrat who is a strong proponent of Medicare for all.<\/p>\n<\/div>\n<\/div>\n

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\u201cWho knows what\u2019s going to happen by January?\u201d Ms. Jayapal asked. \u201cIt\u2019s entirely possible that everything shifts on health care, within weeks or months after the election.\u201d<\/p>\n

Some lawmakers may also try to revive proposals to cap insurers\u2019 profits even more,\u00a0like one<\/a>\u00a0that Senator Elizabeth Warren, the Massachusetts Democrat, has suggested.<\/p>\n

\u201cThere is that money sitting there,\u201d said Dan Mendelson, the founder of Avalere Health, a consulting firm.<\/p>\n

Among the companies with robust earnings is Humana, which reported Wednesday that its net income rose to $1.8 billion for the second-quarter, compared to $940 million for the same three months of 2019. The profits for\u00a0Cigna,<\/a>\u00a0which also owns a large pharmacy benefit manager, were also higher.<\/p>\n

Under the federal health care law, insurers are required to use a fixed percentage of the money they take in from premiums for their customers\u2019 medical expenses. The companies must spend at least 80 cents of every dollar they collect in premiums from small businesses and individuals on health care, and 85 cents per dollar for large employers. The remaining 15 to 20 percent is all they are allowed under the Affordable Care Act to spend on administrative costs like overhead and marketing and to keep as profit. Any additional revenues are to be returned to consumers in the form of rebates.<\/p>\n

Insurers are currently spending a far lower portion of premium revenue on their customers\u2019 health care costs. CVS said its medical-benefits ratio was 70 percent for the quarter, compared to 84 percent in the same period of 2019.<\/p>\n

That translates into millions of dollars that some lawmakers in Congress and advocates say should wind up in the pockets of consumers.<\/p>\n<\/div>\n