Five of the largest health insurers in the United States reported more than $ 11 billion in profits in the second quarter – a drop from the same period last year, when the Covid-19 pandemic helped generate revenues. dizzying benefits.
The increase in profits last year is the result of people in the United States seeking less medical care over fears over Covid-19 while still paying for health insurance. Companies have warned pent-up demand could have an effect on their bottom line, but medical use has still not returned to normal rates.
The scrutiny that insurers faced last year after reporting such high profits – in some cases doubling the amount they made the year before – has largely faded.
The House Energy and Committee has launched an investigation into insurers last August, but the results were not made public.
In a November article for the Journal of the American Medical Association (JAMA), Dr Joshua Sharfstein of the Johns Hopkins Bloomberg School of Public Health and others have called for some of the manna to be allocated to other parts of the healthcare system, such as besieged public health services who could not afford to contact trace.
“Many public health departments are still struggling to find funds for contact tracing, testing even when the local insurer was sitting on huge profits,” Sharfstein said. “I think part of the dysfunction of the American response was that the money was piling up in one part of the healthcare universe when it was desperately needed in another part.”
The American Rescue Plan and other government funding initiatives have helped fill some of the gaps in public health funding, but Sharfstein, the school of public health vice-dean for public health practice and community engagement said it would have been better to recoup some of the insurer’s profits to support these systems instead of using taxpayer money.
The article also advised regulators to seek greater transparency about how the money was used, but aside from the congressional investigation, there has been little action on this front.
At the same time, Americans have suffered the financial shock of the pandemic and the resulting recession.
In a survey conducted between March and June, 36% of adults with health insurance said they had a problem with their medical bill or medical debt, according to a study by the Commonwealth Fund published last month. People who had Covid-19, lost income, or lost their employer-sponsored health insurance had higher rates of medical bills and debt issues than those unaffected by these issues.
Consumers will see some of the profits from last year. Under the Affordable Care Act, there are limits on how much insurers can spend on profits and administration. Money over this limit is paid out to customers as a discount. The Kaiser Family Foundation (KFF) estimated in April that insurers would issue about $ 2.1 billion in rebates this year.
Health insurers are still unsure of what could happen this year, especially with the Delta variant leading to an increase in cases in the United States. But in the second quarter earnings reports, they showed little evidence that it affected their bottom line.
UnitedHealth Group reported profit of $ 4.37 billion and raised its earnings outlook after exceeding earnings and revenue expectations. Anthem reported a profit of $ 1.8 billion and said Covid-19 variants and slowing vaccination rates added uncertainty in the second half of the year, but still raised its profit forecasts.
Humana, which covers much of the elderly, recorded the most dramatic drop in income from the same period the year before – dropping 68.7% to $ 588 million. Executives acknowledged the uncertainties associated with the pandemic, but said they expected 2022 to be a more normal year.
These findings echo a broad review of health insurer records by KFF, who found that most insurers expect health usage to return to pre-pandemic levels and do not factor in the extra costs into next year’s premiums, nor the cost that consumers pay for health care every month. Georgetown University Center for Medicare Reform (CHIR), also analyzed the first filings and found that most insurers consider the pandemic to be “a one-off event, with little or no impact on their claim costs in 2022”.
United, Anthem and Humana released their results in July, but insurers who shared their profits this week, as the public worried more about the Delta variant, saw their stock prices drop after sharing their results.
Part of the reason is that one of the companies, CVS Health, also announced that it would increase the salaries of employees at its 9,900 outlets. The healthcare giant on Tuesday said $ 2.78 billion in profits and said that starting next summer it would raise wages to $ 15 an hour – at a cost of $ 600 million on three years.
Cigna also beat expectations, with a profit of $ 1.47 billion, but its shares fell after the company reported the costs of providing medical services were starting to recover.