Montefiore in the News
Major U.S. Health Insurers Report Big Profits, Benefiting From the Pandemic
- August 5, 2020
Consumers are probably entitled to millions of dollars in rebates under Obamacare rules that cap companies’ profits.
By Reed Abelson | August 5, 2020
The nation’s largest insurers, like Anthem and UnitedHealth, had second-quarter profits so large they will have to pay back some of those earnings to consumers.
The nation’s leading health insurers are experiencing an embarrassment of profits.
Some of the largest companies, including Anthem, Humana and UnitedHealth Group, 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.
But the amounts that insurers are retaining have caught the attention of the Trump administration. The Health and Human Services Department advised companies to consider speeding up rebates, and on Tuesday suggested that they reduce premiums to help consumers through the economic downturn caused by the pandemic.
Just this Wednesday, CVS Health, 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.
Others had already trumpeted blockbuster results, ensuring that their stocks weathered swings in the markets. Anthem’s 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.
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’ offices and emergency rooms in fear of contagion.
The companies’ 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. Some states are discussing cutting payments to insurers that offer Medicaid plans to their residents.
“This could tilt the politics against insurers on a whole number of fronts,” said Larry Levitt, the executive vice president for health policy for the Kaiser Family Foundation, a nonpartisan research group.
And in this presidential election year, the companies’ overly buoyant position could also reignite a discussion among Democrats about “Medicare for all,” a proposal that would replace the current private health care system with a government one that guarantees coverage for all U.S. residents.
“We’re looking at the fact that health care can’t be regulated by the marketplace,” said Representative Pramila Jayapal, the Washington State Democrat who is a strong proponent of Medicare for all.
“Who knows what’s going to happen by January?” Ms. Jayapal asked. “It’s entirely possible that everything shifts on health care, wi