US health insurers doubled profits in second quarter amid pandemic

Authored by theguardian.com and submitted by exmoor456

US’s largest health insurer, UnitedHealth Group, reported $6.7bn in profits compared with $3.4bn for the same quarter last year

The enormous medical response in America to the coronavirus pandemic has not put a drain on US health insurers, which doubled profits in the second quarter of 2020 compared with the same time last year.

The US fight against the virus has been marked by overwhelmed hospitals, testing delays and personal protective equipment (PPE) shortages, but the high profits reported by some insurers have underlined concerns about America’s for-profit healthcare model.

US hospitals pressure healthcare staff to work even if they have Covid symptoms Read more

The country’s largest health insurer, UnitedHealth Group, reported its profits were $6.7bn in the second quarter of 2020 compared with $3.4bn in last year’s. Anthem’s profits rose to $2.3bn from $1.1bn for the same three-month period in 2019. Humana reported last week its earnings rose to $1.8bn, compared with $940m in 2019.

Dr Steffie Woolhandler, a longtime advocate of single-payer healthcare and a professor at Cuny Hunter College, said in normal circumstances she considered the billions insurance companies collect a “scandal”.

“It is particularly glaring and inappropriate in a pandemic,” said Woolhandler, a co-founder of Physicians for a National Health Program.

Last week, the House energy and commerce committee said it was launching an investigation into health and dental insurance companies’ business practices in response to the profits they have reaped during the crisis.

There is, however, a simple explanation for the increases.

After a short period of uncertainty, it became clear that the cost of providing medical care would be lower in 2020. People were avoiding the doctor’s office and delaying 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 each month from individuals, known as premiums, kept pouring in. “Private insurance companies make money by taking in premiums and not paying for care,” Woolhandler said.

The drop in spending was a benefit for insurers, but has left already struggling independent doctor’s offices and rural hospitals vulnerable to closures and layoffs.

In late July, 20% of clinicians had salaries skipped or deferred over the previous four weeks and 24% reported recent layoffs or furloughs, according to a survey of 523 physicians by the Primary Care Collaborative (PCC) and the Larry A Green Center.

“That is not a good system,” Andy Slavitt, a health official in Barack Obama’s administration, tweeted last week. “It’s a system designed for & by insurance companies & pharma companies. Not us. Not doctors and nurses.”

A decade ago, insurers would have been able to keep all of the profits. But under the Affordable Care Act, popularly known as Obamacare, profits are capped.

For each dollar the insurer collects from small businesses and individuals on premiums, it must spend at least 80 cents on healthcare. For premiums from larger employers, the minimum is 85 cents. The remainder can be kept as profit and spent on administration.

Insurers who cross the limit must spend the excess on rebates to consumers within three years. Some insurers have already started sending the checks.

The cap does not apply to profits made from insurers’ subsidiary businesses, such as companies which manage pharmacy benefits. This means profits could be even higher than what was reported in earnings calls.

The trade group, America’s Health Insurance Plans (AHIP), defended insurers in response to a New York Times story about the profits. AHIP said in a 1,000-word blogpost that the coronavirus response is “a marathon not a sprint”, and suggested costs could be higher for these companies down the line.

Linda Blumberg, a fellow at the Urban Institute’s Health Policy Center, said there is uncertainty for insurers, who don’t know yet if there will be a surge in care when people are less worried about coronavirus.

Blumberg was part of a research team that surveyed representatives from 25 insurers from April through 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 would need it and how firms will pay for regular testing. Some representatives also said they had lowered premiums for customers in financial trouble.

“The insurers are trying to find ways to help people through this which they are able to do as a consequence of their stronger financial situation at the moment,” Blumberg said.

But the eye-watering profits firms reported for the second quarter will certainly add more fuel to calls for a single-payer healthcare program such as Medicare for All. Blumberg said this conversation is part of the historical evolution of the US 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 going on, which I expect will continue, to introduce a public option.”

GRINZ_DOCTOR on August 14th, 2020 at 12:25 UTC »

Meanwhile they are cutting doctor reimbursement and hospital reimbursement, while patients still have to pay their premiums. Insurance companies have done such a tremendous job on conditioning patients to think that they have their best interest in mind and conditioning doctors to think that they will have a better career with insurance in the game. As a dentist, I'm told every day that I cannot do treatment for a patient because someone without a dental degree working for the insurance company is dictating the patients treatment based on whether or not the insurance company will make or lose money. It's absolutely mind boggling how doctors have not unionized and taken back control of healthcare.

Some of you guys may say, "Well dentists and doctors are just greedy". Well go ahead and look at the increase in income for dentists and doctors over the last 20 years. The average income is actually going DOWN, while the debt load and cost of training is rising due to tuition. This makes becoming a doctor less attractive for society. In contrast, look at the stock of UHC in the last 20 years. Over a 4,000% fucking increase! The CEO of Cigna gets paid over $43 million fucking dollars in direct compensation. Fuck for profit insurance companies. They have no place in healthcare.

_FATEBRINGER_ on August 14th, 2020 at 11:40 UTC »

Just to draw an important distinction... During that same time period, hospital revenue was down over 75% in some places. I haven't personally heard of any closures, but many hospitals had to furlough and/or let people go.

And just to put a pin in the topic... Look how your car insurance gave you 10-15% back because nobody was driving. This was risk adjustments. Now where the FUCK is that from health insurance?

I'll just keep saying this over and over until the end of time: health insurance companies are blood sucking middlemen and the entire problem with healthcare cost and delivery in this country.

M4053946 on August 14th, 2020 at 10:57 UTC »

"People were avoiding the doctor’s office and delaying elective surgeries such as knee replacement. Those with mild symptoms of Covid-19 were initially advised to stay home unless they needed urgent care."

Some hospitals were full of covid patients. Most weren't, and many hospitals are facing layoffs due to a lack of patients.

Paying for individual services is ultimately a flawed model for healthcare, and this is just one more example.