As Americans delay elective surgeries and avoid doctors and hospitals during the coronavirus pandemic, healthcare spending declines have more than offset the added costs of COVID-19 care, insurance executives and experts say, boosting U.S. health insurer profits.
While extended hospital stays, particularly in intensive care units, can rack up massive bills for individuals, that pales compared to the savings from millions of Americans delaying care. Those savings also outpace the costs to insurers of waiving COVID-19 related co-pays, deductibles, tests and other care, which most insurers have agreed to waive.
UnitedHealth Group Inc, the largest U.S. health insurer, last week posted first-quarter earnings above Wall Street expectations and kept its profit forecast in place for 2020, despite an economy battered by massive layoffs and business shutdowns to slow the spread of the virus. Anthem Inc, Humana Inc and Cigna Corp expect a similar trend.
Executives at Cigna, the health insurance giant, have signaled to investors that the coronavirus pandemic isn’t hurting the company’s business and has been a profitable boon. In a meeting with analysts, Cigna’s CEO explained that although they were seeing higher medical claims for treating coronavirus, those costs were being offset by hospitals’ canceling elective surgeries and other procedures.
Cigna is not the only insurer poised to gain. A model developed by UBS analysts shows insurance companies will benefit if up to 14% of the U.S. population is infected with COVID-19, according to a March 30 report. That would be about 45 million people, compared with just over 1 million confirmed infections so far.
But that hasn’t stopped these companies and their well-paid lobbyists from asking for bailouts and legal immunity. America’s Health Insurance Plans, the powerful health insurance lobby, has proposed that the federal government provide subsidies to employers and individuals to keep their insurance coverage, as well as funding for a program to help commercial insurance plans that incur “extraordinary, unplanned costs” from COVID-19.
“I have never seen a drop in utilization the way we are seeing it happen right now, so in some ways it’s a little bit surprising to me that the industry is looking for support on risk corridors and things like that,” Fischbeck said. “A lot of investors at least are thinking this could actually be a positive for managed care.”