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
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.
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.
“We’re looking at the fact that health care can’t be regulated by the marketplace,” said Rep. Pramila Jayapal, D-Wash., who is a strong proponent of Medicare for All. 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 with $940 million for the same three months of 2019. The profits for Cigna, which also owns a large pharmacy benefit manager, were also higher.
In recent years, insurers have paid out billions of dollars in rebates, said Cynthia Cox, one of the authors of a recent Kaiser Family Foundation analysis that estimated employers and individuals would receive $2.7 billion this year in rebates required under Obamacare. That figure does not include 2020 amounts.
Even though the federal government is now encouraging insurers to turn over excess funds to consumers more quickly this year, the Obamacare law gives companies a three-year window to calculate how much to return as a way to offset any mistakes they made in setting rates or if they experienced unexpected expenses.
The companies also say they are spending billions of dollars on efforts that range from giving small businesses a break on their monthly premiums to paying physicians in advance to help keep practices afloat. But the companies may have even higher profits than is apparent. Some, like UnitedHealth, have large networks of doctors and other health care businesses, in addition to owning giant pharmacy benefit managers. There are no limits on how much these units can make, and many of the units sell their services directly to the insurer.
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