Anthem Inc. is joining the growing number of health insurers offering
premium discounts, as the companies see savings from sharp drop-offs in
surgeries and other types of care canceled because of the coronavirus
pandemic.
Anthem said it would provide $2.5 billion to customers, health-care
providers and others in various forms, including premium credits of 10%
to 15% in July for some individual policyholders and fully insured
employers. The big insurer follows others including Premera Blue Cross,
Blue Cross Blue Shield of Michigan and Priority Health, as well as
UnitedHealth Group Inc., that have given discounts to some customers.
“With the changes in health-care utilization as a result of Covid-19,
we are returning value to our stakeholders through a number of
mechanisms,” said Gail Boudreaux, the chief executive of Anthem, which
is based in Indianapolis, Ind.
The industry is being pressured by some regulators. Outlays for
claims have fallen in recent months as hospitals halted elective
surgeries to brace for a potential coronavirus surge and many patients
steered clear of other forms of care. The savings generally far exceed
insurers’ costs related to Covid-19, the coronavirus illness.
“We just feel like they need to give the consumer a break,” said Mike
Chaney, Mississippi’s insurance commissioner, who said he asked health
insurers in his state to consider consumer rate reductions.
Auto insurers, which have also seen claims fall as stay-at-home
orders kept people off the roads, have been more aggressive with
discounts. The top 10 have all rolled out consumer-relief programs.
Health insurers are “not paying out much in the way of claims, and
have an awful lot of premiums coming in,” said Mike Kreidler, the
insurance commissioner for Washington state, who said his office had
also reached out to encourage health insurers to offer financial breaks
to customers. “This is one where I think insurers have a real moral
responsibility.”
Insurers granting discounts said they also need to ensure they have
adequate funds to handle expenses for the rest of the year. “Our costs
dropped unexpectedly and substantially, and we believe we should
essentially pay forward the premiums we had collected already,” said
Jeff Roe, chief executive of Premera Blue Cross, based in Mountlake
Terrace, Wash. But, he said, “we’re reserving some for the future.”
Analysts have said insurers’ second-quarter profits could be up
sharply because of the plunge in costs. CVS Health Corp. said in early
May that its Aetna unit had seen a 30% drop in the use of health-care
services in April, for instance. In addition to disbursing some of the
money to customers, health-care providers and others, insurers are
likely to do discretionary spending in the second quarter where
possible, said Matthew Borsch, an analyst with BMO Capital Markets.
“They don’t want to report windfall profits amid so much economic distress,” he said. “It just won’t look good.”
Health insurers not offering across-the-board premium discounts said
they already see signs that health-care demand is ramping back up. Cigna
Corp. said it was “tailoring funding arrangements to provide financial
relief for clients,” including premium discounts and credits “where
appropriate.” Aetna, which isn’t offering premium discounts, said that
it is working with customers to “help reduce the financial burden many
are facing” and that it has taken steps to support health-care
providers.
By granting premium credits, health insurers are also likely reducing
rebates that they could end up owing to consumers under the Affordable
Care Act, said Larry Levitt, an official at the Kaiser Family
Foundation. The law requires insurers to spend a certain share of
premiums–80% for individual and small-business plans and 85% for large
employers–on health care. If the spending ratio falls short, insurers
owe rebates to customers, but rebates tied to 2020 plans won’t start
flowing until the fall of 2021.
Joan Budden, chief executive of Priority Health, a Michigan insurer,
said companies don’t yet know if they will owe an ACA rebate. “At the
end of the year, we could be right at the ACA threshold and not required
to give a rebate, but we’re giving this now,” she said. “We knew that
our customers were struggling to maintain coverage.”
https://www.marketscreener.com/ANTHEM-INC-18740543/news/Health-Insurers-Offer-Premium-Discounts-30720415/
