Unlike almost every other sector of the economy, the health insurance industry appears to be profiting from the coronavirus pandemic. While some people need costly COVID-19 care, elective surgeries have all but disappeared and people are going to the doctor and ER less. The cost of elective and emergency non-COVID care appears to be a lot greater than the cost of treating COVID-19 patients.
No question that fewer people have health insurance since the coronavirus outbreak. Thirty million people have lost their jobs, and millions have lost their employer coverage. But, so far, that has not affected health insurer profitability.
Moody’s investor services reported at the end of April that most insurers would remain solidly profitable this year under the most likely scenarios for infection rates and patient health care needs. It noted that most insurers have high levels of excess capital. It also stated that national insurers would make out best.
UnitedHealth Group showed strong profits in the first quarter of this year. It makes a lot of its money off of Medicare Advantage plans, private health plans that provide Medicare benefits. And, it has been gaining business in that market.
Notwithstanding their financial situations, insurers are threatening to raise premiums significantly next year if they don’t get stimulus money. They are arguing that they could spend as much as $250 billion on COVID-19 care this year. They want the federal government to subsidize people’s health insurance today.
Many Democrats in Congress support legislation that would cover the cost of people’s former job insurance, paying for COBRA. But, COBRA does not guarantee people access to care, it simply extends people’s coverage. Most health care coverage comes with high deductibles and copays. Moreover, the proposed legislation only helps people who have just lost their health insurance. And, it is not cost-effective.
Senator Bernie Sanders and Congresswoman Pramila Jayapal are proposing legislation that would have Medicare cover people’s health care, which is cost-effective and ensures people access to care. It has the added advantage of enabling the government to collect data on who’s receiving care and where resources need to be allocated.
Whatever happens in Congress, many states limit the amount that insurers can raise premiums from one year to the next. And, generally, premiums for next year need to reflect expected costs, not losses in 2020. Still, one California analysis suggested that health insurance premiums could rise as much as 40 percent in 2021.
We don’t yet know how things will work out for corporate health insurers. Right now, many states are requiring insurers to cover people’s COVID-19 related copays as well as to waive copays for telehealth. And, in some states, such as New York, governors have told insurers that they cannot cancel some health plans because of nonpayment of premiums.
Because of the pandemic, we do know how unreliable and costly employer coverage can be, even when people most need it. Isn’t it time to move to guaranteed health care for all, health insurance people can count on, regardless of their employment status, where they live or their age, health and income?