Reed Abelson reports for The New York Times that second-quarter profits doubled for big health insurers from the same period in 2019. The Affordable Care Act imposes a limit on the profit that health insurers can keep. But, people with health insurance are not likely to see money back any time soon.
Because few people sought medical care for anything other than COVID-19 between April and June, insurers paid few claims. But, they collected the same premiums they always collect. So, the pandemic has served them very well so far.
The Trump administration has suggested that the health insurers with outsize profits, such as UnitedHealth Group, Anthem and Humana, speed up rebates. But, it has no authority to require them to do so. It also suggested that they lower premiums. Again, it has no authority to require them to lower premiums.
Because insurers are not legally allowed to change their premiums during the year, the Centers for Medicare and Medicaid Services is giving them the right to do so. Big whoopee. Insurers are not going to lower premiums, even if they can, since that would work against the interest of their shareholders.
The Affordable Care Act (ACA) allows health insurers to keep 15-20 cents on the premium dollar, depending upon the type of insurance they are selling, individual, small group or large group. They must pay out the other 80-85 cents for medical care. Still, holding on to extra premium money for as long as possible benefits them financially. And, the ACA gives them three years to hold on to the money.
The ACA effectively protects insurers that charge excessive premiums from having to return the excess money quickly on the theory that health care costs fluctuate and premiums might be inadequate to meet insurer expenses later on. For example, if people start going to the hospital and doctor at twice the rate they have been, insurers would have a cushion to pay those claims. Of course, the laws on premium-setting also protect insurers. They can relatively easily raise their rates next year.
CVS Health, which owns Aetna, saw its net income increase in the second quarter by $1 billion. Last year, its second quarter net income was $2 billion. Anthem saw its net income increase $1.2 billion in the second quarter. UnitedHealth, the largest health insurer in the US, saw its net income rise by $3.3 billion.
Taxpayer money for Medicare and Medicaid private health plans–Medicare Advantage and Medicaid managed care–has likely been paid to private health insurers in exchange for providing far less care than projected. If Medicare Advantage plans are able to keep the payments that they received for the first half of the year, they would be making out like bandits. The same is true for Medicaid managed care plans.
The pandemic is hurting most hospitals and doctors. Many hospitals and doctors are struggling to generate the revenue to stay in business. And, private health insurers owe them nothing. Proponents of a single government health insurance system–one without private health insurers designing insurance policies–explain that in such a system hospitals and doctors would be on a global budget with guaranteed revenue in good times and bad.
One as of yet unanswered question is whether employees at companies that are self-insured are seeing reductions in their insurance premiums. And, if not, why not? Their employers should be paying out less in claims.
The marketplace is clearly not able to ensure that Americans are getting the health care they need at a fair price. “We’re looking at the fact that health care can’t be regulated by the marketplace,” said Representative Pramila Jayapal. It’s time for Medicare for all.
As of now, Vice-President Biden is opposed to Medicare for all. It would be great if these enormous insurer profits led him to rethink his position.
Here’s more from Just Care: