AHIP Responds to Lawmaker Questions on Payer COVID-19 Profits

As major payers release their second quarter earnings reports, policymakers are growing wary of the skyrocketing revenue, culminating in the House Committee on Energy and Commerce’s investigation into health and dental payer COVID-19 profits.

“While the American people grapple with an unprecedented crisis, health and dental insurance companies appear to be making record profits as millions of people forego care and avoid doctors’ offices,” House Representative Frank Pallone, Jr. (D-NJ), chairman of the House Committee on Energy and Commerce, said in the statement announcing the investigation.

“I‘m also deeply concerned by reports that many insurers are denying coverage for COVID-19 tests while sitting on large cash reserves,” he continued. “Large scale testing is the only way we can get beyond this crisis, and insurers who are imposing restrictions on coverage of COVID-19 testing are making this task harder. This is unacceptable.”

UnitedHealthcare reported a net margin for the second quarter of 2020 that was over twice the percentage of last year’s net margin. The payer attributed its $4.5 billion increase in operations earnings largely to coronavirus-related deferred care. Other major payers also saw significant increases in their revenues due to deferred care.

“Although the Affordable Care Act requires many health insurance companies to limit their profit margins and issue rebates to consumers, I believe insurers should be doing more to help enrollees and providers immediately,” said Representative Pallone.

By way of returning the profits to consumers and providers, Pallone suggested premium reductions, extended timelines for coronavirus treatment cost-sharing through the end of the public health emergency, and zero- or low-interest loans for community providers.

The Energy and Commerce Committee plans to investigate health and dental care payers on cost-sharing for coronavirus testing and pandemic-era profits, Pallone warned.

However, payers have balked at the accusations that they are not giving back to consumers.

America’s Health Insurance Plans (AHIP) responded to the House Energy and Commerce Committee with a blog post from Matt Eyles, the organization’s president and chief executive officer.

The letter emphasizes payer commitments to consumers for the long-term, in coronavirus care and also in helping Americans access all kinds of treatment, breaking down social determinants of health barriers, and working towards legislative solutions to uninsurance.

To Representative Pallone’s concerns regarding patients not receiving coronavirus testing, Eyles responded:

“No one should hesitate to get tested or treated for COVID-19 because of concerns about costs.”

Although they are seeing high revenues now, payers are expecting an influx in healthcare spending as Americans return to receive deferred care, Eyles stated. He anticipates that patients will return in worse shape and require higher cost treatment due to the delay.

Furthermore, the costs of coronavirus treatment for the long-term are yet unknown. Nevertheless, payers moved on eliminating treatment cost-sharing before the federal government required it early in the crisis.

In the event that the spike in healthcare spending does not occur, however, Eyles pointed out that federal and state laws require payers to give back premium rebates.

Payers such as Priority Health have already started paying back consumers through premium credits. CMS has followed a similar strategy for the individual and small group health insurance markets and urged states to do the same.

Other methods of reinvesting the surplus of revenues took the form of social determinants of health donations such as SCAN Health Plan’s $5.1 million grant and Humana’s $50 million contribution toward coronavirus relief and recovery.

Yet Representative Pallone is not alone in his distrust in health insurance companies, an opinion that is prevalent among providers and members alike.

A recent JD Power survey found that almost fifty percent of members reported that their health plan did not demonstrate concern for them during the pandemic. Only 25 percent said payers were trustworthy partners in pursuing wellness.