So far, the second-quarter earnings of the country’s two largest health insurers are an indication that the … [+]
The second-quarter earnings so far for the nation’s two largest health insurers – Elevance Health and UnitedHealth Group – are an indication that the industry is overcoming its Medicare Advantage woes.
UnitedHealth, which operates UnitedHealthcare health plans, and Elevance, which operates Anthem Blue Cross and Blue Shield plans and Wellpoint Medicare plans in select markets, reported financial results last week that met or exceeded Wall Street analyst expectations in a period when physicians and other medical care providers are seeing a surge in patients with pent-up demand for healthcare in the wake of the Covid-19 pandemic.
During the pandemic, health insurers generally enjoyed record profits, in part because people weren’t seeking care at the levels they were before the coronavirus hit in early 2020. When claims were not filed because care was avoided or delayed, medical costs were more easily managed.
But for much of last year and earlier this year, health insurers — especially those that sell Medicare Advantage plans — saw a rise in the number of seniors seeking inpatient procedures and treatments ranging from knee and hip replacements to outpatient surgeries . One of the largest operators of Medicare Advantage plans, Humana, said earlier this year it “absorbed unprecedented increases in medical cost trends.”
Humana, CVS Health’s Aetna, UnitedHealth and Elevance have also seen higher medical costs from record numbers of seniors with greater medical needs who recently signed up for Medicare Advantage, which is now the health care plan of choice for more than half of Americans age 65 and parent eligible for Medicare coverage. Medicare Advantage plans contract with the federal government to provide traditional coverage available in traditional Medicare, plus additional benefits and services for seniors, such as disease management and nurse helplines, some of which also include vision, dental, and offering well-being.
While Humana does not report this second quarter profit until next week, UnitedHealth Group, parent of the nation’s largest health insurer, UnitedHealthcare, and Elevance, parent of Anthem Blue Cross-branded plans in 14 states, appear to have a good handle on Medicare Advantage costs and operations.
UnitedHealth CEO Andrew Witty told analysts last week during the company’s second-quarter earnings call that the health insurance industry is being impacted by the government’s Medicare Advantage “funding and price reduction,” but the company is responding well.
“The whole business is involved in how it better manages itself, reduces costs across the business, leverages technology, accelerates our consumer agenda, all designed to play our part across the board in how we offset the pressures that is exercised on these two important companies. ”, said Witty.
To be sure: the UnitedHealthcare health care benefits company reported last week an operating profit of $4 billion on revenue of $73.9 billion. Nearly 7.8 million of UnitedHealthcare’s 49 million U.S. health plan members are enrolled in Medicare Advantage plans.
Meanwhile, Elevance Health CEO Gail Boudreaux told analysts on her company’s second-quarter earnings results that the company’s ability to maintain “star ratings” of 4 or better on the federal government’s five-star scale for more than half of the company’s Medicare Advantage membership, entering the 2025 “payment year,” will “help offset cuts to the Medicare Advantage program for a second consecutive year.”
Elevance reported one “operating profit” of $2.1 billion in its healthcare business including Medicare Advantage in the second quarter which was “unchanged from the prior year.” This occurred despite a significant decline in Medicaid enrollment.
Elevance, like other health insurers, is preparing bids it will submit to the federal government for its Medicare Advantage benefits for seniors in 2025.
“We have maintained our disciplined approach to the 2025 bids,” Boudreaux said. “We will provide highly valued and competitive benefits as we seek to balance growth and margins and remain focused on building an attractive and sustainable Medicare Advantage business for the long term.”