Health Plan Weekly

In a notable reversal, U.S. Chamber of Commerce joined America’s Health Insurance Plans (AHIP) and the American Hospital Association (AHA) in supporting broad — but temporary — federal involvement in health insurance markets during the COVID-19 pandemic.

In an April 28 letter to congressional leadership, the groups endorsed several policies designed to help preserve health insurance coverage, saying Congress should consider them in “the next round of legislation to overcome COVID-19.” The five specific policies the letter called for are:

Humana Inc. and Centene Corp. are both maintaining their 2020 earnings outlook despite the emergence of the COVID-19 pandemic and economic contraction at the end of the first quarter. Centene’s earnings fell short of the Wall Street consensus projection for the first quarter, while Humana’s earnings exceeded forecasts.

Humana’s revenues increased to $18.9 billion, compared with $16.1 billion in the first quarter of 2019, and it reported $5.40 in adjusted earnings per share (EPS), beating the Wall Street consensus of $4.66 adjusted EPS. Centene’s first quarter revenues increased 41% year-over-year to $26 billion, up from $18.4 billion, and it reported an adjusted EPS of $0.86. Centene fell short of the consensus with $0.99 adjusted EPS. Both insurers affirmed their projections for the end of the year, with Humana forecasting adjusted EPS of $18.25 to $18.75 and Centene $4.56 to $4.76.

Anthem, Inc., and Cigna Corp. both reported slightly better-than-expected medical loss ratios (MLRs) as part of their first-quarter 2020 earnings, in part due to delays in elective procedures resulting from the COVID-19 pandemic. Both insurers also reaffirmed their overall earnings-per-share (EPS) guidance for 2020.

But like UnitedHealth Group, which reported its own first quarter earnings on April 15 (HPW 4/20/20, p. 3), the insurers warned that MLRs may tick up later this year. In addition, they predicted that the impact of COVID-19 may lead to significant shifts in enrollment, as workers who are laid off shift to Medicaid or to the Affordable Care Act exchanges.

The Supreme Court’s near-unanimous decision on April 27 to award health insurers $12 billion in unpaid risk corridors funding was certainly a win for the industry, but it might not be as big of a windfall for insurers as it may seem, experts tell AIS Health.

The risk corridors program was part of the Affordable Care Act’s “three Rs” — alongside risk adjustment and reinsurance — which were meant to stabilize the individual market in the law’s early years. With risk corridors, the government shares in insurers’ losses and profits, so health plans with lower-than-expected claims paid into the program while plans with higher-than-expected claims received payment.

✦ Citing the COVID-19 crisis, the Trump administration will apply a “policy of enforcement discretion to allow compliance flexibilities” regarding the interoperability rules it finalized March 9. “Now more than ever, patients need secure access to their healthcare data,” CMS Administrator Seema Verma said in an April 21 statement. “Nevertheless, in a pandemic of this magnitude, flexibility is paramount for a healthcare system under siege by COVID-19. Our action today will provide hospitals an additional 6 months to implement the new requirements.” Read more at https://bit.ly/3eJz43d.

✦ Even though the severity and duration of the COVID-19 pandemic remains highly uncertain, U.S. health insurers are likely to remain profitable, according to a report from Moody’s Investors Service released April 20. However, an emerging recession could cause lower revenues, tighter cash flows and declining commercial enrollment, Moody’s suggested. The credit rating firm said the earnings of regional commercial-focused insurers are more vulnerable than those of national, diversified companies. Read more at https://bit.ly/3cIdJFk.