Health Plan Weekly

UnitedHealthcare is testing a new product in southern California using a closed network that relies on the company’s own OptumCare medical group. The product, which the insurer first rolled out in mid-2019, boasts premiums that are significantly lower than other plans from United and from competing insurers. OptumCare has grown over the past decade to include nearly 50,000 employed or aligned physicians, and the company is expecting it to point the way forward for plans to “reinvent health care delivery,” Optum CEO Andrew Witty told investors late last year at UnitedHealth Group’s annual investor day (HPW 12/9/19, p. 4). The new insurance product, Harmony, is part of that effort. “This is a ‘back to the future’ development,” says Jon Kingsdale, senior strategy advisor at Wakely Consulting and associate professor of the practice at Boston University School of Public Health. “With Optum’s acquisition of groups and customers’ increasing sensitivity to costs, United...

The COVID-19 pandemic is shaping up to be a stress-test for the post-Affordable Care Act insurance market, which has not yet faced a recession. The crisis has already caused mass layoffs, especially in the restaurant and retail industries, and experts say the individual health insurance exchanges and Medicaid could see record enrollment in the coming months as a result.

In the cities that have been hardest-hit so far, like Seattle and Boston, dozens of restaurants and stores have laid off workers or closed as residents practice social distancing. A March 17 NPR/PBS NewsHour/Marist Poll found that “18% of employed Americans say they have been let go or have had their work hours reduced because of coronavirus.”

✦ On March 9, global insurance brokerage firm Aon PLC agreed to buy fellow broker Willis Towers Watson in a deal that values the new firm at roughly $80 billion, according to a joint press release. The release emphasized the technology-driven nature of the deal and claimed the transaction will generate $10 billion in shareholder value. Companies like Aon and Willis Towers Watson help employers choose health plans and PBMs for their workers. Both firms’ stocks, which have trended downward since February, rallied the day after the announcement, but declined severely in subsequent days as markets crashed in response to an onslaught of bad COVID-19 news. Read the release at https://bit.ly/2QccPYS.

✦ CMS on March 11 rolled out a voluntary model that would set out-of-pocket costs for insulin at a maximum $35 copayment per 30-day supply throughout the benefit year for beneficiaries in participating enhanced Part D plans. The goal is to ensure that beneficiaries in participating plans “will have predictable copays for a broad set of formulary insulins, including rapid-acting, short-acting, intermediate-acting, and long-acting insulins, marketed by participating manufacturers from the beginning of the plan year and through the coverage gap phase,” according to a press release. Visit https://go.cms.gov/39Kn1zx.

As the number of known COVID-19 cases continues to increase in the U.S., reaching over 1,600 on March 13, health insurers are taking action to help their enrollees access testing and treatments. A majority of reported cases are in Washington, New York and California, where state governments have issued guidance to health insurance providers regarding testing and treatment coverage. Below are some key measures taken by insurers, based on a roundup compiled by America’s Health Insurance Plans.

Health insurance stocks were not spared on March 12, the worst trading day on Wall Street since Black Monday in 1987. UnitedHealth Group, Cigna Corp., Anthem, Inc., and Humana Inc. all closed at least 9% down from the day before. Analysts say the gloomy view of payers is justified, despite carriers’ efforts to boost investor confidence.

In a March 9 note describing financial models of the COVID-19 pandemic based on the 2018 flu season, Credit Suisse analyst A.J. Rice projected “a negative EPS [earnings per share] impact relative to our 2020 EPS estimates ranging from 1.6% for Cigna to 14.4% for Humana” for the first quarter of 2020, adding that “for the full year, this results in negative EPS impact of 0.8% for Cigna to 3.7% for Humana.”