Health Plan Weekly
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Subsidies Could Defang Risk From New COBRA Guidance
The Trump administration recently released guidance that will allow the newly unemployed to retroactively opt into COBRA months from now, which could increase the risk of adverse selection and thus harm fully insured and self-funded employer plans’ risk pools. With millions of Americans suddenly unemployed, and employers reeling from sudden drops in revenue, a coalition of large companies is lobbying for the federal government to subsidize employer plans’ COBRA benefits.
Meanwhile, a proposal passed by the House would have the federal government pay full COBRA premiums for approximately nine months, making the program free to anyone eligible for it. That plan, included in the Heroes Act (H.R. 6800), could be a boon to employers and insurance carriers, but it faces challenges in the Senate and could harm individual insurance markets.
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Will Autoenrollment Advance Amid Health-Coverage Crisis?
As the COVID-19 pandemic continues to ravage the U.S. economy, it would seem to be the perfect time for policymakers to explore a policy option that has garnered rare bipartisan support: automatic health insurance enrollment.
“We have huge numbers of people who are losing employer-based coverage; most of them are eligible for some kind of help, but we know historically most laid-off workers do not enroll in coverage for which they qualify,” said Stan Dorn, director of the National Center for Coverage Innovation and senior fellow at Families USA. “It’s just overwhelming to be grappling with job loss and therefore it becomes imperative to make enrollment as easy, seamless and automatic as possible.”
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News Briefs
✦ UnitedHealthcare will expand its presence on the Affordable Care Act exchanges by offering plans in at least one additional state in 2021. Maryland Gov. Larry Hogan (R) said on May 12 that the insurer will join two other carriers — CareFirst BlueCross BlueShield and Kaiser Permanente — in offering coverage through the state’s individual marketplace. As of 2020, UnitedHealthcare offers exchange plans in parts of Massachusetts, Nevada and New York, but back in 2016 it participated in 34 states, Credit Suisse analyst A.J. Rice pointed out in a May 12 note to investors. In response to a query from AIS Health regarding whether UnitedHealthcare will sell plans in any more state exchanges in 2021, a spokesperson said it is “premature for us to provide any further details.” However, he added that “we intend to offer exchange plans in those states where we can provide an efficient network and competitive product capable of driving sustainable value for consumers and our state and federal partners.” Read Hogan’s press release at https://bit.ly/2T4NstH.
✦ In sharp contrast to the nearly $3.2 billion in net income it reported in the first quarter of 2019, Kaiser Permanente posted a $1.1 billion net loss for the same period in 2020, Modern Healthcare reported. Still, the integrated health system didn’t see a revenue decrease when elective and non-emergency care was put on hold, since its model requires membership fees to be paid at the beginning of each month and California’s stay-at-home order was put into place on March 19. Kaiser’s revenue grew 5.9% in the quarter to $22.6 billion, and its expenses grew by 7.8% to $21.4 billion — a result that executives attributed to an intentional focus on keeping memberships affordable. Read more at https://bit.ly/2xZzim6.
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Outpatient Visits, Hospital Revenues Down During COVID-19 Outbreak
Due to the COVID-19 pandemic, the number of visits to ambulatory care practices dropped almost 60% in mid-March, according to a new analysis by researchers at Harvard University and health care technology company Phreesia. Surgical and procedural specialties saw the greatest impact, with the number of visits between March 1 and April 5 decreasing more than 60%. Meanwhile, a recent FAIR Health study reported that larger hospitals and health systems were hit harder financially by the pandemic. The average per-facility revenues based on estimated allowed amounts in large facilities decreased from $4.5 million in the first quarter of 2019 to $4.2 million in 2020.
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S&P Is Cautiously Optimistic About Health Insurers’ Financial Prospects
Credit ratings firm S&P Global Ratings Inc. is mildly confident about the financial health of the health care industry. On May 13, S&P analysts gave health insurance companies a stable outlook, and graded payer debt with an A rating. Meanwhile, for-profit and not-for-profit providers both received negative outlooks.
S&P has not downgraded any health insurance firms this year. Those ratings are in line with a consensus across Wall Street that sees health insurance firms as a safe investment bet despite the COVID-19 pandemic and economic crisis. Publicly traded payers’ first-quarter earnings were all in line with their pre-COVID-19 guidance, and many firms exceeded their projected first-quarter results (HPW 5/4/20, p. 1).
