Health Plan Weekly

In its initial release of requested rate increases from insurers, Covered California, the state’s Affordable Care Act (ACA) exchange, announced a state record-low average rate increase of 0.6% for the individual market. In an Aug. 4 conference call with reporters, Covered California Executive Director Peter Lee also touted expanding payer competition on the exchange and growing enrollment.

The year’s marginal rate increase follows a similarly low increase of 0.8% for 2020, and comes in spite of the state’s many worsening COVID-19 outbreaks. California officials have positioned expanding health coverage as a critical part of the state’s response to the pandemic.

Humana Inc.’s second quarter earnings exceeded investor expectations due to a drop in utilization, although the insurer expects spending on health care services to rebound somewhat as patients continue to return to medical facilities.

In its second quarter earnings report, Humana reported adjusted earnings per share (EPS) of $12.56. According to Jefferies analyst David Windley and Oppenheimer analyst Michael Wiederhorn, Wall Street anticipated an EPS of slightly over $10. Analysts anticipate a positive outlook for the rest of the year, but they hedged positive projections by noting the COVID-19 crisis could damage insurer earnings in unforeseen ways.

While Aetna is just one part of CVS Health Corp.’s massive health care enterprise, it was disproportionately responsible for the company’s strong financial performance during the second quarter of 2020, thanks to the effects of COVID-19.

CVS’s quarterly adjusted earnings per share of $2.64 easily beat the Wall Street consensus estimate of $1.91, and its adjusted EPS increased nearly 40% compared with the second quarter of 2019. The majority of that earnings growth was attributable to the firm’s health care benefits segment — housing its Aetna business unit — “which saw an unprecedented decline in utilization due to the pandemic,” Chief Financial Officer Eva Boratto said during the company’s Aug. 5 earnings call.

With the COVID-19 pandemic ushering in significant economic uncertainty and consumer frustration mounting over rising health insurance deductibles, benefit designs that aim to give consumers more upfront value appear to be coming back into fashion.

Dave Fortosis, a senior vice president and health care consultant at Aon Hewitt, puts it this way: “There is interest in moving to something more affordable to the average American who is not sitting on a boatload of money.” To that end, companies competing for employers’ business are already rolling out options that seek to address such a need.

Recent events indicate the telehealth boom caused by the COVID-19 pandemic will result in a permanent expansion of virtual care. On Aug. 3, the Trump administration issued an executive order directing HHS to make permanent some of the telehealth regulations it relaxed for Medicare beneficiaries during the public health emergency. Plus, a newly unveiled deal would marry two major telehealth players. However, experts say Congress must act to make expanded telehealth offerings permanent and sustainable, which is unlikely to happen until after the election.

The executive order directs officials to issue proposed regulations that will lock in some of the changes in telehealth policy that the Trump administration included as part of pandemic relief. In response to the order, CMS on Aug. 3 proposed a rule that would permanently allow Medicare to reimburse for certain services that are furnished virtually, “including home visits for the evaluation and management of a patient (in the case where the law allows telehealth services in the patient’s home), and certain types of visits for patients with cognitive impairments.”