Should health insurers offer rebates after outbreak?
It was after learning her 83year-old father’s scheduled eye appointment had been canceled due to the COVID-19 pandemic that the thought struck Christine Gargani.
Just days earlier, her Upper St. Clair family had seen a news report that their auto insurer would be offering rebates on monthly premiums. With people staying home and driving less during the COVID-19 shutdown, the insurer expected fewer claims — so it was passing the savings back to consumers.
Meanwhile, her father couldn’t get his eyes checked, and Mrs. Gargani’s family was still shelling out $1,300 a month for its health insurance coverage, even though they could not schedule in-person doctor visits or routine screenings.
So, she wondered, why aren’t health insurers giving rebates too?
“I think that is such a valid question. It’s a question consumers and employers should be asking,” said Jessica Brooks, president and CEO of the employerled Pittsburgh Business Group on Health, which has long advocated for consumers to be more involved in their health care choices.
For six weeks during the state ban on elective procedures, “the medical spend was not happening,” Mrs. Brooks said, nor were there claims for infections or other complications.
“Will we get savings from that? Will our rates be lower?” she asked. “What will that look like if what we are paying for through premiums and other arrangements for care that was projected to happen and didn’t happen?”
On Thursday, UnitedHealth Group, parent of United Health Care, said it plans to help those affected by the pandemic by offering its commercially-insured members credits ranging from 5%-20% and waiving physician cost sharing for its Medicare Advantage members at least through September.
For the moment, there’s no indication other local insurers will follow suit.
Tom Doran, chief financial officer for Pittsburgh-based Highmark Health Plan, said the insurer had actually expanded services during postponement of the now-resumed elective procedures, noting it waived out-ofpocket fees for coronavirus testing and expanded telehealth offerings. Pittsburgh-based UPMC Health Plan spokesman Jeffrey Davis said that organization has also expanded services and offered employers the option of deferring some premium payments.
There’s no doubt the coronavirus pandemic has sucker punched a health insurance industry that loves analysis and hard data — and loathes the unexpected and unpredictable.
Mr. Doran said the postCOVID-19 landscape will be new territory for everybody.
“There are so many different unknowns. Are there going to be antibody tests [which might suggest the person has developed immunity], and how much are they going to cost? Who will get them and how often? Will there be a vaccine, and how much will that cost?”
By his estimate, those could be $100 million questions, and that’s just for Highmark’s membership.
Yet Highmark and every other health insurer will be making 2021 rate decisions in a matter of months, likely well before many of those questions have answers.
An analysis by London-based insurance broker Willis Towers Watson this month projected that COVID-19 could reduce employer health care costs this year by up to 4% because of the reduced care provided for non-infected patients — a reduction that it said will “more than offset” cost increases related to COVID-19.
Dr. Alan Fendrick, director of the University of Michigan Center for Value-Based Insurance Design in Ann Arbor, has a similar take.
“At least for the next two years, health care spending will go down because the elective surgeries will not be rescheduled,” he said. That’s in large part because some people will avoid going to a hospital for elective care until the pandemic is under
“At least for the next two years, health care spending will go down because the elective surgeries will not be rescheduled.”
Dr. Alan Fendrick
control or a vaccine is developed.
Yet Mrs. Brooks said her Pittsburgh Business Group on Health members are already hearing early projections for next year’s rates for 2021 that range from no significant change to a 40% increase.
“So where are these numbers coming from?” she asked.
Employers who self-insure — that is, the business covers the cost of claims while contracting with an insurer to administer the plan — will see savings from fewer claims since a lot of nonemergency care didn’t happen.
Mr. David, at UPMC, said last week that officials there “fully anticipate most if not all” people who had postponed elective procedures will soon get that care, which would be in addition to COVID-19-related claims.
Harold Miller, president and CEO of the Center for Healthcare Quality and Payment Reform, Downtown, says there may be several reasons why deferred routine care might never happen.
“A lot of people make regular visits to physicians and get periodic tests,” he said, “and they won’t go to the doctor twice as often when social distancing ends. They’ll just miss what they would have done normally.”
Someone planning, say, a knee replacement may want to reschedule the surgery, he said. Even that decision gets complicated if they’re among those who’ve lost their job and no longer have health insurance.
But Mr. Miller doesn’t expect insurers will lower their prices.
“It seem likely that health plans will try to raise premiums more than they would ‘need’ to, partly because of the uncertainty and partly because it is in the financial interest of every health plan to raise premiums as much as possible, particularly if they think other health plans are also going to be raising their premiums.”
As for the rebate debate, Mr. Miller and Mr. Fendrick both see problems with the auto insurance vs. health insurance comparison.
“People are not going to drive to work twice as often after the pandemic is over, so auto insurance spending is going to dip and then go back to normal,” said Mr. Miller.
As Dr. Fendrick put it, “There’s no postponing of car crashes.”