US health insurance giants doubled their profits as the coronavirus pandemic killed thousands of Americans — sparking a federal investigation.
Three of the nation’s largest health insurers raked in a collective $10.7 billion in profits from April through June with the virus raging across the country, up from just $5.3 billion in the same period last year, financial statements show.
That included $6.6 billion in net earnings for UnitedHealth, the biggest US health insurance firm, which reported earnings of roughly $3.3 billion in the second quarter of 2019. Indianapolis-based Anthem’s net income climbed to $2.2 billion from $1.1 billion last year, while Humana’s surged to $1.8 billion from $940 million a year ago.
CVS Health, the pharmacy giant that owns the insurer Aetna, also saw its profits jump to nearly $3 billion from some $1.9 billion in the year-earlier quarter.
The windfall was so staggering that it’s prompted a probe from the House Energy and Commerce Committee, which said it is examining health and dental insurers’ business practices amid the pandemic.
One reason for the surge is that insurers paid out less money in medical claims as the pandemic forced patients to put off elective surgeries and doctors’ appointments while slammed emergency rooms battled the virus, according to the New York Times, which first reported on the spike last week. The Guardian also reported on the profits Friday.
But federal health care laws also require insurers to spend between 80 percent and 85 percent of the premiums they collect to pay for their customers’ medical expenses. Under the Affordable Care Act, revenues collected in excess of those caps must be returned to consumers in the form of rebates.
“In a time of national crisis and when many families are struggling financially, the insurance industry must do its part to assist individuals who are deferring medical procedures, avoiding doctors’ offices, or otherwise not using the health insurance for which they are paying,” three Democratic lawmakers wrote in a Thursday letter to nine insurance companies.
America’s Health Insurance Plans, an industry trade group, defended its response to the pandemic last week, noting that insurers have eliminated patient cost-sharing for COVID-19 testing and treatments while expanding access to telehealth and mental health services.
“The second half of the year could see a lot more care, and higher costs, than the first half of 2020,” Matt Eyles, the group’s president and CEO, wrote in a blog post.
“However, if these costs never materialize and remain below certain levels, American consumers, businesses, and taxpayers are protected by provisions in federal and state laws that require health insurance providers to deliver premium rebates and put money back into their pockets.”