Researcher Adam Block: Health Plans Are ‘Rolling in Money’ As Providers, Rest of Economy Struggle
In this part one of two video series, Adam Block, a New York Medical College assistant professor, discusses his recent contributed article to Managed Healthcare Executive titled "Profits of Publicly Traded Health Plans Surge Amid Requests for Higher Rates."
As a disease, COVID-19 has been the opposite of a leveler. It has disproportionately affected older people, Black Americans, and those with comorbidities.
COVID-19’s financial consequences have also been uneven, as Adam Block discussed in a video interview with Managed Healthcare Executive® this week and in a paper he wrote with Kevin Van Dyke and Leah Dillard posted on the our website yesterday. The paper is titled “Profits of Publicly Traded Health Plans Surge Amid Requests for Higher Rates.
“We wrote this paper because we were seeing …headlines about how badly hospitals are doing — which was counterintuitive —and not too many headlines about how well the health plans were doing,” Block said.
Block and his colleagues computed the relative difference between 2019 Q2 net operating income and 2020 Q2 net operating income for five publicly traded national insurers. On average, 2020 Q2 net income was 136.7% higher than 2019 Q2 income, they said, and 2020 Q2 difference was a 136.7% increase.
Block says the big jump in net operating income is the result of the sudden decline in elective procedures and other routine medical care.
“It makes a lot of sense because if all of the elective procedures went away and we are all still paying same premiums that we were…earlier in the year, pre-COVID, that money all stays as retained earnings for the health plans.”
Publicly traded health plans are required to file quarterly earnings reports, so just how well they are doing has come to light the past couple of weeks. “If you are health plan, you sort of don’t want to make it public that in an economy that is declining by 10% that you are rolling money,” said Block.
Health plans could offer rebates to its premium-paying customers; Block said he received a rebate from his auto insurer because he is driving less and because the accident rate is down because Americans, in general, are driving less because of social distancing, cancellations, and work from policies. They could also pass on the money to providers, who are struggling.
“If the network goes out of business, you don’t have much of a health plan.
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