COVID-19 Still A Big Uncertainty For Insurers In 2021

January 12, 2021

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Source: Nimbus-T PPE, by Nona Tepper

Given the continuation of the pandemic, health insurers are steeling themselves for a possible bumpy ride. Industry analysts said they expect 2021 to be a volatile year for insurers, although nothing can compare to the dramatic peaks and valleys in profits publicly traded companies reported in the first half of 2020.

Moody’s Investors Service forecasts mid- to single-digit earnings growth among insurers in 2021. “The need to control health costs has been a huge problem for the industry and for the country,” said Dean Ungar, vice president and senior credit officer at Moody’s. “The health insurers know that their future in a way depends on helping keep costs under control without government intervention and government meddling. The insurers are investing in things like value-based care and digital, remote monitoring.”

During the first two quarters of 2020, hospitals deferred elective procedures and health plan members put off routine doctor appointments. Those care deferrals are expected to continue at insurance giant UnitedHealth Group, John Rex, chief financial officer at the Minnetonka, Minn.-based health insurer, said at an investors conference in December.

Rex said he expects the deferral of care to continue into 2021, with the spike in COVID-19 cases this winter keeping members out of hospital waiting rooms, although not at the levels seen in 2020.

He said the missed preventive tests and procedures people delayed would result in more severe illness when they’re diagnosed, plus COVID-19 could also have long-term health effects on patients’ health that may be expensive for insurers.

UnitedHealth expects COVID-19 testing, treatment and other pandemic-related costs to reach $2 billion in 2021, with about 75% of that total coming from its insurance subsidiary UnitedHealthcare’s bottom line.

“Certain populations, particularly seniors, have deferred care,” Rex said. “Some have not seen a doctor at all in 2020, which impacts their health, and our ability to close gaps in care and properly document conditions that surely still exist. This could affect final risk scores in 2021.”

Some insurers expect a lower amount of traditional claims to offset the high costs of COVID-19 treatment. Mary Anne Jones, chief financial officer at Priority Health, said she expects the Grand Rapids, Mich.-based insurer’s finances in 2021 to mirror the third and fourth quarters of the previous years for the company, which is a subsidiary of Spectrum Health.

“Accidents aren’t happening like they had happened in the past,” Jones said. Sports-related injuries and contagious conditions beside COVID-19 are down because people are doing so much mask wearing and social distancing, which is offsetting the added costs of treating the coronavirus.

 

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