Health Insurers, High on the Hog, Are Extending Premium Relief

Many if not most health insurers have racked up large operating margins in 2020 because of the sharp decline in claims for routine medical care. It’s a huge pot of money, and some industry observers want to see a portion of it go to the providers that have seen their revenue streams dry up because of COVID-19.

But a growing number of insurers are taking steps to return some of their 2020 operating surpluses back to their premium-paying customers in the form of premium credits and variety of other adjustments.

“It is doing our part to help a community in need,” Craig Samitt, M.D., MBA, CEO of Blue Cross and Blue Shield of Minnesota, said in a recent interview with Managed Healthcare Executive®.

The Minnesota Blue has announced plans for $38 million in premium relief in the form of one-time credits. It has also accelerated issuing $31 million in medical-loss ratio rebates due from 2019. Members received that money last month when it ordinarily would have distributed in September.

“I would hope we are part of trend,” said Samitt.

And the Minnesota Blue does, in fact, have a fair amount in company in providing premium relief as insurers see that the precipitous drop in utilization during the second half of March, all of April, and the first part of May has not necessarily led to a summertime surge in

utilization (and claims) from pent-up demand.

In its latest hospital “flash report,” Kaufman Hall today reported that hospitals, as a group, have experience their fifth consecutive month of lower volume relative to the same months in 2019. Other medical group are also reporting that the utilization continues to lag, almost certainly because of the uptick in COVID-19 cases and related deaths in July.

Blue Cross Blue Shield of Michigan announced last week that it will waive 30% of one month of health and dental plan premiums for more than 180,000 members. The insurer’s announcement said the waiver was worth a total of $21 million. The Michigan Blue had announced refund and rate adjustment plans back in May that it said added up to $100 million.

Blue Cross Blue Shield of Rhode Island also made a premium relief announcement last week that it said added up $11 million, which came on top of the $13.8 million in relief that it already extended.

UnitedHealth Group, the for-profit insurer, which had $6.6 billion in net income in the second quarter, announced a plan in May that it said totaled $1.5 billion. UnitedHealth said it was extended premium credits and the waving cost sharing for members of its Medicare Advantage plans.

In his interview with MHE, Samitt spoke of the peaks and valley of utilization (“we are a valley right now”) and that the financial goal of the not-for-profit was to “come in on plan,” or budget.

In follow-up emails after the interview, a spokesperson for the Minnesota Blue said 2017 was the first year of “positive financial performance” for the not-for-profit insurer in the individual market following three consecutive years of losses. Since then, medical-loss ratio rebates have been distributed to members based on the rolling three-year average. The 2019 MLR rebate checks that Minnesota Blue issued in July ranged from a few hundred dollars to more than $1,500, according to the company spokesperson.

The $38 million in premium relief from the Minnesota Blue related to the dynamics of COVID-19 utilization and expense include $22 in premium relief for commercial businesses and another $16 million individuals and families in the Medicare and individual market. Most of these businesses will see the 10%-25% premium credit applied to their October billing cycle, according to the company’s press announcement.