Blue Cross and Blue Shield of Minnesota is providing about $70 million in premium rebates and discounts after patients delayed or pulled back from many types of health care this spring as COVID-19 spread across the state.
Insurers across the country are making similar moves after health plan profits boomed this spring with dramatic reductions in nonemergency surgeries and procedures as a result of the pandemic.
Eagan-based Blue Cross, which is the state’s largest health insurer, said Friday it would offer about $38 million in premium relief to Medicare members, people who purchase individual health plans and certain business customers through one-time credits of 10 to 25%. The credits would be in addition to about $31 million in rebate checks to individual market customers that are mandated by the federal Affordable Care Act (ACA).
“The premium holidays, and the advanced rebates, are good publicity,” said Allan Baumgarten, an independent health care analyst in St. Louis Park. They also help health insurers maintain employer groups as customers, he said, despite the weak economy.
“I think these insurers are saying: If we give you a break, can we count on you to maintain your insurance coverage through 2020 as opposed to losing you as an insurance customer?” he said.
To conserve supplies for an expected surge in pandemic patients, states ordered a suspension of elective and nonemergency health care this spring that delayed thousands of surgeries and procedures. And in some cases, patients have been reluctant to return to health care settings due to concerns about the virus that causes COVID-19.
The end result is that health insurers have had fewer medical bills to pay.
On Friday afternoon, second-quarter financial results for the health insurance division at Blue Cross were not available. But a regulatory filing for the insurer’s HMO showed increased profitability compared with the first half of 2019.
Taken together, the Blue Cross HMO plus the insurance and HMO businesses at HealthPartners, Medica and UCare collectively saw net income of about $522 million during the first half of 2020, according to a Star Tribune review of regulatory filings. The income was an increase of more than 50% over the same period last year for the group, which includes the state’s four largest nonprofit health plans.
Minneapolis-based UCare said in May that it would cut Medicare premiums by 20% for the months of July and August, among other discounts. Bloomington-based HealthPartners and Minnetonka-based Medica in June announced discounts for about 70,000 people in Medicare health plans.
UnitedHealthcare, the nation’s largest health insurer, has highlighted its premium relief efforts at several points over the past few months, including a May announcement of $1.5 billion in credits and spending related to the pandemic. Minnetonka-based UnitedHealth Group, which is the insurer’s parent company, reported a $6.6 billion profit in the second quarter, which was twice the earnings from the year-ago period.
At Blue Cross, employers that buy “fully insured” coverage will get the bulk of the credits, about $22 million worth, in the October billing cycle, the insurer said Friday.
In a statement, Blue Cross said many businesses that buy coverage from the insurer have seen a significant decline in the use of medical services among employees “due to pandemic-related postponements of elective procedures and other delays in nonemergency health care.” As a result, the insurer said it would provide a one-month premium relief credit of 20% for more than 9,000 employers across the state.
Eligible Medicare beneficiaries in Advantage, Cost and Supplement plans will receive a one-time premium credit that amounts to a 10 to 25% return of two months’ worth of premiums earlier this year, Blue Cross says. The insurer says access to nonemergency care was most restricted by the pandemic at that point.
Certain customers in individual health plans will see a 20% return of a previous month’s coverage payment from earlier in the year.
Taken together, the company said it is providing $16 million in credits and discounts to Medicare enrollees and individuals.
The ACA rebates normally are issued in September, Blue Cross said, but the insurer last month mailed more than 25,000 checks totaling more than $31 million. Under the federal law, insurers must spend at least 80% of premiums on health care services and quality improvement. When they don’t, they must rebate the difference to people in individual-market health plans.
Across the country, insurers are sizing up the amounts they are paying for health services and projecting the need to pay future rebates under the ACA, Baumgarten said. Those rebates could be required not only for individual market customers, but also some employer groups.
“It’s a matter of pay me now,” he said, “or pay me later.”