Some give all the credit to Obamacare. Others cite the poor economy or employers forcing workers to bear more of the cost of their medical expenses. Whatever the reason, health-cost increases stayed tame through the first half of the year, insurers say. Thursday鈥檚 report from Cigna was the last dispatch on second-quarter financial results from major medical carriers. Cigna鈥檚 results were similar to those of its rivals: higher-than-expected profits thanks largely to moderate increases in medical prices and the number of medical procedures.
鈥 Every insurer reported moderate cost increases. Some lowered already low projections. Aetna estimated that cost increases for for its commercial insurance lines would be about 6 percent for 2013. WellPoint projected 6.5 percent for the year. Cigna projected 5 percent to 6 percent 鈥 a full percentage point lower than the previous estimate.
Before the economic slowdown, some carriers鈥 annual medical costs increased at close to double-digit percentages. 鈥淢edical trends continue to develop lower than our previous projections,鈥 , Aetna鈥檚 chief financial officer. (Thanks to for the transcripts.)
As to what鈥檚 causing it, Aetna CEO Mark Bertolini suggests that consumers delay seeking care when money is tight: 鈥淲hile structural changes in the health system may be playing a modest role in the low-cost trend we are experiencing, we continue to believe that this low utilization is largely driven by the weak economy,鈥 he said.聽
鈥 WellPoint 鈥 750,000 鈥 in members whose claims will be paid directly by their employers by the end of 2014. (WellPoint makes money processing the claims.) WellPoint implied it鈥檚 taking the business from rivals. But other carriers also reported increases in self-insured employers.
Cigna sees 鈥済reat progress鈥 in processing claims for self-insured companies with from 51 to 250 employees, as well as more competition for that business. 鈥淓mployers are seeing this as an attractive alternative鈥 to conventional insurance,聽Employers who self-insure the health law鈥檚 premium taxes, which are聽estimated to raise prices from 2 percent to 4 percent, as well from from some rules governing benefit levels.
鈥 Despite that reversed imminent government cuts, Medicare Advantage plans 鈥 managed care for Medicare members 鈥 still face funding reductions required in the Affordable Care Act. Some once speculated these would lead to Medicare Advantage鈥檚 diminishment or demise.
Not at Cigna. 鈥淥ur聽expectations are unequivocally to grow our customer base further in 2014,鈥 Cordani said Thursday. Not at UnitedHealth Group. 鈥淲e remain committed to Medicare Advantage as the most valuable and fastest-growing Medicare benefit offering available to American seniors,鈥 said CEO Stephen Hemsley. Not at Humana. 鈥淲e聽continue to anticipate growth in individual Medicare Advantage membership in 2014,鈥 said CEO Bruce Broussard.
鈥 Aetna鈥檚 Bertolini suggested he鈥檚 not prepared to accept Maryland鈥檚 final premium rates for Obamacare exchange plans as really final. Last week, Maryland regulators proposed premiums for plans to be sold through the聽subsidized online marketplaces known as exchanges. Average premiums for Aetna鈥檚 plans were cut 29 percent. Asked by a stock analyst whether the company would sell insurance at those prices, Bertolini implied that the negotiations aren鈥檛 over.
鈥淲e generally do not negotiate our rates with states in the [news]paper,鈥 he said, declining to get into specifics. 鈥淪o I would argue that the current information that鈥檚 in the public domain is in mid-process. We have not committed to the rates, nor will we聽see ourselves committing to those rates anytime at this point.鈥
鈥 Humana portrayed its expansion in Mississippi as a potential profit opportunity, or at least one that won鈥檛 lose money. After pressure from Mississippi officials and presumably Washington, Humana to sell subsidized health plans in dozens of poor, rural Mississippi counties that otherwise might not have had any offerings sold directly to individuals and families through online exchanges.
But since Humana won鈥檛 have any competitors in those places, Broussard suggested, it can set rates relatively high. (Even at higher rates, tax credits limit what consumers will pay, depending on their income. Federal taxpayers make up the difference.)
鈥淲ell, first thing is considering the population there, it was the right thing to do, I think, for us to go into that marketplace and to offer the insurance on the exchange side,鈥 Broussard said. 鈥淚n regards to how we approach it, it is a market that, since there will be only us in that marketplace, it does offer the ability to have a fairly reasonable rate there.鈥