One crucial number in health insurers’ financial reports reveals that people are going to the doctor again despite the pandemic

  • Health insurers' financial reports show that patients are going to the doctor almost as often as they did before the pandemic, even though COVID-19 cases show no signs of slowing.
  • A key gauge of medical spending increased across the health insurance industry in the third quarter, compared with the prior three months.
  • Insurers' combined profits were lower in the third quarter compared with the same period and a year ago and with the second quarter of 2020.
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Patients are visiting their doctors nearly as much as they did before the coronavirus pandemic, health insurers' latest financial reports show.

As the pandemic spread throughout the country, people canceled routine doctor's appointments to stay home as governors issued lockdown orders. Hospitals called off surgeries and other planned procedures to make room for the sickest patients.

But a key metric in insurers' latest financial reports shows that trend is now reversing, even as COVID-19 cases rise.

That metric is known as a medical loss ratio, and it reflects how much of insurers' premiums are spent on medical care.

In the three months through September 30, that metric jumped for all seven of the largest, publicly traded insurance companies compared to the quarter before, showing that patients are getting healthcare closer to how they used to. Insurers are also paying more bills related to COVID-19 than they did earlier in the year.

"People have started to come back to the doctor, not just for a surgery, but for preventive measures, colonoscopies, and mammograms, and you have these additional COVID-19 claims," said Brad Ellis, a senior director at credit ratings agency Fitch Ratings.

Health insurers' profits deflated as their medical loss ratios increased. Collectively, the seven insurers, many of which also have non-insurance business lines, reported $8.2 billion in profits in the third quarter, down about 5% over the same period a year ago.

Those insurers raked in record profits in the quarter before, as they continued to collect members' health insurance premiums while spending billions less on medical claims. They reported $17 billion in combined profits in the second quarter, up about 79% over the same quarter in 2019. UnitedHealth Group's profit nearly doubled in the second quarter compared with the year before.

To be sure, insurers aren't hurting. Though their collective profits were lower in the third quarter, they still made a significant amount of money. All of them reported higher revenue in the third quarter over the same time last year and all but two grew membership. Combined, they brought in revenue of $258.5 billion, up 12.5% over the same period in 2019, and they served 177.1 million people, an increase of 7%.

Read more: Health insurers are creating a new kind of plan that makes it cheaper for patients to see doctors online, and it shows how the pandemic is reshaping the future of healthcare

Insurers' medical loss ratios jumped in the third quarter

Aetna, a national health insurer owned by pharmacy giant CVS Health, said its medical loss ratio rose to 84% in the third quarter from 70.3% in the second quarter. That means that Aetna spent 84 cents of every dollar in premiums on medical care, up from just 70 cents in the quarter before.

"Utilization has been steadily rising since April," said Aetna President Karen Lynch, who was recently tapped to be CEO of CVS starting in February.

UnitedHealthcare, the country's largest health insurer insurer, said its loss ratio was 81.9% in the third quarter, up from 70.2% the quarter before. Cigna reported a loss ratio of 82.6%, up from 70.5%, and Anthem's jumped to 86.8% from 77.9%.

Anthem CEO Gail Boudreaux told analysts during the company's earnings call that healthcare-use levels are higher than they were before the pandemic. Anthem provides health insurance to about 42.6 million people.

"Non-COVID utilization in the third quarter largely returned to normal levels or roughly 95% of historical baseline. And when coupled with the cost of COVID-19 care, overall utilization was above baseline," Boudreaux said.

Likewise, Cigna, Humana, and UnitedHealth officials also noted that healthcare use has rebounded to about 95% of normal levels. Humana's loss ratio was 82.6%, up from 76.4% the quarter before. Centene and Molina also reported higher loss ratios.

Under the Affordable Care Act, insurers must spend at least 80% of premiums on medical care or rebate the difference to their members.

Health insurers said some patients remain reluctant to go to the doctor. People with commercial insurance, such as those that get coverage through their jobs, are getting healthcare services more frequently than people with coverage through Medicare and Medicaid, John Rex, UnitedHealth's chief financial officer, said during an earnings call in October. 

Medicare is the federal health program for the elderly and some people with disabilities. Medicaid generally covers people with low incomes and many mothers and children. 

While medical loss ratios were higher in the third quarter over the second quarter of 2020, for many insurers, ratios were still lower than third-quarter 2019, reflecting the fact that healthcare use hasn't completely rebounded.

It's hard to know if patients will continue to go to the doctor throughout the rest of the year. COVID-19 cases are spiking around the country, and as a result, some insurers said they expect to see more medical claims over the next couple of months. At the same time, it's possible that some people will stay away from the healthcare system to avoid COVID-19.

"We fully expect that the fourth quarter will be above baseline for the entire quarter, given the recent surge in COVID as well as all the other trends that we're seeing," Anthem Chief Financial Officer John Gallina said.

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