Will individuals see the savings from insurance pandemic relief? Not quite

Health insurance companies are offering their corporate customers rebates to offset premium costs and reflect lower medical spending as patients avoid doctors’ offices, routine procedures and elective surgeries during the coronavirus pandemic.

It’s unclear how big an impact the rebates, in the form of credits, might have on the premiums companies pay and contributions their employees make. Premiums vary from company to company and, depending on the circumstances, the rebates could lower premiums, keep them from rising or at least limit increases.

Companies, meanwhile, will decide whether to adjust employee contributions to health insurance premiums based on the rebates they might receive.

Fewer claims were filed during the pandemic, meaning insurance companies paid out less, kept more of the premiums they collect and earned higher profits. As a result, insurers are coming under pressure to return some of the windfall to customers, particularly since the Affordable Care Act prohibits insurers from keeping more that more than 20 percent of premiums for administrative costs and profits.

The Centers for Medicare and Medicaid Services issued guidance in August that allows insurers to refund the excess profits this or next year as premium credits, which are discounts that reduce the amount paid monthly.

On Tuesday, Blue Cross Blue Shield of Texas said it would help customers during the pandemic by issuing $104 million in premium credits to employers that it insures. It also said it would adjust the price of 2021 premiums for individual and group plans, saving buyers $109 million.

UnitedHealthcare said it is issuing between 5 to 20 percent in premium credits to companies it covers. Cigna, one of the nation’s largest insurers, has a pandemic relief program that will offer credits for 2021 premiums paid by companies, said Cigna spokesperson Mark Slitt. Slitt declined to provide estimates on the amounts saved.

The rebates only affect companies that buy health care plans directly from insurers. Self-funded employers, where companies pay claims themselves and hire insurers to administer the plans, won’t receive credits because they don’t pay premiums to insurance companies.

Approximately 67 percent of workers nationwide are enrolled in self-funded plans, according to the Kaiser Family Foundation. Self-funded plans are likely experiencing similar trends in health care spending and paying fewer claims, analysts said.

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Some, but not all

Industry experts, however, expect the declines in health care spending to be temporary. Once the COVID-19 pandemic is brought under control, they expect people to quickly return to doctors’ offices, outpatient clinics and elective procedures.

Ken Janda, a health care consultant and former insurance executive, said insurers must guess whether it’s a better financial move to reimburse customers now in the form of premium credits, or to wait until next year and see if there’s pent-up demand from people who put off care in 2020.

“All of those services are down and save the insurance company money this year because they don’t have to pay those claims, but could potentially cost them money next year or the year after,” Janda said.

John Ford, a spokesperson for the Texas Association of Health Plans, a trade group, said that insurers are assuming patients will not only will get their care later, but because of the delay in checkups and other preventive services, care will become more complex and cost insurers more later.

Reaping the benefits

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Last month, insurers complained that COVID-19 test and care costs were skyrocketing and the costs could be reflected in customer’s premiums going forward. But, Janda said, the testing costs will be offset by the plunge in claims for emergency room visits and elective procedures, avoiding or limiting premium increases.

Chien-Ping Chen, a health economist at the University of Houston-Victoria, expects other insurers to follow Blue Cross Blue Shield of Texas in reducing planned premium rates for 2021. It creates a good image for customers, he said, while abiding by the federal mandate to return overcharges to consumers.

Insurers also could benefit from an increase in customers as the pandemic drives more people to buy health insurance, Janda said.

“Between people who lost employer sponsored insurance and people who have been uninsured and who are now nervous about COVID,” Janda said, “my guess is that we’ll actually see growth in the number of people buying policies for 2021 in Texas.”

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