The COVID-19 pandemic has made the entire world kneel at its feet. Millions of people have lost their jobs and are struggling to make their ends meet. The economy of several countries, including the United States of America and India, is falling rapidly. It has been close to a year since the coronavirus altered people’s lives and yet it shows no signs of stopping. In this scenario where everything looks grim and full of uncertainty, health insurers have an entirely different picture to show.
Health Insurers Doubles Profits During Pandemic
Health insurance companies have profited exponentially through the COVID-19 pandemic. Some of the largest health insurers in the US have doubled their profits in the second quarter of 2020. The United Health Group, which is the biggest mediclaim provider in the United States, reported a profit of 6.7 billion dollars in the month of August as compared to 3.4 billion for the same period last year. Similarly, Anthem earned a profit of 2.3 billion over last year’s 1.1 billion and Humana’s profits rose to 1.8 billion compared with 940 million in 2019.
In India, the situation is quite similar. Health insurance companies in India have significantly increased their premium earnings. As per reports, the premiums have risen close to nine per cent this year. In fact, standalone health insurers have managed to collect premiums worth Rs 6,268 crore as compared to Rs 4,981 core earned in 2019.
How Health Insurance Providers are Earning Profits During the Pandemic?
Health insurance companies have managed to increase their earnings by selling more policies but distributing lesser claims. The entire pandemic situation has instilled fear amongst the people making them buy health covers that may save them for medical debt. Although the sale of mediclaim has increased, the cost of providing healthcare has reduced. People are avoiding going to the doctors for regular check-ups and are delaying elective surgeries. As a result, a lesser number of claims are being raised in the first place.
Besides, the pandemic has led to new business opportunities for the insurers by introducing innovative COVID-19 specific health products. They have managed to sell coronavirus-specific health covers by playing on the fears of the public. And, it has totally worked in their favour. The treatment of COVID-19 in private hospitals in India is touching the roof. As per a report, the treatment cost at top private hospitals in Delhi, Mumbai and Kolkata ranges between Rs 3 lakh to Rs 16 lakh. This means a person is paying close to USD 20,000 for treatment of coronavirus in India while the per capita income is 1837 dollars (or Rs 1.35 lakh) only. Naturally, lower-income groups cannot afford to pay for COVID-19 treatment expenses in the absence of a mediclaim policy.
That’s not all. Insurance companies in India have raised their premium costs. Going by a recent claim, the yearly health insurance premium in India has increased by 40 to 70 per cent. Health insurance premiums are also said to increase for the people of California. As per the latest reports, health insurance prices in California offered through the state marketplace is set to increase by an average of 0.6 per cent in 2021.
However, health insurers are not paying as much for medical care as compared to the premiums they have earned. In India, health insurance providers have been accused of denying claims by several policyholders. In fact, the matter had escalated to the Supreme Court of India in the month of May where the bench had directed the insurers to not wash off their hands during the pandemic since the people are already facing a lot of hardships.
Profits Capped Under Obamacare
Fortunately, the profits earned by health insurance providers in the US is capped under Obamacare or the Affordable Care Act. As per the Act, the insurers are required to pay 80 per cent of each dollar (80 cents) earned as premiums from individuals and small businesses on healthcare. In the case of large employers, 85 per cent of every dollar (85 cents) earned as premiums is to be spent on healthcare. Whatever remains can be considered as profit and can be spent on the company’s administration.
Moreover, insurance companies that overshoot the limit are required to spend the excess on rebates to policyholders within three years. Unfortunately, only three out of 23 non-profit medical insurance co-operatives under Obamacare will remain functional by the end of the year as New Mexico Health Connections have decided to close.
In the prevailing situation, the US Health & Human Services Department had advised insurers to reduce health insurance premiums to help people survive the current economic slowdown. They have also advised the insurers to speed up the excess rebates.
Summing It Up
Health insurers in the US operate to earn profit and not for public welfare. The for-profit healthcare system has left policyholders at the mercy of the insurance companies. While in India, health insurers ave conveniently managed to evade paying out claims. Ideally, health insurance is supposed to bridge the gap between what hospitals charge and what people can afford to pay. But how health insurers today are operating is worrisome, to say the least.