UnitedHealth Group said it will provide $1.5 billion in direct financial relief for its customers in the form of premium rebates for consumers on individual and small group employer plans, and cost-sharing waivers for seniors on its Medicare Advantage plans.
The nation’s largest health insurer says employers and individual members enrolled in its UnitedHealthcare fully-insured health plans will receive a 5% to 20% premium credit on their June billing statements. As of March 31, the company had 8.2 million members enrolled in fully-insured plans.
“As you know, people are hurting right now. Employers are hurting, individual consumers are hurting, and we felt it appropriate to get as much of this back in the hands of people as quickly as possible,” said UnitedHealth Group CEO David Wichmann, adding the company aims to help “small businesses, many of which have been out of work for a while.”
While insurers have pledged to cover coronavirus testing and medical costs, the pandemic has resulted in a sharp drop in medical spending due to delayed elective surgery and diagnostic procedures since the Trump administration issued a national shelter-in-place order in mid-March.
Some insurers and hospital operators have reported surgical volumes and non-Covid-19 emergency room visits in April down 40% or more from a year ago, which is more than offsetting increased costs on coronavirus care and expenses.
Under the Affordable Care Act, insurers are required to provide a rebate at the end of the year, if they spend less than 80% of premiums on medical costs for fully-insured employer plans, and 85% on individual health plans. Large, self-insured employer plans are not covered by the rebate provision.
UnitedHealth said that “the vast majority” of the new financial relief initiatives are not tied the ACA minimum medical spending mandate.
“A small fraction of the amount that consumers and the groups will be receiving relates to that rebate,” Wichmann explained, adding “the rest is based upon what we would characterize as an economic imbalance that we think will persist.”
Record 2020 rebates
Last month, auto insurers announced refunds to customers due to lower driving and accident rates over the last six weeks. UnitedHealth is the first health insurer to announce a rebate on premiums, due to overall lower medical costs.
But analysts and researchers anticipate that the industry could be on the hook for record refunds on 2020 premiums, under the ACA.
An analysis by the Kaiser Family Foundation estimated insurers collectively could have to pay out more than $2.7 billion in rebates for premiums collected this year; an average of $420 per member on individual plans and $1,850 per member on small group plans. That’s more than double the current record of $1.4 billion in rebates insurers are refunding individual consumers and employers for 2019 premiums.
Medicare and Medicaid support
UnitedHealth is waiving co-pays for all primary care doctor and specialist visits through September, for the nearly 5.6 million seniors on its privately insured Medicare Advantage plans.
With states now beginning to lift Covid-19 moratoriums on elective surgery and other non-emergency care, the ramp up of rescheduled procedures is expected to be slow until the second half of the year.
“Some of the care that’s being deferred is this care that we would characterize as necessary … and we are strongly encouraging people to access,” Wichmann said.
The company is also providing state Medicaid plans with funding for doctors, as well as support programs which include providing food and baby formula to families.
To date, the company has committed $75 million in funding for community outreach programs, including providing protection equipment for health care workers, and meals for students on school lunch programs.
UnitedHealth did not provide a breakdown on how the $1.5 billion in new funding will be split between the premium revenues, co-pay waivers and the Medicaid support.