Lewis & Ellis, LLC

COVID-19 has insurers shifting strategies

Health Care and Health Insurance
by John O'Dell
COVID-19 has insurers shifting strategies
COVID-19 has insurers shifting strategies

It's no secret that health insurers have been looking for clarity and certainty amid the novel coronavirus pandemic, and have had to make themselves more nimble to respond to the ups and downs that are likely to keep coming for some time. That includes reconsidering their relationships with the state- and federally run health insurance exchanges, which had previously been the subject of much industry debate.

Tens of millions of people are projected to lose their jobs throughout the pandemic, and for many, with those lost jobs will also come the loss of employer-provided health insurance. For that reason, some of the nation's biggest health insurers are wading back into those government-run marketplaces after slowly pulling out of them over the course of several years, according to Politico. This comes in the wake of industry analysis that showed insurers that continued participating in the exchanges even after the repeal of the individual mandate remained profitable.

No slipping through the cracks
The hope for these insurers is clearly that as people lose their employer-based coverage, they will continue to seek out health insurance, especially in light of the national health emergency that is still ongoing. While some may end up being eligible for Medicare or Medicaid, a large number will likely also turn to the exchanges, especially those living in states where elected officials failed to broaden Medicaid eligibility.

With potentially tens of millions of people looking for new health insurance options before the end of the year, and as 2021 arrives, health insurers seemingly see the value in getting involved in the individual market once again.

The health insurance landscape is shifting dramatically.The health insurance landscape is shifting dramatically.

Cutting rates is more common
This comes against the backdrop of growing regulatory pressures for health insurers, many of which saw strong profits in the first quarter of the year even as other aspects of the economy hit the skids. Safehaven notes that the current economic climate and issues of health insurance affordability, having long hovered over most industry discussions, seemingly came together to create a difficult situation.

Specifically, the insurance regulators of several states asked - with some force - major insurers to provide financial assistance to policyholders. Some are stepping up with financial aid in the hundreds of millions or more, eliminating out-of-pocket costs for some enrollees, cutting premiums and more. Of course, those cuts are hardly unique in the broader insurance industry these days, as nearly all major auto insurers have slashed premiums (largely in light of the fact that people have generally been doing less driving since the first "lockdown" orders were issued).

Dealing with care providers
Insurers may also have to keep in mind that many care providers across the U.S. may be under increased financial stress, especially if they are located in rural areas, according to the Lonsdale News Review. It has become increasingly difficult for these organizations to keep their doors open in recent years, and a large number have been shuttered already, reducing the number of care options for people living farther out from population centers. In Minnesota, for instance, the average profit margin for rural care providers - which account for roughly 1 in every 11 such facilities in the state, but serve just 1 in every 20 people - was 0.1% as of 2018.

One way in which these organizations may be able to overcome some of their challenges is through changes to health insurance reimbursement rules. Currently, there are regulatory challenges in many states that make it difficult for care providers to provide treatments via telehealth (and in fact, a lot of rural providers haven't invested nearly enough in these avenues due, in large part, to their financial constraints). If rules could be changed to be more conducive for insurers to cover more telehealth appointments, that might provide a critical lifeline for such care providers and the people who rely on them.

A bright future?
With all this having been said, however, the expectation is that the health insurance industry is well positioned for growth in the years ahead. Worldwide Market Reports recently published a projection which shows the U.S. health insurance market is expected to enjoy "huge growth" between this year and 2027.

However, in order to ensure such success, insurers will likely need to do a little more to guarantee that their relationships with policyholders can weather all the storms that could come in the months and years ahead. One of the best ways to do this is to stay in touch, communicate changes (and why they happen) and otherwise maintain a stronger relationship on an ongoing basis.



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