Last Friday, Aetna released their earnings report and as expected had an increase in profit. When you read the news release you will see a common theme in theirs that you also see in UnitedHealth, Cigna and WellPoint: more and more members are delaying to seek care. As the economy is struggling to regain stability, and those covered under insurance today have very high deductibles and coinsurance, people will delay seeking treatment for services.
In some ways having people delay going to the doctor and asking the question, “do I really need to seek care?” is a good thing. Why may you ask? Many years ago we introduced the very low copay option to insureds. We did this as an incentive to go to a PPO/HMO provider as an incentive to try this “new” concept out. What we created were people going to the doctor with the slightest sniffle or ache. The cost was minimal; why wouldn’t you?
Fast forward to where we are today. Those covered by insurance with high deductibles are now saying “maybe I’ll feel better tomorrow,” or “let me look online to see if I really need to see a doctor.” This is a culture shift from when we had low copays, no claim forms and unlimited access. Today, the consumer is thinking with their pocketbook. Again, people should seek care that they need, it but it is interesting to see how the culture shift is being played out in the financial numbers with the carriers.
No doubt they will have to adjust their assumptions, but stay tuned. I guess my mom was right, “unless you are bleeding and pass out, there is no reason to go into town to see a doctor.” (I lived on a farm in Nebraska)
Listed below is the highlight of Aetna’s earnings news release:
“Aetna said the profit boost was "largely the result of higher commercial underwriting margins driven by management actions to appropriately price the business," along with lower health care use. Aetna had struggled through 2009 with medical costs that climbed higher than the company expected when it set prices for that year. Company leaders said then that they repriced a significant portion of Aetna's commercial insurance business.
Aetna is the third largest commercial health insurer based on enrollment, trailing WellPoint and UnitedHealth. Those insurers and Cigna Corp. have all seen a slowdown in health care use over the last part of 2010.
Industry observers have said use slowed due to a mild flu season that followed the swine flu outbreak of 2009 and because consumers tend to cut back on care during a struggling or recovering economy.”
Yesterday’s Wall Street Journal an article written by Janet Adamy deals with the rise in health insurance premiums. As insurers start to assess the costs associated with the additional benefits mandated under PPACA we are seeing the beginning of what many people predicted: higher premiums. We all know that premiums were rising before the passage of PPACA and again I believe health reform is needed but what we are now seeing is how insurers are starting to assess the additional costs for the mandates provided under PPACA and this is where we get “unintended consequences.” The article highlights the premium increases for individual plans. Over the next few weeks we will have a clearer picture of what the landscape looks like for group plans. Between 65-75% of group plans renew January 1 so the renewal rates are now being shared with employers. It is again anticipated we will have double digit increases for group plans and when you include the likely repeal of the Bush tax cuts for 2011, employers will have to make some very serious decisions on how they will remain competitive in the marketplace.
I encourage you to watch and listen to the video above. Ron Williams, CEO of Aetna, is interviewed by Alan Murray of the Wall Street Journal, and Mr. Williams makes some excellent points regarding cost and quality in today’s healthcare environment. If we are to have true reform, we must have a rational payment system that us fully transparent to all parties. The time is now.