It has become tricky to evaluate 2018 profit forecasts in the light of massive U.S. tax cuts; companies are offering varying (if fairly buoyant) guidance that likely involves a fair bit of guesswork.
But even within that context, the roughly 15% profit boost Anthem Inc. projected for this year, as it released fourth quarter earnings on Wednesday, is meaty. And it’s easier to trust because Anthem’s business is confined to the U.S.
It’s just a shame it had to get overshadowed by seismic shifts in the U.S. health care market.
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For one thing, a new health care company from Amazon.com Inc., Berkshire Hathaway Inc. and JPMorgan Chase & Co. (let’s call it “AmBerMorg,” at least until they formally name the thing), while in its infancy, is a potential threat to Anthem’s commercial insurance business.
Self-insurance — in which organizations pay for employee health expenses themselves while farming administrative services to an insurer — is nothing new. But this venture looks more ambitious than that. One of its likely goals is to take on (and ideally improve on) some of the functions insurers currently manage. If successful, AmBerMorg may be a blueprint for how companies can self-insure with less help from Anthem and its ilk. It may even become a competing service provider in its own right.
Self-funded plans generally aren’t as profitable as fully insured plans where an insurer takes on risk. Anthem had nearly 25 million people enrolled in self-funded insurance plans as of the end of 2017, the most of any U.S. insurer. If AmBerMorg takes off, then self-insurance may become more common and less profitable.