Anthem Sees Employers Thinking About What to Do Now

Anthem Inc. is expecting COVID-19-related disruption to hurt group health plan enrollment, but, at this point, many employers are still thinking about what to do next.

Executives at the Indianapolis-based health insurer talked about the state of the group health market Wednesday, during a conference call the company held to go after first-quarter earnings.

Gail Boudreaux, the company’s chief executive officer, said she believes employers are focused first on ensuring the safety and health of their employees.

Resources

• Links to Anthem’s earnings resources are available here.
• An article about Anthem’s fourth-quarter earnings is available here.

“We had a really strong pipeline, and what we expect across many of these procurement opportunities is that they’ll move out further into next year,” Boudreaux said. “I do think we are going to see some deferred decisions, just because of what’s happening across this environment and need for employers really to focus on their own business right now.”

Peter Haytaian, the president of Anthem’s commercial and specialty business division, said that Anthem has seen furloughs accelerate, and that it has seen some employees fall off payrolls.

Employers are asking about affordable alternatives to the benefits they have now, Haytaian said.

Another sign of pressure on employers is an increase in the percentage of employers that will be paying their April premiums late: The percentage of employers using payment flexibility arrangements has increased to about 3% for April, from a historical range of about 0.5% to 1%, Haytaian said.

But, overall, “we haven’t seen acceleration yet in disenrollment,” Haytaian said.

About 40% to 50% of the workers who leave group health plans as a result of the COVID-19 situation could end up with Anthem Medicaid plan coverage or Anthem individual major medical insurance, Boudreaux said.

Earnings

Anthem is reporting $1.5 billion in net income for the first quarter on $30 billion in revenue, compared with $1.6 billion in net income on $25 billion in revenue for the first quarter of 2019.

Anthem ended year providing or administering health coverage for 41 million people, up from 40 million people a year earlier.

Enrollment

Here’s what happened to the number of people covered by specific types of Anthem health coverage products between the first quarter of 2019 and the latest quarter:

• Individual Commercial: 717,000 (down from 773,000
• Medicare Advantage: 1.3 million (up from 1.1 million)
• Medicare Supplement: 914,000 (up from 867,000)
• Self-Funded Employer Plans: 26 million (up from 25.5 million)
• Fully Insured Employer Plans: 16 million (up from 15 million)
• Dental: 6.2 million (up from 6 million)
• Vision: 7.5 million (up from 7.2 million)
• Life and Disability: 5.2 million (up from 4.8 million)

Liquidity

John Gallina, Anthem’s chief financial officer, said the company took $600 million from credit facilities and raised $900 million by issuing commercial paper.

The company also has the ability to borrow an additional $2.1 billion, Gallina said.

Claims

Gallina said Anthem believes that about 30% to 40% of its annual medical spending is the result of procedures that can be deferred.

The company expects ratios of claims to revenue to be “well below historical levels” for the second quarter, but it’s looking at medical loss ratios over a two years, and it believes medical loss ratios over that two-year period could be closer to the historical averages, executives said.

Pricing decisions for 2021 will depend on what Anthem learns as the year goes along, executives said.

Pandemic Response

Boudreaux said that about 99% of Anthem’s 77,000 employees are now working at home.

The company has joined with the other Blue Cross and Blue Shield carriers to offer $3 billion in financial support for hospitals and other health care providers.

The company has donated tens of millions of dollars on its own to charities throughout the country.

The company has ramped up telehealth operations, and use of the company telephone-based and web-based “virtual care systems” has increased by 250%, Boudreaux said.

— Read Centene Braces for COVID-19 Impact, on ThinkAdvisor.

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