Gail Boudreaux, Anthem’s chief executive officer, told investors Wednesday that the company spent about $500 million on COVID-19-related diagnostic services medical care in the second quarter, and about $2.5 billion on trying to help people overcome the effects of the COVID-19 lockdown.
The Indianapolis-based health insurer suspended the usual co-payments and other out-of-pocket costs for COVID-19 testing and some other procedures.
The company gave customers a premium credit equal to 10% to 15% of the monthly premium for major medical insurance, and premium credit equal to 50% of the monthly premium for dental insurance.
Anthem is also providing extra support for providers, including $10 per visit extra for personal protective equipment for dentists seeing enrollees in the company’s dental plans.
Medical spending seems to have increased to about 90% of the expected levels in June, from about 80% in May, and just 60% in April.
But profits doubled, in part because of COVID-19-related decisions by providers and patients to postpone elective procedures, both to conserve health care system capacity and to keep providers and patients from making each other sick.
Boudreaux noted that the rest of the year could look different from the second quarter.
“Looking ahead, we recognize there is much unknown regarding the magnitude and duration of this pandemic given the recent resurgence in COVID-19 cases across the country,” Boudreaux said, during a conference call Anthem organized to go over its latest earnings.
But, if a COVID-19 rebound continues to create unusually low medical spending levels, then Anthem will “certainly take appropriate actions to help address whatever imbalances exist,” John Gallina, Anthem’s chief financial officer, said during the call.
- Links to Anthem earnings resources are available here.
- An earlier article about Anthem’s earnings is available here.
Anthem organized the call to go over its earnings for the second quarter with securities analysts. The company has posted a recording of the call on its website
Anthem is reporting $2.3 billion in net income for the second quarter on $29 billion in revenue, compared with $1.1 billion in net income on $25 billion in revenue for the second quarter of 2019.
Anthem has about $4.1 billion of cash and highly liquid investments at the top level, Gallina said.
“With liquidity concerns not as prevalent as they were earlier in the year, we have resumed our share repurchase program and continue to expect to repurchase greater than $1.5 billion of shares for the year,” Gallina said.
Anthem ended year providing or administering health coverage for 42 million people, up from 41 million people a year earlier.
Here’s what happened to the number of people covered by specific types of Anthem health coverage products between the second quarter of 2019 and the latest quarter:
- Individual Commercial: 711,000 (down from 741,000
- Medicare Advantage: 1.4 million (up from 1.2 million)
- Medicare Supplement: 921,000 (up from 877,000)
- Self-Funded Employer Plans: 25.9 million (up from 25.4 million)
- Fully Insured Employer Plans: 16.6 million (up from 15.4 million)
- Dental: 6.1 million (up from 5.9 million)
- Vision: 7.5 million (up from 7.2 million)
- Life and Disability: 5.1 million (up from 4.9 million)
Government moves to let Medicaid enrollees stay in Medicaid plans, without going through new eligibility checks, helped increase government plan enrollment, and shrinkage at employer plans was less than expected, Boudreaux said.
Anthem believes enrollee attrition might increase as federal assistance programs expire, Gallina said.
Boudreaux said that Anthem has a good group plan sales pipeline, but that employers seem to be taking longer to make benefits purchasing decisions.
Boudreaux said the push toward increased use of telehealth services has continued.
The company has facilitated 475,000 telehealth visits, and enrollees’ use of telehealth visits has increased 300%, Boudreaux said.
Use of behavioral health telehealth services is 56 times higher than it was before COVID-19 came along, Boudreaux said.
Felicia Norwood, the president of Anthem’s government business division, said Anthem is also making more use of telesales systems, including at the company’s Medicare plan business.
The Medicare annual enrollment period starts Oct. 15.
Medicare plan sales slowed in the spring, as social distancing rules took effect, but sales have improved since then, in part of increased use of virtual sales systems, Norwood said.
“So, we are fully prepared to adjust our sales processes accordingly in-light of this pandemic,” Norwood said. “We’re expecting that more than 50% of our sales activity will probably be virtual for this year’s [Medicare annual enrollment period]. Similarly, I would think that more of our agent engagement and training activities are going to be held virtually as well.”
— Read Life, Health and Annuity Issuer Earnings Season Begins, on ThinkAdvisor.