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Anthem Says COVID-19 Vaccines Might Hurt Its Earnings

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What You Need to Know

  • Anthem estimates COVID-19 could cut its 2021 earnings by $600 million.
  • That would be equal to about one-third of first-quarter net income.
  • Vaccines are cutting COVID-19 hospitalizations faster than Anthem had expected.

COVID-19 could pinch Anthem Inc.’s earnings more than expected this year — because the U.S. vaccination campaign is moving faster than expected.

Executives from the Indianapolis-based health insurer gave that bittersweet assessment Wednesday, during a conference call they held to go over the company’s earnings for the first quarter with securities analysts.

The company reported $1.7 billion in net income for the quarter on $32 billion in revenue.

The company now predicts that that it will earn $25.10 per share this year for the full year, up from an earlier estimate of $24.50 per share.

But Anthem suggested in January that COVID-19 could cause about $600 million in extra costs — an amount equal to about one-third of first-quarter net income — this year. The company is sticking with that estimate, according to John Gallina, the company’s chief financial officer.

Anthem is doing well, but the increase in the earnings outlook is smaller than it could be in a world without COVID-19. The list of potential risks that includes a long fourth wave of COVID-19 cases, new COVID-19 variants, pent-up demand for health care and the potential for deferred checkups routine care that lead to severe, expensive-to-treat health problems, Gallina said.

The government recently increased Anthem’s costs by requiring it to pay $48 per COVID-19 vaccine dose administered, up from $28 per dose before, Gallina said.

Another factor, he said, is the pandemic’s effect on COVID-19 care cost and non-COVID-19 care costs.

Because the rollout of the COVID-19 vaccine has been faster than expect, COVID-19-related hospitalizations have dropped earlier and faster than expected, and that has helped to hold down the cost of pandemic-related care, Gallina said.

Meanwhile, because the easing of the pandemic has freed patients to go doctors and hospitals for more non-COVID-19-related care, claims for ordinary care have increased faster than expected, he added.

Enrollment Trends

Gail Boudreaux, Anthem’s CEO, said Anthem likes the decisions by the managers of Affordable Care Act public health insurance exchanges to let anyone enroll up until August. The usual enrollment deadline for the past few years has been Dec. 15.

Thanks to the longer enrollment period for 2021 coverage, “we feel that there will be some solid membership growth in the individual exchanges,” Boudreau said.

Boudreaux said Anthem has not seen many people who once had employer-sponsored group health coverage signing up for Medicaid coverage.

“Some of that just may still be the timing and people are still on their employer plans,” Boudreaux said.

Anthem has seen Medicaid enrollment grow, but that’s because of temporary rules that make it easier for people to keep their Medicaid coverage, she said.

Hydrogen Health

Anthem recently joined with Blackstone to back K Health’s Hydrogen Health startup.

Anthem hopes to see Hydrogen Health make “virtual care” available to patients through video phones, texting systems and chat systems, Boudreaux said.

 

Gail Boudreaux (Photo: Al Drago/Bloomberg)