What You Need to Know
- Executives at another health insurer say COVID-19 care costs peaked in August.
- Reduced use of regular care because of the surge in COVID-19 cases helped hold down overall spending.
- Federal efforts to change the individual major medical enrollment calendar had a noticeable effect on enrollee health risk.
The summer COVID-19 surge may have hit working-age people harder than Medicare or Medicaid enrollees, partly because working-age people were less likely to be vaccinated against the virus that causes the disease.
Joseph Zubretsky, CEO of Molina Healthcare, talked about that observation Thursday on a conference call the company held to go over earnings for the third quarter with securities analysts.
The Surge Quarter
The third quarter began July 1 and ended Sept. 30.
Molina manages health coverage for about 4 million people with Medicaid coverage, 138,000 people with Medicare coverage and 719,000 people get individual commercial major medical coverage from the Affordable Care Act health insurance exchange program. Even many of the ACA plan enrollees are low-income, but they are in households with income above the federal poverty level.
In the third quarter, the COVID-19 surge was the one factor that pushed the ratio of medical costs to revenue up to 91.3% for exchange plan enrollees, up from 81.6% in the third quarter of 2020.
The ratio increased to 89.6%, from 86.4%, for Medicaid enrollees, and to 86.8%, from 82.4%, for Medicare enrollees.
The impact of the surge was bigger for exchange plan enrollees, partly because Molina has many exchange plan enrollees in California, Florida, Texas and Washington state, where the COVID-19 delta variant hit hard, Zubretsky said.
But the surge hit exchange plan enrollees harder because exchange plan enrollees tend to be younger, he added.
The cost of caring for a younger person who has COVID-19 tends to be a bit lower than the cost for an older person, “but the infection rate is high, and the younger population tends to be unvaccinated,” Zubretsky said.
Zubretsky noted that COVID-19 surges tend to crowd out spending on ordinary care, and that drops on spending on ordinary care tend to offset increases in COVID-19 treatment costs.
Drew Asher, the chief financial office at Centene, a Molina competitor, said Centene saw a spike in demand for COVID-19 treatment in August, and that the peak was higher than during the severe January surge.
But claims fell in September and are still falling this month, Asher said.
At Centene, he said, the effects of the surge were tougher on the ACA exchange plan business than on the company’s Medicare Advantage plan business, “because of the high vaccination rate of seniors.”
The Enrollment Calendar
Zubretsky and executives from Centene also talked about the effects of changes in individual major medical insurance rules on the health risk level of new individual major medical insureds.
In recent years, states have handled the ACA ban on medical underwriting in the individual market by making it easy for individuals to buy health coverage during the limited “open enrollment period” that began around Nov. 1 and ended around Dec. 15 in most states.