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Health Costs Are Still Tame, Insurer Results Show

WebMD News from Kaiser Health News

By Jay Hancock

Thu, Aug 01 2013

Some give all the credit to Obamacare. Others cite the poor economy or employers forcing workers to bear more of the cost of their medical expenses. Whatever the reason, health-cost increases stayed tame through the first half of the year, insurers say. Thursday’s report from Cigna was the last dispatch on second-quarter financial results from major medical carriers. Cigna’s results were similar to those of its rivals: higher-than-expected profits thanks largely to moderate increases in medical prices and the number of medical procedures.

Insurers also shed new light on how they’re dealing (or not) with the new online health marketplaces, also called exchanges, set up by the health law; the enduring popularity of Medicare Advantage plans despite government payment pressure; and continued moves by employers to self-insure their health costs, letting them avoid some Affordable Care Act rules and taxes. Here is the earnings news that didn’t make the headlines:

– Every insurer reported moderate cost increases. Some lowered already low projections. Aetna estimated that cost increases for for its commercial insurance lines would be about 6 percent for 2013. WellPoint projected 6.5 percent for the year. Cigna projected 5 percent to 6 percent — a full percentage point lower than the previous estimate.

Before the economic slowdown, some carriers’ annual medical costs increased at close to double-digit percentages. “Medical trends continue to develop lower than our previous projections,” said Shawn Guertin, Aetna’s chief financial officer. (Thanks to Seeking Alpha for the transcripts.)

As to what’s causing it, Aetna CEO Mark Bertolini suggests that consumers delay seeking care when money is tight: “While structural changes in the health system may be playing a modest role in the low-cost trend we are experiencing, we continue to believe that this low utilization is largely driven by the weak economy,” he said. 

– WellPoint projected a huge increase — 750,000 — in members whose claims will be paid directly by their employers by the end of 2014. (WellPoint makes money processing the claims.) WellPoint implied it’s taking the business from rivals. But other carriers also reported increases in self-insured employers.

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