Who Pays the Price for Health Plans’ Soaring Profits?

UnitedHealth Group announced higher than expected earnings this week, celebrating an 18 percent year-over-year increase to $185 billion in 2106 revenue.  But not everyone’s cheering.

While the company’s premiums revenue soared, up $5 billion from the fourth quarter of 2015, some patients saw premium expenses strain their family budget.  Rising premiums have been attributed to the expense of treating sicker patients, a claim that may now strike some as ironic.

The insurer’s earnings also call into question patients’ struggle to access innovative medicine for chronic conditions.  Health plans have increasingly applied utilization management techniques to slow or block patients’ access to treatments for high-cost conditions.  For example, prior authorization processes in some private and state Medicaid plans block all but the sickest patients from being cured of hepatitis C by direct-acting antiviral treatments.

A similar scenario exists with new high-cost, high-value treatments for extremely high cholesterol.  Known as PCSK9 inhibitors, the drugs can effect up to a 60 percent reduction in LDL cholesterol, which leads to stroke and heart attack.  But health plans reject as many as three out of every four patients whose doctor prescribes the drug.

The combination of high premiums and more stringent access barriers may explain how health plans reduce the net cost of care per patient.  As reported by Business Insider, UnitedHealth Group explained late last year that “the amount it spends on medical claims compared with the insurance premiums that it brings in decreased…to 80.3 percent in the third quarter.”

And despite uncertainty about the future of the Affordable Care Act, profits are expected to continue rising in 2017 as health plans cut their exchange plan offerings.  This year, UnitedHealth offered Affordable Care Act plans in 34 states.  Next year, the company will offer plans in only “a handful” of states.  UnitedHealth and other insurers announced plans to pull from the Affordable Care Act exchanges because of declining revenue and the higher-than-anticipated cost of serving sicker patients.

UnitedHealth Group is the nation’s largest health insurer, seen as a bellwether for other plans and earnings reports to come.  But that may not be good news for patients who need access to quality health care and necessary medical treatments.

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