COVID-19 Variants Worry Anthem Forecasters

Anthem executives are watching carefully to see whether vaccines beat COVID-19, or whether virus variants and low vaccination rates in some parts of the country help the pandemic make a comeback.

Executives talked about their new uncertainty about the pandemic Wednesday, during a conference call Anthem held with securities analysts to go over its earnings for the second quarter.

Anthem is one the largest health insurers in the United States. The Indianapolis-based company holds the Blue Cross and Blue Shield licenses for Illinois, Texas, Montana, New Mexico and Oklahoma.

Gail Boudreaux, Anthem’s CEO, said during the call, in response to a question about Medicare Advantage plans, that the delta variant version of COVID-19 has the company’s attention.

At the company’s Medicare Advantage business, “we have a highly vaccinated population,” Boudreaux said. But “we’re very prudent about what’s going on with the delta variant,” Boudreaux said.

Anthem’s CFO John Gallina said COVID-19 vaccination rate statistics are part of a model that company managers talk about every week.

Because of the slowing COVDI-19 vaccination rates and rise of new COVID-19 variants, Anthem is now taking a slightly more cautious view of what claims will look like in the second half of the year, Gallina said.

“We’re going to price to forward trend and be disciplined,” he added.

The Earnings

For the second quarter, which ended June 30, Anthem is reporting $1.8 billion in net income for  on $34 billion revenue, compared with $2.3 billion in net income on $29 billion in revenue for the second quarter of 2020.

The COVID-19 pandemic and lockdown rules cut medical claim costs far below normal levels in the second quarter of 2020. Use of care was close to normal levels in the latest quarter, according to Anthem executives.

Because of that shift, benefits expense as a percentage of premiums increased to 86.8%, from 77.9%.

Enrollment

Anthem ended the first quarter providing or administering health coverage for 44 million people, or 3.3% more than it was covering 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 2020 and the latest quarter:

  • Individual Commercial: 738,000 (up from 711,000)
  • Medicare Advantage: 1.8 million (up from 1.4 million)
  • Medicare Supplement: 936,000 (up from 921,000)
  • Self-Funded Employer Plans: 26 million (unchanged)
  • Fully Insured Employer Plans: 3.9 million (up from 3.8 million)

The number of life and disability members fell 7.4%, to 4.7 million.

Enrollment in the company’s dental plans increased 3.2%, to 6.6 million, and enrollment in dental plans that Anthem administers, rather than insurers, increased 14%, to 1.5 million.

European Compliance Association

European Compliance Association

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