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United Health to spend $1.5 billion in medical relief to curb coronavirus costs

Anjalee Khemlani
·Senior Reporter
·4 min read

UnitedHealth Group (UNH) is investing $1.5 billion to provide financial relief to its insurance plan members, using a mix of givebacks and waived medical fees to alleviate the fallout from the coronavirus crisis.

In addition to a previously-announced plan to waive COVID-19-related visit costs it announced earlier this year, the insurance giant’s plans to offer premium credits ranging form 5% to 20% for some commercial insurance plans for June. For Medicare Advantage members, specialist and primary care physician visit costs will be waived through the end of September, UnitedHealth added.

“Our premiums were based on a certain medical cost assumption, and as we’ve looked at what the premiums are in relation to the cost, it’s the right thing to do to accelerate the give-back of that money to folks,” UnitedHealthcare CEO Dirk McMahon told Yahoo Finance in an interview.

With the pandemic forcing delays and closures in certain types of health care, insurers like UnitedHealth have seen their medical costs reduced. And with unemployment skyrocketing, McMahon hopes the move will help ease the burden on employers.

“With these reductions, business may be able to stay online longer, businesses may be able to keep more people on their payroll,” he said.

Prior to the outbreak, the health care industry was facing significant pressure over soaring costs, which fed the political fight over universal health care. With that in mind, McMahon suggested that the industry should respond to the crisis with an eye toward curbing health care inflation.

“I think what you’ve seen from the health insurance industry is there’s been some reactions to what’s the environment looks like. It’s the right thing to do,” he said.

‘Hard to predict’

New York's new coronavirus cases are on the decline, as the numbers in the rest of the U.S. rise
New York's new coronavirus cases are on the decline, as the numbers in the rest of the U.S. rise

Across the health care industry, elective procedures that are the most lucrative for hospitals and providers have all but stopped in the early part of the year due the outbreak. As a result, hospitals and providers have suffered, but insurers have benefitted.

What the pandemic’s impact on premiums will be in 2021 remains an open question. Insurers price in uncertainty — something of which there’s certainly no shortage.

McMahon explained that even as elective treatments slowly pick back up, the overall trajectory remains unclear.

“It’s just hard to predict what’s going to occur, and when— there’s clearly been some deferred costs now— at what rate, and how they come back. Obviously, some of it may not come back at all, but there’s a whole bunch of deferred care that people need to do,” he said.

That’s partly why the company is covering costs for Medicare Advantage members, to restrain costs down the line.

UnitedHealthcare is also keeping premiums stable for AARP Medicare Supplement policies, and accelerating funding to states for Medicaid plans. The insurer also plans to expand homeless support programs to include providing non-perishable food and baby formula.

Responding to COVID

United Health has also been investing in COVID-19 related initiatives, like self-swabbing studies, and a $5 million donation to a federally-sponsored program at Mayo Clinic to expand access to experimental plasma treatments.

The plasma from donors who have recovered from COVID-19 will be distributed to hospitalized patients with severe or life-threatening COVID-19 infections, the company said in a statement.

UnitedHealth’s chief medical officer, Dr. Richard Migliori, told Yahoo Finance the company’s focus on the outbreak came from a realization that there are no therapies to treat patients yet.

“Right now, we’re dependent upon a whole bunch of non-pharmacologic interventions like staying at home, like physical separation of people, like masking — and its taken its toll on the economy,” Migliori said.

So the company began to look at what the options are that could use a boost, and help through investments. UnitedHealth wants to help drive adoption of the treatments once proven effective, and create health benefit plan designs that mirror the commitment, the executive said.

“We’ve never had the ability, in this short a period of time, to see American medicine cooperate at this scale to get an answer, and that was exciting to us,” Migliori said.

Anjalee Khemlani is a reporter at Yahoo Finance. Follow her on Twitter: @AnjKhem

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