Pharma and insurers raking in the cash

HEY NOW: Most companies struggled in the second quarter as the coronavirus pandemic froze the economy, but health insurers like UnitedHealth heavily benefited as people held off on going to the doctor or hospital, resulting in fewer medical claims that needed to be paid. In addition, pharma profit margins remain very high.

UnitedHealth Group registered more than $6.6 billion in profits in the second quarter — by far the conglomerate’s highest quarterly profit ever, according to an analysis of company financial data from FactSet. UnitedHealth’s “medical loss ratio” in the quarter was 70.2% compared with 83.1% during the same time last year — meaning UnitedHealth paid out just 70 cents in medical claims for every dollar it received in premiums.

On the pharma side J&J was the top profit earner follows closely by Pfizer and Gilead.

INSIGHTS:

1ne: People seem to be returning for medical care so it’s likely that insurers will be paying out a lot of claims. However, if COVID comes back in a big way we could see patients once again stay away.

2wo: The costs of delayed treatment are not measurable but could run into the billions.

3hree: It’s estimated that a lot of people may need mental health treatments because of the changes that have taken place over the last year.

4our: Although pharma companies are making a lot of money they’ll need that money for acquisitions. The argument, however, that they need big profit margins because of R&D is invalid.

5ive: We still don’t know the effect on costs telehealth will have on overall healthcare costs but telehealth is here to stay.

Now the bad news. Most employees are going to see significant increases in their health insurance premiums which can potentially offset any raises they may get.

It’s hard to fathom that insurers could raise rates so much when they are setting records for profits but remember it’s about Wall Street not about people.

Pharma and insurers raking in the cash