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Contrary to earlier concerns, it appears that health insurers are doing pretty well through the COVID pandemic. It appears the costs of treating people with the virus are more than offset by a 60% reduction in other medical care including elective surgeries, routine outpatient care and lower ED visits. The six largest insurers reported $8.6 profits for the last quarter of this year, even as they waived costs for COVID testing and treatment. UnitedHealth Group is refunding $1.5 billion to customers in credits and waived co-pays.

Under the Affordable Care Act, insurers must spend at least 80% of premiums on medical care for individuals and small groups and 85% for large groups. If they don’t, they have to refund the balance back to consumers. Rebates declined for the first few years after passage of the ACA, but started climbing again in 2018. This year US insurers rebated a record $2.7 billion to consumers for 2019 coverage. If medical spending this year continues to be low, insurers may break that rebate record again for this year.

Early estimates of COVID-19’s costs were scary, but a new post from Health Affairs predicts lower healthcare spending impact this year and no impact on 2021. This analysis includes the impact of rising numbers of uninsured Americans. In good news, there is early evidence that outpatient care may be starting to rebound.

It’s important to note that while insurers appear are doing well, hospitals are taking a serious hit.  ICU beds are full but elective surgeries aren’t happening. Connecticut hospitals may lose as much as $1.5 billion this fiscal year threatening financial stability and prompting furloughs, and cuts in management salaries and workers’ hours.