Major health insurers are being hit with higher-than-expected flu-related costs—a barometer of the severity of the H1N1 flu virus.
The cost of H1N1
Payers hope vaccine availability will help ease costs
WellPoint, the largest insurer by membership, reported to investors last week that it saw a spike in H1N1-related costs in the last half of September and is bracing for higher-than-anticipated medical costs over the next two quarters. The Indianapolis-based insurer expected $20 million in flu-related medical costs spread over the last six months of 2009, but “the vast majority of the $20 million was eaten up in the last two weeks of September,” said Wayne Deveydt, chief financial officer of WellPoint, on an earnings conference call on Oct. 28.
Insurers are able to infer medical cost trends almost in real time by looking at pharmacy data, Deveydt said. In mid-September, WellPoint began seeing more prescriptions being filled by members for flu anti-retroviral drugs such as Tamiflu and Relenza. Increased physician visit claims related to the H1N1 virus, commonly referred to as swine flu, also began to climb, he said. WellPoint has nearly 44 million members.
Amerigroup, a health insurer serving mostly the Medicaid market, last week withdrew its year-end outlook because of higher-than-anticipated medical costs because of the flu. Like WellPoint, Amerigroup began seeing those higher costs related to H1N1 hit in September.
The H1N1 virus is especially virulent among children, pregnant women and people with underlying medical conditions. Amerigroup, based in Virginia Beach, Va., estimates that those most susceptible to H1N1 represent about 87% of its 1.7 million members.
“The vast majority of our members are within the demographic most at risk for the flu, and we appear to be early in the cycle,” James Carlson, Amerigroup chairman and CEO, told investors on Oct. 26. “With this in mind, it is difficult to determine if, and when, the situation will abate, continue at current trends or worsen.”
Officials at UnitedHealth Group and Aetna also said on third-quarter earnings calls in recent weeks that they anticipate higher medical costs because of the H1N1 virus.
UnitedHealth Group reported $60 million in flu-related costs in the third quarter ended Sept. 30, up from $50 million in the second quarter. Executives at the Minnetonka, Minn.-based insurer said they expect continued H1N1 flu costs for the rest of the year but expressed optimism that claims would moderate as the vaccine becomes more widely available.
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