UnitedHealth Group, the parent company of the nation's largest insurer, said Thursday it will spend $1.5 billion to discount some customers' premiums, waive copayments for doctor visits, and offer other assistance to members amid the COVID-19 pandemic.
The company said it would apply discounts ranging from 5% to 20% to the bills that UnitedHealthcare fully insured customers receive in June. It will also eliminate cost-sharing for primary care and specialty care visits through at least the end of September for Medicare Advantage customers.
Part of the funds will also go toward stabilizing premiums for its Medicare supplement policies and supporting Medicaid members with food and baby formula.
UnitedHealthcare CEO Dirk McMahon said in an interview that the company is making these investments because its medical costs have been lower than expected.
"Our premiums were set some time ago and those anticipated a certain level of medical expenses. Those medical expenses are less than what we anticipated and customers, employers, people need funds now, so bringing them into the current period makes sense," McMahon explained.
The help comes after UnitedHealth reported $3.5 billion in profit on $64.4 billion in revenue in the first three months of the year. During an earnings call in April, the company said its financial results were largely untouched by the pandemic and said it expected to still achieve its full-year 2020 earnings projections. McMahon said the $1.5 billion commitment doesn't change that.
"Our customers are hurting, and it's the right thing to do," he said of the investments.
The widespread deferrals of elective medical procedures and routine doctor's appointments amid the pandemic has drained hospitals and physician practices of revenue, but it's been a boon to large, for-profit health insurers. Analysts expect the benefit of the deferred services to outweigh any COVID-19 related costs in 2020.
McMahon declined to say how much lower UnitedHealthcare's medical expenses are than expected, but some other health insurers, including Aetna and Humana, have estimated that medical utilization has fallen about 30% in recent months.
UnitedHealth Group CEO David Wichmann in April promised to correct any "financial imbalances" arising from the pandemic and related social distancing efforts, whether through customer rebates or other investments.
The company previously sped up $2 billion in provider claim payments and committed funds to address the healthcare system's shortage of personal protective gear. Like other insurers, it has also waived costs for COVID-19 tests and treatment and eliminated prior authorization requirements.