AYESHA RASCOE, HOST:
CVS Health is healthier than industry analysts thought. That's after the company beat earnings' expectations this past week. Its CEO points to tighter control over higher medical costs facing its Aetna Health Insurance arm. Those are the same costs that sent rival UnitedHealth shares tumbling just days earlier and have cut Humana share prices in half over the past 18 months. And we should mention Humana is a sponsor of NPR. Bruce Japsen is a senior health care contributor for Forbes, and he joins us now. Welcome.
BRUCE JAPSEN: Good to be back with you, Ayesha.
RASCOE: So CVS is up, UnitedHealth is down. Humana is actually up in recent days after a long losing streak. It seems like these are mixed messages, but you cover the health care industry every day. So what's cutting through the noise for you?
JAPSEN: Well, in its simplest terms, all of these health insurance companies - and of course, CVS owns Aetna, the nation's third largest health insurance company. You know, Humana - UnitedHealth Group owns United Healthcare. We could go on down the list. They were making billions of dollars during the pandemic - 2021, 2020, 2022, into 2023 - because people were not going to the doctor or getting a lot of routine procedures and other procedures like they did before the pandemic.
You know, people would be, like, I'm not going into the doctor to get this right now. I might get COVID. And these health insurance companies - 'cause I listen to the earnings - they kind of always said, hey, we're going to see a pent-up demand for health care at some point. We just don't know when. Well, that started to hit last year and then into this year.
And one of the things that the health insurance companies are supposed to do is figure all this out. Well, they admitted they didn't do a good job of that. They're saying the population of patients that they saw was sicker and needed more services than they thought. And CVS - because they and Humana were hit first in their Medicare population, the Medicare coverage for folks 65 and older - they're starting to come out of it.
RASCOE: So last time you and I talked, that was in May, and it was because CVS had announced it was pulling Aetna out of the ACA market in 2026. Was that part of the story this past week?
JAPSEN: A little bit. I mean, I think Aetna - they are pulling out of the individual market. So if you have Aetna individual coverage under the Affordable Care Act, about a million people are going to have to pick a new plan. They are not, by any stretch, the biggest player in that market. I think the decision they made is they said, you know what? We're better at other things. And so I think they're like, we're going to focus on Medicare. We're going to focus on Medicaid. We're going to focus on our commercial insurance for employers, and our pharmacy benefits we provide through Caremark. This is not a market that we want to be in, and so that's happening.
And then you're seeing other companies in that market that are already telling Wall Street, we're going to be going back to state regulators, saying, hey, wait a minute, we're going to need bigger increases than we thought we did. Centene, biggest provider of Obamacare in the country under their Ambetter brand - they said that they're going to be asking for this.
RASCOE: When you say bigger increases, you mean they're going to be asking people to pay more.
JAPSEN: You got it.
RASCOE: And those higher premiums for people in the marketplace for the Affordable Care Act - that will come into play next year?
JAPSEN: Yes. It will come into play for the 2026 benefit year, but people will pick their plans this fall.
RASCOE: I want to talk about UnitedHealth for a second. The company has been sued and is under multiple investigations. Of course, their CEO was assassinated late last year, so it's not really a surprise that they're struggling a bit. But how much of that struggle is unique to that company and how much of it might be endemic to the industry at large?
JAPSEN: Yeah. I would say that most of it is relative to the industry at large. So the CEO who was assassinated was the CEO of the health insurance unit United Healthcare, which is under UnitedHealth Group. The company has been through a lot. I mean, let's face it. One of your senior leaders is assassinated. The company has faced death threats. Workers have faced death threats. It's been a tough place for them to work. Because it's a health insurance company, they don't get a lot of sympathy in that regard.
One of the things that has come out of this is that a lot of the companies, the health insurance companies, have said, you know what? We're going to eliminate prior authorization when, you know, you have to get approval before you get a procedure for literally hundreds of things, hundreds of things. Clearly, the heat is on these health insurance companies to be better about patient experience.
RASCOE: And to be clear, even when we talk about health care companies that may be struggling, they're still raking in billions of dollars, right?
JAPSEN: Correct (laughter).
RASCOE: You mentioned how health care companies are realizing that they're not getting a lot of sympathy from people in the public and especially, you know, talking about, like, oh, they're struggling to make profits or to grow their profits. Is there a reason why the public should care about these things? How does it impact, you know, Joe Public, if the health care industry is having some struggles?
JAPSEN: They need to care because when you see that their costs are going up and they're spending more on the provision of care than they thought they had to, to cover those costs, they're going to raise rates.
RASCOE: That's Bruce Japsen, senior health care contributor for Forbes. Bruce, thank you so much for joining us.
JAPSEN: Thanks for having me.
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