Insurers are well-positioned to manage costs associated with the COVID-19 pandemic, as well as new healthcare business competition from Amazon, according to The Wall Street Journal.
Profitability for health insurers has grown in the short term because of the deferment of elective surgeries amid COVID-19 surges. Those profits will adjust next year as patients reschedule any care that was deferred. UnitedHealth Group expects a negative effect of about $1.80 per share from increased COVID-19 treatment and testing costs, the residual effect of patients deferring care in 2020 and overall unemployment.
However, UnitedHealth predicts that membership growth, especially in its Medicare Advantage business, will likely offset losses. UnitedHealth anticipates that it will earn $16.90 to $17.40 a share next year, up 8 percent from a year before, according to The Wall Street Journal.
Another potential headwind for insurers are new entrants into the market, like Amazon's recent debut of its online pharmacy business. But according to The Wall Street Journal, it's unlikely that a company like Amazon will completely disrupt the prescription drug industry. For example, Amazon is working with Cigna subsidiary Inside Rx to manage its drug discount program for Prime members, the report states.
"Considering what has failed to sink health-insurance stocks in 2020, the shareholder outlook for next year should be rosy," according to The Wall Street Journal.