NEW YORK (Lewis Krauskopf) - use of the American medical services have not yet rebounded in the weakness of the economy, health insurers say, a trend which retains the down business costs and could further strengthen their profits this year.
Low use of health care has been major reasons behind the insurers health allocation of profits in the first quarter well above analyst forecasts earlier this year.
The companies have been factoring increases in their prices to their plans, but executives at an Investor Conference this week said the continued use of remain low.
UnitedHealth Group Inc. CEO Stephen Hemsley "medical expenses did not return to trend levels that we expected," said at the Conference, held by Sanford Bernstein.
Hemsley, which the company is the largest U.S. health insurer by market value, said that unitedhealth continues to believe that the trends of the medical expenses will return "to" more normal levels.
"But if it is driven by economic trends, or whatever date, medical expenses continue to tend to be more moderate, Hemsley said.
Since the economic downturn, Humana Inc. CEO Mike McCallister said, "use a little fell and there actually remains."
Historically, McCallister said, some health insurers have failed to anticipate a rebound priced too low - hurting results plans and medical expenses and the confidence of investors.
"The use is still relatively gentle that we might have expected, nobody knows when and if it's going to come back," said McCallister. "We are assuming basically that it's coming back because we are not going to miss this increase."
Some analysts have suggested that the use of less than expected is a more fundamental change instead of a short-lived. Due to structural changes in the plans of health care over the years, such as higher insurance and other costs, consumer focused ever more health care costs.
"You can argue if this economic situation, that we are long term and will have long-term effects, and if it has fundamentally changed something", said McCallister. "I don't know." I am not an economist. »
Jay Gellert, CEO of Health Net Inc., which operates the plans in the West of the United States, said the prolonged slowdown and its related job losses, makes this more unusual situation.
"In General, when people return to work they will then use health services," Gellert said. "But in California if you are in the 11.5% unemployment, I don't know which is the time that you think to get off the coast of your work and make selection procedures."
"And we are a long ways at least now, it seems, a rate of unemployment to a figure in California, sub-7 in the United States, and so I think that we could attend a longer period of depressed use,"Gellert said.""
However, Gellert said, "there is always risk on our side be mistaken use."
"Once that you miss, you are in great difficulty", he said.
(Reported by Lewis Krauskopf;) (Editing by Gary Hill)
Copyright 2011 Thomson Reuters. Click on for Restrictions.
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