Bloomberg News

Flu Hitting U.S. Fast as Insurers Brace for Claims

January 09, 2013

The U.S. influenza season is off to a fast start, which may hurt insurers, hospitals and people lulled by the milder outbreaks of the recent past.

The number of flu cases began to rise in November and reached an elevated level in December, a month earlier than usual, said Michael Jhung, a medical officer with the U.S. Centers for Disease Control and Prevention’s influenza unit. About 5.6 percent of all doctor visits in the U.S. now are for influenza, according to the Atlanta-based agency. That compares with 2.2 percent of visits at the peak of the season last year.

Companies most affected by the early start include insurers like Centene (CNC:US) Corp., Coventry Health Care Inc. (CVH:US) and Humana Inc. (HUM:US), said Michael Manns, a Bloomberg Industries analyst in Princeton, New Jersey. They have the largest exposure in states such as Florida, Texas and Georgia, where the virus is widespread, indicating their medical costs could rise as a result.

“These companies have a larger percentage of their enrollment in states with a high incidence of the flu,” Manns said in a telephone interview. “If we look at those who are slanted toward older patients, we’ll see an increase in doctor office visits and hospital outpatient visits. That will probably drive utilization higher rate than people may have anticipated.”

Hospital companies including Health Management Associates Inc. (HMA:US) and Vanguard Health Systems Inc. (VHS:US) are likely to take a hit from the influenza outbreak because 93 percent of their beds are in the 25 states reporting elevated flu levels, Manns said. The spread of the virus will boost emergency room visits by the uninsured, which cuts revenue rates per patient, he said.

Severe Outbreaks

The most prevalent strain of the virus, known as H3N2, has been linked to severe flu outbreaks in the past. The last time the season peaked this early was in 2004, when there were 50,000 deaths, said Brad Tebbets, an infectious disease health-care analyst at GlobalData, a London-based business intelligence provider. It’s not clear if rates this year are still rising.

“It’s early, there is a lot of influenza activity and it may occur for some time,” Jhung said in a telephone interview. “I don’t know if we are at the peak now in the current season, or if it may be increasing further.”

Google Trends

Flu activity is higher on Google Inc.’s Flu Trends function than it has been any time in the past six years, in addition to peaking earlier. The chart is an aggregation of search terms that indicate people are looking for information about the virus, and is often a leading indicator for higher rates later reported by the CDC.

In the city of Boston, Mayor Thomas Menino declared a public-health emergency. There have been about 700 confirmed cases of influenza already this year, 10 times more than the 70 seen in all of last year’s flu season in the city.

“This is the worst flu season we’ve seen since 2009, and people should take the threat of flu seriously,” Menino said in a statement. “This is not only a health concern, but also an economic concern for families.”

The good news, Jhung and Tebbets said, is that the virus is well matched by the 135 million doses of vaccine produced by Sanofi (SAN), AstraZeneca Plc (AZN), Novartis AG (NOVN), GlaxoSmithKline Plc and CSL Ltd. (CSL) More than 100 million Americans have been vaccinated this year, Jhung said, and there is still time for others.

Get Vaccinated

“If people haven’t been immunized already, they should get the vaccine,” Jhung said. “It’s perhaps even more important to be vaccinated, and quickly, because of the high rate of influenza we are seeing now.”

Most health insurance companies plan for a normal flu season each year, said Ana Gupte, a Sanford C. Bernstein & Co. analyst in New York. Those that provide benefits to people with Medicare, the U.S. government’s health insurance program for the elderly, may get additional payments to compensate for a sicker patient pool. Others that cover people enrolled in Medicaid, the federal-state program for the poor, or that provide employer- based insurance bear the cost alone, she said.

Centene reduced its 2012 earnings forecast on Dec. 14, saying on a conference call that it expected higher costs because of the flu. The St. Louis-based company also said it expected 2013 expenses caused by the flu season would be higher than recent years.

Mary Mason, Centene’s chief medical officer, didn’t return phone calls this week seeking comment.

The flu typically starts picking up in December or January. The virus attacks for about three months, moving through the population and leaving fever, muscle aches and malaise so severe many patients struggle to leave their beds for a week or two.

Complications are more common in the old and young, and they can be fatal. A combination of influenza and pneumonia was the eighth-leading cause of death in the U.S. in 2009, killing 53,692 Americans.

To contact the reporter on this story: Michelle Fay Cortez in Minneapolis at mcortez@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net


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Companies Mentioned

  • CNC
    (Centene Corp)
    • $77.53 USD
    • 0.91
    • 1.17%
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