The CPI print yesterday, while not as directly and immediately relevant to health insurance itself, continues to paint a picture of higher labor and goods costs that, in a regulated industry like health care, will require substantial cost management – something CLOV seems to think is not necessary.
Eschewing the usual provider network structure in favor of proliferating their Clover Assistant website among the physician community, CLOV spent about 107% of the premiums it took in on health care benefits in 1Q 2021. The company’s primary insurance subsidiary, from which it derives most of its revenue, has experienced underwriting losses in every quarter since 2016 except two: the peak pandemic months of 2Q 2020 and 3Q 2020 when many physicians’ offices were closed.
The future is no brighter than the past. Pick any data point you wish, personal consumption expenditures, wages, producer price index. They all point to more and more expensive care in the aftermath of COVID-19. Meanwhile the revenue CLOV receives from the federal government to pay the health care expenses of its members is revised only annually and on a lag.