US health insurance companies beat analyst expectations and reported billions in profits in the first quarter of 2021, after making a windfall in the first year of the Covid-19 pandemic. The insurers’ success comes as small healthcare providers face unprecedented financial stress and millions of Americans struggle to cover health costs. The large profits reaped by the insurance firms are also likely to increase criticism of the US healthcare sector. The nation’s largest health insurer, UnitedHealth Group, reported $4.9bn in profits in the first quarter of 2021 compared to $3.4bn in the same period in 2020 – a 44% increase. The higher than anticipated profits prompted the company to raise its projections for the year. Anthem also beat estimates in its report of $1.67bn in profits in the first three months of 2021, a 9.5% increase from the same period last year. Humana’s net income was $828m in the first quarter, a 75% increase from the same period the year before. CVS Health, which owns the Aetna health insurance provider and drugstores, reported $2.2bn in profits, up from $2bn in the same quarter a year before. Cigna said on Friday its net income fell to $1.17bn from $1.19bn in the same period last year, but it still raised its forecasts for the year. Together, the companies represent the country’s five biggest health insurers by membership. Insurers’ financial success is not reflected across the healthcare system. Small healthcare providers such as independent doctor’s office and rural hospitals have been in a financial crunch, or closed, during the pandemic. Emergency medical service systems and some larger hospitals have also been under severe financial pressure. Health insurers have been insulated from this stress because there were sharp declines in expensive, elective procedures, such as hip replacement surgery. People also delayed or skipped doctor’s appointments because of fears of Covid-19’s spread or concerns about the cost of medical care during a recession. Allison Hoffman, a health law expert at the University of Pennsylvania, explained: “Insurers’ Covid-related costs have been far smaller than their pandemic-related savings.” Last year, insurers warned medical use could soar when Covid-19 cases decrease and people are more comfortable visiting a doctor’s office. In earnings calls this quarter, health insurance executives said they expect medical use to be normal or slightly above normal, but not extreme, in the second half of the year. Anthem’s executive vice-president and chief financial officer, John Gallina, said it was too early to see pent-up demand. “Folks were able to get access to care in 2020 when a lot of the stay-at-home rules were relaxed,” Gallina told analysts. “So at this point in time, we are taking a very cautious approach, certainly monitoring all of the variables, but we still believe that our original outlook for utilization is appropriate and prudent.” CVS Health’s chief financial officer and executive vice-president, Eva Boratto, said in an earnings call this week: “Covid-19 is expected to have a minimal impact on consolidated financial results for the year.” Insurers are required to return part of the profits to the individuals and employers who use their services because of the Affordable Care Act’s cap on insurance company profits. Some insurers potentially offset some share of the rebates by reducing premiums or providing a premium credit to people in 2020. Many also waived treatment fees for insured patients with Covid-19. Those waivers are now being phased out. Anthem, UnitedHealth and Aetna rolled back the waivers this year, while Humana has dropped them for some customers. Covid-19 vaccinations and most coronavirus tests are still free for people under federal law. The California representative Katie Porter was one of 10 Democratic representatives to write to Anthem, UnitedHealth and CVS Health last week to ask them to continue covering costs for Covid-19 treatment. “To do anything less can and will harm the members who pay your salaries and who you are committed to serve,” wrote the members, including Pramila Jayapal, of Washington, and Cori Bush, of Missouri. The insurers’ lobby America’s Health Insurance Plans (AHIP) said that an August statement from its president and CEO, Matt Eyles, still reflected the lobby’s position on profits during the pandemic. “American consumers, businesses and taxpayers are protected by provisions in federal and state laws that require health insurance providers to deliver premium rebates and put money back into their pockets,” Eyles said. Hoffman predicted insurers would be under more legislative and public pressure to answer for high profits if they continue into the year. “I don’t necessarily blame them for last year, because nobody could have predicted what the year looked like,” Hoffman said. “But when you come out with such high profits at the end of the year, maybe you use this as an opportunity to do some good things in return.”