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Health insurers like Aetna would reap big gains from the Republican tax overhaul. Photo: Bill Sikes / AP

Large health insurance companies would be among the biggest winners under Republicans' tax overhaul bill. Nearly all of their business is based in the U.S. and they consequently pay close to the full 35% corporate tax rate.

The bottom line: Cutting the corporate tax rate to 20% would instantly boost insurers' profits. Some of that benefit could result in lower premiums for anyone who has health coverage, but insurers would also find ways to keep as much of that money as possible.

The details: Cowen's health care equity research team modeled how tax reform would affect earnings per share for the biggest for-profit insurers. Cowen assumed the tax cuts would go into effect for 2018, though the House and Senate are deciding whether to push it to 2019.

Here's how much earnings per share projections for insurance companies would rise next year if Republicans agreed to a 20% corporate tax rate starting in 2018, per Cowen:

  • Molina Healthcare: 62.1%
  • Humana: 34.4%
  • WellCare Health Plans: 32.5%
  • Centene: 31.6%
  • Aetna: 30.4%
  • Anthem: 25.2%
  • UnitedHealth Group: 24.3%
  • Cigna: 21.6%

State Medicaid programs and employers likely would demand some of that money be passed back to them in the form of lower Medicaid rates and cheaper premiums.

The big question: Medical loss ratios, or MLR. These ratios require health insurers to spend so much of their premium dollars (minus taxes) on medical care or activities that try to improve health quality. For most types of health insurance, companies have to spend at least 85% of premiums on patient care, and the remainder can go toward administrative expenses, salaries and profits.

Insurers have to issue rebates back to consumers if they don't meet their MLR. And a tax windfall would inherently lower the ratios to the point where insurers may have to issue rebates. But it's possible companies could "increase spending on quality initiatives in order to avoid triggering the minimum MLR or lower price points to customers," Cowen analysts said in a report.

Go deeper

50 mins ago - Health

Study: Common antidepressant guards against COVID hospitalization

A COVID-19 intensive Care Unit in Rio De Janeiro, Brazil on May 27, 2021. Photo: Fabio Teixeira/Anadolu Agency via Getty Images

The readily available antidepressant fluvoxamine significantly reduced COVID-related hospitalizations, according to a large study published Wednesday.

Why it matters: The clinical trial suggests that a cheap, readily available drug could dramatically reduce serious illness and death when prescribed early.

By the numbers: Catholics, Biden and abortion

Expand chart
Reproduced from Pew Research Center; Chart: Axios Visuals

President Biden — the second Catholic U.S. president — will meet with Pope Francis at the Vatican on Friday, as some church leaders debate whether to deny Holy Communion to politicians who support abortion rights.

By the numbers: Overall, two in three U.S. Catholics believe Biden should be allowed to take Communion despite his stance on abortion, according to polling by Pew Research Center.

Texas House probes school library books dealing with race and sexuality

Photo: Brittany Murray/MediaNews Group/Long Beach Press-Telegram via Getty Images

Texas state Rep. Matt Krause, chair of the Texas House Committee on General Investigating, announced Wednesday that he's initiating a probe into schools' library books, according to a letter sent to the state's education agency and other superintendents.

Why it matters: The probe focuses on books that discuss race, sexuality or "make students feel discomfort, guilt, anguish or any other form of psychological distress because of their race or sex," Krause wrote in the letter.

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