First Published on Thomson Reuters Regulatory Intelligence on 9th April 2020
Covering healthcare related to COVID-19 could cost insurers in the United States anywhere between $56 billion to $556 billion through the next year, a study commissioned by a health insurance group showed on Wednesday. The report comes at a time when health insurers are working on plans to determine their rates for the 2021 benefit year.
The report includes the impact of testing and treatment costs of COVID-19 on the commercial market as well as Medicare Advantage and Medicaid managed care plans, said Wakely Consulting, which conducted the study. It assumes a 20 percent infection rate, or 50 million infections, with at least 5.5 million people requiring hospitalization and 1.3 million of those needing intensive care.
Health insurers have said they are bracing for an unprecedented rise in claim costs from treating coronavirus patients while simultaneously working to ease burdens on individuals and businesses struggling to afford their current coverage through timely premium payments.
America’s Health Insurance Plans (AHIP), which commissioned the study, said insurers have not only waived testing and treatment costs for consumers but are also working with state, federal and local officials to support health care workers while assisting lawmakers and insurance commissioners with specific policy and regulatory changes to ease the response to the crisis.
Insurers have waived lengthy procedural requirements and expedited claims processing to aid hospitals and healthcare workers during the outbreak. They, however, turned down a request from the American Hospital Association to make periodic interim payments available to hospitals saying they needed to maintain “necessary resources” to cover these costs for the businesses and individuals.
A different study last month from actuaries at Covered California, the state’s health insurance marketplace, in late March estimated the cost of covering testing, treatment, and care for the 170 million Americans in the commercial market anywhere between $34 billion to $251 billion or more in the first year of the pandemic.
Premiums in the individual and employer market could rise by 40 percent in 2021 as a result of COVID-19 alone, if the federal government did not intervene with assistance programs to limit the impact of these costs, Covered California’s chief actuary, John Bertko said. “While there is a lot of uncertainty with anything related to COVID-19, one thing we can be certain of is that the impact will be significant.”