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April 10, 2020
Health Law Weekly

Health Insurers’ Costs for COVID-19 Could Hit $556 Billion, New Study Finds

  • April 10, 2020

Testing and treatment for COVID-19 could cost health insurers between $56 billion to $556 billion in 2020 and 2021, according to a new study released by America’s Health Insurance Plans (AHIP).

“Protecting Americans’ health and financial stability always has been, and always will be, our first priority,” said AHIP President and CEO Matt Eyles. “This new data provides us with better insight to help policymakers, private sector leaders, and other stakeholders understand the investments required to successfully care for every American subjected to this life-threatening virus.”

Wakely Consulting Group, which conducted the analysis for AHIP, acknowledged the wide range of estimated costs based on varying data points including the number of Americans who become infected but are asymptomatic, the impact of social distancing and other mitigation efforts, the availability of testing, and hospitalization rates.

The report also noted several “material variables” that were not explicitly reflected in the analysis, including hospitals delaying elective and nonemergency procedures. “We acknowledge that a portion of these foregone services may remain foregone over the course of 2020 and 2021. On the other hand, delayed services could lead to adverse and costly events associated with the absence of preventive care and poor management of chronic conditions.”

As a mid-range scenario, the report estimates 1.3 million Americans would require intensive care, with costs potentially exceeding $30,000 per person on average.

The report also estimates potential out-of-pocket costs for consumers with COVID-19 ranging from $10 billion to $78 billion over the next two years, which doesn't take into account that some health insurers are waiving cost sharing for COVID-19 testing and treatment.

Uninsured Costs

Department of Health and Human Services Secretary Alex Azar has indicated that a portion of the $100 billion included in the Coronavirus Aid, Relief, and Economic Security Act for health care providers will be used to reimburse hospitals for the cost of treating uninsured COVID-19 patients.

“As a condition of receiving funds under this program, providers will be forbidden from balance billing the uninsured for the cost of their care. Providers will be reimbursed at Medicare rates,” Azar said.

An analysis from the Kaiser Family Foundation (KFF) posted April 7 found the administration's plan could consume between 14% to 40% of the CARES Act funding for health care providers. KFF estimated that between 670,000 and 2 million uninsured individuals could be hospitalized with COVID-19 but also emphasized the uncertainty in its estimates.

“While the details are spotty, uninsured patients could still be on the hook if they test negative for coronavirus and if they receive care outside hospitals,” KFF President and CEO Drew Altman noted.

The American Hospital Association (AHA) has criticized the administration’s announcement, saying the emergency funding was intended to help ease the financial strain on the nation’s hospitals facing substantial additional expenses and lost revenue from canceled elective and scheduled procedures.

In a statement, AHA President and CEO Rick Pollack noted the group has urged the administration to look for other options to cover the costs of treating uninsured patients with COVID-19, including opening up a special enrollment period for the Affordable Care Act marketplaces, expanding Medicaid, and using other federal emergency programs.

“Hospitals and health systems also support the proposals from members of Congress for a new, separate fund to specifically address the costs associated with treatment of the uninsured,” Pollack said.
 

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