The financial impacts to the healthcare sector caused by COVID-19 are likely to be complex and far-reaching. A new policy/actuarial brief from Covered California, the state’s health insurance exchange, projects costs of as much as $251 billion over the next year to test and treat those with COVID-19 who are insured by their employers’ plans or through individual plans. A low estimate of $34 billion assumes that shelter-in-place orders and other interventions will significantly reduce the spread of the disease.
The potential impacts detailed by Covered California reflect what could happen absent decisive federal action:
- Consumers and employees may not receive the necessary testing or treatments.
- Employers may increase premiums for coverage or may shift increased costs to employees.
- Employers may drop coverage or individuals may forgo coverage altogether.
- Smaller carriers may become insolvent, which could destabilize the overall health insurance market in that such insolvencies could leave currently covered consumers without coverage and shrink the carriers’ market, leading to higher premiums for all.
Also, cost estimates for 2020 include only testing and treatment for COVID-19; they do not include estimates of costs for other conditions that may result from COVID-19. These estimates also do not account for the probable need of carriers to recoup their 2020 COVID-19 costs through premium increases for 2021, which could range from 4 percent to more than 40 percent in order to protect their solvency.
The Covered California brief, The Potential National Health Cost Impacts to Consumers, Employers and Insurers Due to the Coronavirus (COVID-19), “reflects the engagement and counsel from experienced external actuaries with deep expertise in the commercial insurance markets, as well as expert clinical review and interviews with health insurance plans,” according to the organization.