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Coronavirus could hike premiums by double digits next year

Dive Brief:

  • The COVID-19 outbreak could cause insurance premiums to increase by double digits next year for tens of millions Americans as hospitals struggle with an influx of severely ill patients, according to one analysis.
  • Actuaries in California’s individual insurance marketplace estimate medical care from the virus could add between $29 billion and $216 billion in hospital costs nationwide for patients covered by their employers or those in individual market plans, depending on how many people in the U.S. are infected.
  • Payers, smack dab in the middle of rate-setting for 2021, could increase premiums from 4% to more than 40% if they aim to recoup all COVID-19 costs and protect solvency, the new report from California warns.

Dive Insight:

The new coronavirus is sending the U.S. economy into a tailspin, but could also have far-reaching economic impacts that could hit Americans over the next few years, too. The outbreak has killed more than 800 people in the U.S. and infected more than 55,000 as of Wednesday, highlighting gaps in the U.S. healthcare system already plagued by ever-rising costs.

The majority of coronavirus cases are relatively mild, or may not even show symptoms within the two week incubation period. However, a small subset of those infected — most over the age of 65 or with underlying chronic conditions — result in severe respiratory complications requiring a hospital stay to receive oxygen and other treatment.

Actuaries in California’s ACA marketplace, Covered California, project that patients hospitalized due to COVID-19 will stay in the hospital an average of 12 days and generate an average bill of $72,000.

A majority of those patients will likely be covered by Medicare, as the virus disproportionately hits older people. But the bills racked up by COVID-19 treatment could prove disastrous for the uninsured, or even those insured with a high deductible. And, down the line, that uptick in healthcare spending will raise future premiums across the entire risk pool, according to the Covered California estimate.

California actuaries looked at three scenarios: a “low impact” scenario where 400,000 people are hospitalized across the country; a “medium impact” where 1.2 million people are hospitalized; and a “high impact” scenario with 3 million hospitalizations. Each case would result in bills insurers didn’t plan for in the 2020 plan year and could send premiums skyrocketing in 2021.

The $72,000 estimate for a hospital bill is higher than some other projections: For example, researchers at the Kaiser Family Foundation estimate an average of $20,292 for a COVID-19 hospital stay, based on the average cost of admission for pneumonia with major complications and comorbidities in 2018. FAIR Health estimates between roughly $42,000 and $74,000 per patient, depending on case severity.

Public and private payers alike have mobilized to expand access to COVID-19 testing and treatment. California, along with a handful of other states, is opening up a special enrollment window for Affordable Care Act plans amid the pandemic.

UnitedHealthcare, the largest private health insurer in the U.S., is offering a special enrollment period for its commercial members and reducing some of its prior authorization requirements. Aetna said Wednesday it would waive cost-sharing and copays for its commercial members admitted to a hospital with COVID-19, while Humana is expanding access to telehealth coverage across all its plans.



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