Health Insurers Say Their Virus Costs Could Surpass $500 Billion

Health insurers’ costs for testing and treating Covid-19 could be as high as $556 billion in 2020 and 2021, a trade association for health insurers said Wednesday.

America’s Health Insurance Plans commissioned Wakely Consulting Group to study Covid-19 costs to U.S. health insurers. Wakely came up with a wide range: $56 billion to $556 billion over the next two years.

It isn’t yet clear how the pandemic will affect insurers because hospitals have canceled elective procedures to make way for Covid-19 patients, a move that is expected to save money for insurers in the short-term. AHIP’s assessment appears aimed at reminding policymakers that insurers may be hit with big costs in the long run.

“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,” Matt Eyles, president and CEO of AHIP, said in a statement.

Wakely estimated that enrollees’ out-of-pocket costs— through copayments, deductibles, and coinsurance—would range from $10 billion to $78 billion over the two-year period. But that didn’t take into account many insurers’ waiving of out-of-pocket costs for Covid-19 testing and treatment.

A mid-range scenario in which 20% of the U.S. is infected, about 50 mllion people, would result in at least 5.5 million requiring hospitalization and 1.3 million needing intensive care, Wakely estimated. Total costs for insurers and patients in that scenario would be between $113 billion and $185 billion.

Targeted Funding

The more than $2 trillion to date in Covid-19 response funding approved by Congress hasn’t included payments for insurers, but has focused on hospitals, employers, and workers.

Insurers haven’t requested extra funding for treatment costs, but they have asked that Congress expand premium subsidies to cover more people in Obamacare plans. They’ve asked the Trump administration to reopen enrollment in the federal Obamacare exchange, HealthCare.gov, to allow uninsured people to buy coverage.

The Trump administration has declined to reopen the exchange. Instead it has said it will cover the cost of treating the uninsured from the $100 billion fund authorized by Congress for hospitals. But doing that could soak up more than 40% of that funding, according to the Kaiser Family Foundation.

Many insurers have agreed to cover both testing and treatment for Covid-19 without requiring enrollees to pay out-of-pocket costs, and many have also waived treatment pre-authorization that is normally required before a patient can be hospitalized.