Coronavirus Side Effects: Could Health Insurance Premiums Rise In 2020 Due To The Pandemic?

An analysis by California’s Affordable Care Act marketplace indicates health insurance premiums could spike 40% next year as a result of costs of treating patients for COVID-19. Projected costs for commercial insurance companies for testing, treatment and care range as high as $251 billion.

“No insurer, no state, planned and put money away for something of this significance,” Peter V. Lee, the executive director of Covered California, told the New York Times.

The number of confirmed U.S. coronavirus infections topped 157,000 and 2,900 deaths by midafternoon Monday, with thousands hospitalized. Estimates of the eventual death toll range from 200,000 to 2.2 million.

Lee said if insurers see a 20% increase in costs this year from the pandemic, they likely will hike premiums by 40% next year, making coverage too expensive for many Americans.

Covered California reopened its enrollment period through June 30 to enable uninsured eligible Californians to acquire coverage. The insurance exchange warned sharp premium increases likely will add to the ranks of the uninsured as employers pass increased costs on to employees.

Additionally, small insurance companies could face insolvency, reducing competition.

The analysis estimates there are 20 million people less than 60 years of age at higher risk of serious illness from COVID-19 in the commercial insurance market.

“We expect relatively few COVID-19 cases for those under age 65 will end up in hospitalization, but that cases involving hospitalization will have lengths of stay around 10-14 days,” the analysis says, estimating hospitalization will be required in about 5% to 17% of those who test positive.

The cost of treating a case for 12 days in a hospital is roughly $30,000, the analysis estimates based on Medicare rates for similar diseases like flu and pneumonia. Treating an individual as an outpatient would cost an estimated $600 to $1,800. The estimates do not include the costs of treating underlying conditions.

Cigna and Humana announced Sunday they would waive out-of-pocket costs for subscribers treated for COVID-19. Aetna made a similar announcement last week.

Covered California provides coverage to 170 million workers and individuals through private health plans. The analysis does not include Medicare and Medicaid recipients.

The $2.2 trillion relief package signed into law Friday provides funds to ease the financial burden on hospitals but does not require hospitals to pass on any funds to insurers. Insurance companies are seeking a federal reinsurance program to handle the most expensive claims.