COVID-19 could cost insurers up to $547B through 2021: report

coronavirus
An updated report found the COVID-19 pandemic could cost insurers up to $547 billion from 2020 through 2021. (iStock/Getty Images Plus/wildpixel)

The estimated costs for treating COVID-19 could add up as much as $547 billion for private insurers from 2020 to 2021 depending on the rate of infection, an updated report found.

The report, released Monday from consulting firm Wakely and commissioned by insurance lobbying group America’s Health Insurance Plans (AHIP), looks at the utilization of medical services associated with a COVID-19 infection and the costs for such services. The analysis is restricted to insurers operating in commercial, Medicare Advantage and Medicaid managed care markets.

Wakely estimates that the pandemic could cost insurers between $30 billion and $547 billion.

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The report explores the costs of COVID-19 based on a series of potential infection rates, which represent the total population infected. The study modeled infection rates based on 10%, 20% and 60%, while acknowledging that the true infection rate could be far lower.

Wakely then looked at the total costs the plan is liable to cover based on each infection rate.

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A 10% rate would lead to a total cost of $30 billion to $92 billion from 2020 to 2021, and a rate of 20% would be $60 billion to $182 billion.

But an infection rate of 60% would cost insurers the greatest, with a range of $180 billion to $547 billion.

“We assume that a higher volume of COVID related services will be incurred in 2020 and lower volume in 2021, distributing approximately 75% of the total services to 2020 and 25% to 2021,” the study said.

Wakely notes it did not model any long-term costs for treating people recovering from COVID-19 infections.

The firm also didn’t factor in vaccine mitigation in 2021 nor a scenario in which large-scale infections occur throughout 2021.

While private insurers have waived cost-sharing for COVID-19 treatments, it remains unclear how long the waivers will last. Anthem and Molina announced Monday they will extend their cost-sharing waivers through the rest of 2020.

The report is an update to an earlier one distributed by Wakely back in March at the onset of the pandemic. That report pegged the total COVID-19 costs between $56 billion and $556 billion.

The main reason for the decline is Wakely factored in deferred care due to the pandemic.

Wakely also reduced the overall assumed rate of hospitalizations for COVID-19-infected individuals to align with more recent studies. But the estimated unit cost for a hospital admission also increased, based on survey data from AHIP members.

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People have been putting off necessary care for fear of going to a doctor’s office, and hospital systems have canceled or postponed elective surgical procedures for months.

Hospitals have slowly started to resume elective procedures, but only after installing stringent requirements on cleaning and testing. 

Insurers are bracing for a wave of healthcare utilization some time later this year or in 2021 to deal with this pent-up demand.

The deferred care costs would differ based on the infection rate of the virus.

“We assumed, particularly for higher infection rate scenarios, that there may be limited capacity to make up care in 2021,” the report said.

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