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Health Insurance Premiums Could Go Up Due to Coronavirus

The COVID-19 pandemic has resulted in an unprecedented disruption in the U.S. health care system. A report released by the California health insurance marketplace indicated that the cost of COVID-19 care and treatment could be as high as $250 billion. As a result, health insurance premiums could increase by as much as 40%.

The total commitment of resources redirected to COVID-19 has complicated the financial picture of the health care system overall.

The Paradox of COVID Care

“Paradoxically, while the facets of the health care system dedicated to COVID-19 patients are overwhelmed, the parts of the health care system that cares for all other health care needs are extremely underemployed,” noted Katherine Baicker, dean of the University of Chicago’s Harris School of Public Policy. “There is a financial strain on some facets of hospitals and health care providers from fewer patients, while at the same time that you have a shortage of ventilators and ICU beds.”

Health Insurers Flush with Cash

“Thus far, health insurers, particularly the big publicly traded ones, are raking in a lot of premium revenue, but they’re not spending it on a lot on medical care,” noted Shelby Livingston, who writes about the insurance industry for Modern Healthcare. “That’s due to delaying routine care as well as putting off expensive procedures such as hip and knee replacements. For the most part, health insurers are sitting on a lot of money.”

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Despite the massive income, health insurers are worried about what the next few months will look like when it comes to novel coronavirus infection rates. The concern also revolves around non-coronavirus patients returning to the health care system. Livingston notes that we’re just beginning to see premium rate requests made public and mostly, those are modest increases. However, it’s important to note that many insurers are hiding their rate requests.

“There’s no indication yet that there will be a huge rate increase due to the novel coronavirus, but things could change if there is a second wave of the pandemic or if patients overwhelm hospitals for the care that they’ve postponed,” Livingston said.

Employment Rates are a Factor

Baicker points out that another thing to consider as insurers set their premiums is what the patients will look like in the coming months. This is especially true as lockdown layoffs result in the loss of employer-provided coverage.

“As people are forced from their employer-sponsored health insurance plans onto Medicaid, or onto a spouse’s plan, or worse, becoming uninsured, the risk pool that insurers have could substantially change. That’s mostly unpredictable until we know what the employment rate will look like through the rest of the year,” Baicker said.

As well as the huge increase in unemployment, other factors affecting the insurance rates include the costs of testing and the possibility of a vaccine. It also remains to be seen how fast routine medical visits will resume.

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The Long-term Effects of the Nationwide Shutdown

According to the Centers for Disease Control and Prevention, it’s estimated that almost half of those with chronic kidney disease who aren’t currently on dialysis don’t know they have the condition, Likewise, more than 20% of those with diabetes are also undiagnosed.

These statistics worry public health experts who fear the shutdown will have long-term consequences for people who missed routine screenings and check-ups. This also includes those who have missed screenings and treatment for diseases like cancer. There are also strong signs that the prolonged shutdown has resulted in an increase in mental health issues, substance abuse, and suicide.

Bioethicist David Hoffman, who chairs the policy committee of the National Association of Chronic Disease Directors, believes we won’t see the effects for another year as the medical system catches up on many months of postponed appointments.

“All of these things will take time,” he said. “We cannot screen everyone at once when things finally reopen.”

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Hoffman will watch for evidence of increased levels of diabetes, heart disease, and other conditions via the Behavioral Risk Factor Surveillance System, an annual CDC phone survey. A spike in chronic disease will likely trigger a corresponding increase in health care spending.