Payer COVID-19 Healthcare Spending for 2020, 2021 May Hit $546.6B

Experts slightly lowered their estimate for payer COVID-19 healthcare spending to a high of $546.6 billion based in part on adding delayed care savings, a study by Wakely Contracting Group found. America’s Health Insurance Plans (AHIP) contracted the company to assess potential healthcare costs and to update a previous study published in late March 2020.

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The present report lowered the hospitalization rate from the March report’s assumption, increased the cost of hospital admission, and added deferred care costs.

The new report states the cost could be anywhere from $30 billion to $546.6 billion for benefit years 2020 through 2021.

The out-of-pocket healthcare spending for members and beneficiaries could be between $2.8 billion and $48.6 billion.

Experts have estimated that the US is currently experiencing a  3.5 percent infection rate.  Based on the current infection rate, the experts set up three potential scenarios.

If the infection rate  remain steady through benefit years 2020 and 2021, experts project that ten percent of Americans would contract the virus. If there is a small spike spanning from the fall of 2020 into 2021 with an otherwise ready infection rate, around 20 percent of the population would be infected. A large spike in cases starting in the fall of 2020 and extending into 2021 could result in 60 percent of the population getting coronavirus.

In all of these scenarios, the bulk of the costs would likely take place in 2020. Even in the highest infection rate, COVID-19 costs in 2021 would only represent at most 7.6 percent of the overall cost of care. Conversely, 2020 healthcare spending could range from 7.6 to 23 percent of the overall cost in the same conditions.

Whether healthcare spending on deferred care would decrease overall healthcare spending for benefit years 2020 and 2021 would largely depend on the infection rate. In a low infection rate, the total healthcare spending for deferred care could reduce healthcare spending for coronavirus treatment by $30.4 billion to $67.6 billion. At the highest infection rate, overall spending for these years could decrease by $256.1 billion to $330.5 billion.

In all three infection rate scenarios, however, the cost of deferred care also has the potential to increase spending in either benefit year 2020 or 2021.

If the infection rate was 10 percent, the combined healthcare spending for coronavirus treatment and deferred care could range from $16.2 billion in profit for payers to $26.4 lost in spending over the two years. In a 60 percent infection rate scenario, the combined healthcare spending could mean $76.1 billion in revenue or $216.1 billion in healthcare spending.

Healthcare spending would also largely depend on the line of business and age and demographic.

For example, in a high infection rate, treatment for a Medicare Advantage beneficiary who does not go to the intensive care unit (ICU) could result in up to $20,000 in expense for coronavirus treatment.

Meanwhile, a non-ICU commercial plan member’s treatment costs could be around $10,000 higher and double the cost of a Medicaid MCO non-ICU beneficiary, hitting around $30,000.

These numbers reinforce a March 2020 Peterson-Kaiser Family Foundation Health System Tracker study that predicted overall healthcare costs for coronavirus treatment would be around $20,000 for serious cases.

In every scenario, commercial health plans—both plans on the group health insurance market and individual health insurance market—would see the highest costs. Over the two years in a 10 percent infection rate, such plans may see $45.8 billion to $126.2 billion in healthcare spending. In a 60 percent infection rate scenario, these payers might spend $137.1 billion to $378.6 billion.

Medicaid managed care organizations could see from $3.2 billion to $74.2 billion in spending depending on the infection rate. State Medicaid programs on the whole have seen repercussions from coronavirus already. Eighteen out of 32 states surveyed were beginning to see their spending rise above their original 2020 estimates.

While these estimations remain highly uncertain, they provide some perspective as payers try to finalize rates for 2021.