Coronavirus Disease (COVID-19) Implications on Health Insurance - August 2020

Summary

The highly contagious coronavirus (SARS-CoV-2), dubbed COVID-19 (formerly 2019-nCoV), which emerged at the close of 2019, has led to a medical emergency across the world, with the World Health Organization (WHO) officially declaring the novel coronavirus a pandemic on March 11, 2020.

The virus is also having a growing impact on the global economy including the health insurance industry. This report reflects how government bodies and healthcare authorities are reacting to protect policyholder interest and minimize the impact on the health insurance industry during the COVID-19 crisis.

Key Highlights

• Changes to certain telemedicine regulations are likely to be made permanent: The announcement of an Executive Order directing the HHS to issue rules about certain regulatory changes to telemedicine is the first definitive indication that access to these services will be expanded on a permanent basis, following months of pressure from lawmakers and healthcare organizations from around the US.
• The pandemic has shown the many wide-ranging benefits of telemedicine. While telemedicine will not fully replace traditional in-person visits for certain patients and situations, the technology has earned a place in the future of healthcare delivery by demonstrating improved health outcomes and a reduction in healthcare spend. As the CMS’ Seema Verma highlighted in July, there are many questions and issues that will need to be addressed before telemedicine services can be successfully provided on a permanent basis, such as ensuring that the most suitable patient groups have access, setting reimbursement rates compared to in-person visits, and the prevention of fraud and abuse. However, given the unprecedented surge in demand for telemedicine by patients and providers over the past four months, it is difficult to see how healthcare in the US could go back to the way it was before the pandemic.
• High numbers of individuals have lost employer sponsored insurance (ESI) coverage due to COVID-19, but ACA expansion would significantly reduce the number of uninsured individuals: Several reports have shown that millions of people have lost ESI coverage as a result of job losses or furloughs during the COVID-19 pandemic. Other analyses highlight that if the remaining non-expansion states expanded Medicaid coverage, it would significantly lower the number of uninsured individuals by approximately 4 million. This is a worrying time for those without health coverage in the US. Non-expansion states can ease financial burdens by expanding Medicaid coverage for the uninsured. However, the US election is looming and healthcare coverage is a particularly contentious issue. Expanded Medicaid coverage could be abolished for all if the ACA is disbanded in line with President Trump’s proposals.
• The full impact of COVID-19 on 2021 premiums is yet to be determined: A preliminary analysis of available premium rate filings for 2021 show moderate rate changes. However, many insurers have yet to incorporate the impact of COVID-19 on rates, as there is still too much uncertainty about the true costs of the pandemic. Payers are likely to experience high costs from the pandemic as it continues to spread throughout the US, showing no signs of abating to date. Insurers have been instructed to waive the cost of COVID-19 testing and treatment during the pandemic, and will likely have to cover the cost of a COVID-19 vaccine, all of which will have to be accounted in next year’s rates. However, many leading payers saw large increases in Q2 2020 revenue from deferred elective procedures, with patients delaying or cancelling care due to the pandemic. This trend is likely to continue into next year until a vaccine is available, and may limit high premium rate increases for 2021.

Scope

• This fourth installment of the sector impact report includes updates for June and July 2020.
• Regions covered in this report include the US, Canada, Asia-Pacific (APAC), the Middle East and Africa, and South and Central America. There were no updates for Europe for this report.

Reasons to Buy

• See how government bodies and healthcare authorities around the world are reacting to protect policyholder interest and minimize the impact on the health insurance industry during the COVID-19 crisis.