Commercial and government insurance coverage has been significantly impacted by the COVID-19 pandemic. Given health insurance funds many medical services, when there’s a change — especially due to an unanticipated event — it can cause imbalance and volatility in the market. It’s estimated over 27 million Americans will lose employer-sponsored insurance from unemployment as a result of COVID-19.1 The ripple effect caused by this disruption in insurance will be felt by patients, providers and payers alike.
The scenarios below outline some of the short and long-term impacts on providers and payers:
Cost of testing and treatment: The cost involved in testing and treating COVID-19 could range from $56 to $556 billion from 2020 through 2021.2 Despite the CARES Act waiving most costs for patients, hospitals and payers are still seeing COVID-19-related expenses. Hospitals’ average expenses per adjusted discharge, even with fewer patients, were more than 18% higher than the previous year,3 and it’s estimated commercial payers will see the highest COVID-19 costs.4
Skyrocketing levels of unemployment: Unemployment rose to almost 43 million in late May,5 unleashing a massive change to employer-sponsored health coverage. Prior to the pandemic, a near majority (49%) of Americans got insurance from an employer, and 35% received coverage from state and federal programs.6 Many individuals — likely up to 16.2 million7 — are now uninsured due to job loss.
Increased Medicaid and insurance exchange enrollment: The pandemic will bring a shift to the payer mix. It’s estimated that employer-sponsored insurance coverage will decrease by as many as 30 million members, Medicaid will grow by 11 million, and the uninsured will increase by an additional 10 million. Due to rising unemployment, it’s likely ACA plans on the insurance exchange marketplace will also see an increase of members.8 It is worth noting the future of the ACA remains uncertain depending on the U.S. Supreme Court’s decision on Texas v. United States.9
Employers looking for alternatives: Companies, already financially impacted, will be looking for cost-saving measures on their benefits. This may mean leaner offerings, lower premium costs and increased cost sharing — if not already in place with high deductible health plans — with employees. Employers will shop for plans with better value. For providers, this may lead to rising balances after insurance and an increase in bad debt.
Changing relationships between providers and payers: Day-to-day relationships between providers and payers will transform as a result of COVID-19. It’s in the best interest of both parties to put contingency plans in place for future outbreaks to ensure sustainable cash flow.
Learn more about the impact of COVID-19 on the healthcare industry, as well as strategies to recover more revenue, at: transunion.com/healthcare-covid-19.