The Covid-19 pandemic is upending the United States health coverage market in unexpected ways, forcing some insurers to issue refunds to customers this year and complicating the models they use to set the prices for next year’s premiums and copays.
“It’s a difficult process … and from a financial perspective what I’ve said to my board is we have to look at 2020 and 2021 as one fiscal year,” said Michael Carson, president and CEO of Harvard Pilgrim Health Care, a New England-based not-for-profit health insurer.
While insurers have had to shell out more money to cover coronavirus treatments, more and more people are reducing spending by putting off all but the most vital medical care. The sharp drop in elective medical procedures — like routine cancer screenings and wellness checkups — has cut spending so much that it’s skewing projections for next year’s plans.
Some insurers, including Anthem, UnitedHealth Group and Humana, have given members money back in some cases through premium rebates and waived copays on doctor visits. Harvard Pilgrim is giving members with Medicare supplemental insurance or who have coverage through employers a 15% discount on premiums this fall, anticipating it will face substantial rebates for the first half of the year under the Affordable Care Act, which requires insurers to spend at least 85% of premiums on medical claims.
“We’re giving it back to the consumer and the employer up front, rather than waiting,” said Carson, adding that they are starting to see an increase in medical claims. which will determine whether there will be further rebates in coming months. For 2021, Carson is looking to hold premium increases down, though he adds that he’s still watching claims this month to try to get a better handle on next year’s costs.
Rising Covid-19 outbreaks may be sending medical costs back up for some carriers to this spring’s emergency levels in the South and West, where hospitals had resumed elective surgery procedures. Last month, Texas banned elective medical procedures in 100 counties that cover most of the state.
Analysts at PwC’s Health Research Institute say there’s so much uncertainty because of the Covid disruption that it’s difficult to pinpoint whether medical-cost trends will be significantly lower or higher next year.
In the institute’s Behind the Numbers outlook for 2021, researchers estimate that a disruptive second wave of coronavirus next winter could push out more elective care, resulting in only a 4% growth in medical- cost trends — one-third lower than the average growth over the last five years.
The researchers said if most of the care deferred this year gets pushed into 2021, medical costs could balloon by 10% above pre-coronavirus levels next year, which would make for the highest rate of medical-cost inflation since 2007.
Eight in 10 Fortune 500 company employers surveyed by the American Benefits Council are concerned about medical costs surging. Large self-insured employers worry that delayed treatment this year will result not only in a higher number of medical claims in 2021, but also higher overall costs for more acute care.