Estimating The Cost Of COVID-19 Treatment For U.S. Private Insurers

posted by AHIP

on April 8, 2020

The COVID-19 pandemic has had an extraordinary, unprecedented, and severe impact on virtually all aspects of life in the United States. The emerging impact of continued virus proliferation on the U.S. health care system will be immense. Wakely Consulting, in a recently released report, explored the potential COVID-19 testing and treatment cost implications to U.S. health insurance providers for 2020 and 2021.

Recognizing the extraordinarily wide range of potential outcomes and data limitations, Wakely compiled, for a range of assumed infection rates, estimates of the potential COVID-19-related costs for health insurance providers operating in the Commercial, Medicare Advantage, and Medicaid Managed Care lines of business.

The estimated costs range from $56 to $556 billion over the 2-year time period.

Estimated Range of Total COVID Associated Treatment and Testing Costs, 2020-2021

Scenario 2020 Range Total Allowed Cost (in billions) 2021 Range Total Allowed Cost (in billions) 2020-2021 Total Range of Allowed Cost (in billions) 2020-2021 Total Range of Enrollee Cost Sharing (in billions)
Low Infection Rate (10%) $42.2 – 69.5 $14.1 – 23.2 $56.2 – 92.7 $10.0 – 13.0
Baseline Infection Rate (20%) $84.4 – 139.0 $28.1 – 46.3 $112.5 – 185.4 $20.0 – 26.0
High Infection Rate (60%) $253.1 – 417.1 $84.4 – 139.0 $337.5 – 556.1 $59.9 – 78.0

Modeling was performed based on emerging data and information available to Wakely as of March 28, 2020. Wakely relied on information from outside sources.  Considering the extraordinary pace at which available data is evolving and changing, there is potential that analysis performed later could yield material updates to the scenario estimates and render the estimates outlined herein outdated. The Wakely report details the cost scenario modeling methodologies, source data, and limitations, and should be considered in its entirety.  Variables may include the number of Americans who are asymptomatic, the impact of interventions such as social distancing, the availability of testing, and the length of hospital stays. Wakely did not include estimated savings to insurance providers as a result of individuals delaying or foregoing care which could have a material impact mitigating costs over the study period. The report also assumes reasonable pricing by labs, drug manufacturers, and providers. Consequently, actual results may vary from the Wakely estimates materially.

Additional details of Wakely’s cost scenario assumptions and results are presented below.

Population Assumptions in Baseline 20% Infected Scenario (Midrange), 2020-2021

Assumption Medicare Advantage Commercial (Group + Non-Group) Medicaid MCO Total
Total enrollees 24,480,000 176,700,000 54,180,000 255,360,000
Total Number Infected

(includes those not tested)

4,896,000 35,340,000 10,836,000 51,072,000
Number Confirmed Cases 3,380,000 24,690,000 7,540,000 35,610,000

Total Utilization and Cost per Utilizer Assumptions in 20% Infected Scenario, 2020-2021

Service Category Medicare Advantage Commercial (Group + Non-Group) Medicaid MCO Total / Average
Total Utilization
IP Hospital Services 920,000 3,780,000 800,000 5,500,000
Non-ICU 660,000 2,930,000 610,000 4,200,000
ICU 260,000 850,000 190,000 1,300,000
OP Hospital Services 2,030,000 14,820,000 4,520,000 21,370,000
Professional Services 2,030,000 14,820,000 4,520,000 21,370,000
All Other Services 120,000 220,000 40,000 380,000
Rx Services 1,110,000 11,040,000 3,720,000 15,870,000
Cost per Utilizer
IP Hospital Cost
Non-ICU $8,850 $12,450 $6,800 $11,050
ICU $17,000 $38,450 $16,250 $30,950
OP Hospital Cost $600 $1,000 $460 $850
Professional Cost $170 $140 $70 $130
All Other Cost $4,850 N/A N/A $20
Rx Services $90 $110 $130 $120

 

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