posted by AHIP
on June 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 continue to be immense. Wakely Consulting, in a recently released report, updated its March 30, 2020 report on the potential COVID-19 treatment cost implications to U.S. health insurance providers for 2020 and 2021. Since the initial report was published, new data on COVID costs, utilization, and deferred care has become available, and has been incorporated into the update.
The primary changes from the prior report include the following:
Recognizing the extraordinarily wide range of potential outcomes and data limitations, Wakely compiled, for several 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 treatment costs range from $30 to $547 billion over the 2-year time period.
|Scenario||2020 Total Allowed Cost||2021 Total Allowed Cost||2020-2021 Total Allowed Cost||2020-2021 Total Member Cost Sharing|
|Low Infection Rate 10%||$22.1 to $67.9||$7.9 to $24.2||$30.0 to $92.0||$2.8 to $8.1|
|% Cost of Care||1.3% to 3.9%||0.4% to 1.3%||0.8% to 2.5%||n/a|
|Baseline Infection Rate 20%||$44.6 to $135.2||$15.6 to $47.0||$60.2 to $182.2||$5.6 to $16.2|
|% Cost of Care||2.5% to 7.7%||0.8% to 2.5%||1.7% to 5.0%||n/a|
|High Infection Rate 60%||$133.6 to $404.6||$46.5 to $142.1||$180.0 to $546.6||$16.6 to $48.6|
|% Cost of Care||7.6% to 23.0%||2.5% to 7.6%||5.0% to 15.1%||n/a|
Given that the pandemic, in addition to treatment costs, is simultaneously reducing demand for non-COVID related medical services (i.e., deferred care) Wakely also included the total effects of both direct COVID treatment costs and the impact of deferred care.
|Scenario||2020 Total Allowed Cost||2021 Total Allowed Cost||2020-2021 Total Allowed Cost|
|Low Infection Rate 10%||-$20.2 to $25.6||-$11.7 to $26.9||-$16.2 to $26.4|
|% Cost of Care||-1.1% to 1.5%||-0.7% to 1.5%||-0.4% to 0.7%|
|Baseline Infection Rate 20%||-$101.2 to -$10.6||$3.6 to $44.2||-$71.0 to $13.8|
|% Cost of Care||-5.7% to -0.6%||0.2% to 2.5%||-2.0% to 0.4%|
|High Infection Rate 60%||-$152.3 to $118.7||$34.6 to $118.1||-$76.1 to $216.1|
|% Cost of Care||-8.6% to 6.7%||2.0% to 6.7%||-2.1% to 6.0%|
Modeling was performed based on emerging data and information available to Wakely as of May 18, 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. The report also assumes reasonable pricing by labs, drug manufacturers, and providers. Wakely did not include long-term costs associated with individuals recovering from COVID infections or the costs of a vaccine. Finally, we have not explicitly adjusted cost projections for potential inpatient hospital bed capacity constraints. Consequently, actual results may vary from the Wakely estimates materially.
 Testing is only included in this report’s treatment estimates to the extent it is implicit in the treatment of COVID-19 patients in an inpatient or outpatient setting. The potential costs associated with broader testing are not included in this analysis.