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New Study: COVID-19 Health Care Costs Could Reach $556 Billion Over Two Years

posted by AHIP

on April 8, 2020

Experts examine various pandemic severity scenarios to model testing and treatment costs

WASHINGTON, D.C. –  No one should hesitate to seek testing or treatment for COVID-19 due to concerns about costs. Health insurance providers are taking decisive action to protect patients and support hospitals and doctors during this unprecedented national health emergency.

To get a more complete picture of what COVID-19 costs could be, America’s Health Insurance Plans (AHIP) retained Wakely Consulting Group to explore the potential cost implications of COVID-19 testing and treatment to U.S. health insurance providers for 2020 and 2021. Wakely estimated that the costs to the health care system from COVID-19 could range from $56 billion to $556 billion over the next two years.

Protecting Americans’ health and financial stability always has been, and always will be, our first priority,” said Matt Eyles, president and CEO of AHIP. “This new data provides us with better insight to help policymakers, private sector leaders, and other stakeholders understand the investments required to successfully care for every American subjected to this life-threatening virus.

Midrange Scenario: 1.3 Million Require Intensive Care

The risks and impact of COVID-19 are unprecedented, and we are learning more about its true impacts every day. Actual outcomes will differ depending on things like the number of Americans who become infected but are asymptomatic, the impact of interventions such as social distancing, and the availability of testing. Hospital costs could exceed Wakely’s estimates if average intensive care stays are longer, more expensive or require more services than estimated in these models.

Wakely’s findings are based on data and information available as of March 28, 2020. As the COVID-19 national emergency continues to evolve, AHIP and Wakely will revisit these findings and provide updates as needed.

The report considers the impact of COVID-19 to Commercial, Medicare Advantage, and Medicaid managed care plans. Assuming a 20% infection rate among the study population, the report estimates that more than 50 million Americans will become infected, with at least 5.5 million requiring hospitalization – of which 1.3 million will require intensive care. For each person admitted into intensive care, costs, on average, could exceed $30,000. Please see the full report for important information related to the assumptions, methods, and limitations associated with these estimates.

The report assumes reasonable pricing by labs, drug manufacturers, and care providers, as leaders across the health care industry have committed to working together to protect Americans during the COVID-19 national emergency. The report also does not consider the impact of potential delays in care, which are unknown at this time, or large shifts in patients between product lines. Data is changing daily and the Wakely estimates required many key assumptions, and therefore contain some uncertainty.

Protecting Patients and Providers from Out-of-Pocket Costs

The report also considers the potential out-of-pocket costs consumers could experience for COVID-19 care. Wakely estimates enrollee cost sharing would, on average, be approximately 14-18% of annual allowed costs on average across lines of business modeled, and would range from $10 billion to $78 billion. This figure does not take into account announcements made by health insurance providers that they are waiving out-of-pocket costs for COVID-19 testing and treatment.

In these extraordinary times, costs should not be a barrier to anyone seeking treatment,” emphasized Eyles. “This is why many health insurance providers have stepped forward to proactively waive out-of-pocket costs for testing and treatment. These essential actions are ensuring that both the health and financial stability of hundreds of millions of Americans are protected at a time they need it most. And for hospitals, it eliminates the need to bill and collect from patients so they can focus on caring for their patients.

Health insurance providers remain committed to working with state, federal and local officials in every way possible: from supporting our front-line health care workers and public health heroes; to offering specific policy and regulatory changes; to assisting governors, state legislatures and insurance commissioners, the Congress and the Administration. Together, we can and will meet this challenge.

Read the full report.

About AHIP

AHIP is the national association whose members provide coverage for health care and related services to hundreds of millions of Americans every day. Through these offerings, we improve and protect the health and financial security of consumers, families, businesses, communities and the nation. We are committed to market-based solutions and public-private partnerships that improve affordability, value, access, and well-being for consumers. Visit for more information.