The cost of health insurance premiums may increase in 2021 if insurers face unexpected costs for treating people with COVID-19, the novel coronavirus that has sickened more than 250 people in the U.S. and killed at least 14 others.
Unlike the seasonal flu, whose predicted costs are baked into premium rates each year, the COVID-19 outbreak is a new virus and one that health insurers couldn’t predict, said Bradley Ellis, a health insurance analyst for Fitch Ratings. The possibility of a premium rate increase next year as a result of the coronavirus would depend on how severely insurer’s medical loss ratios are impacted. (The Affordable Care requires insurers to spend a certain percentage of premiums on medical care and not administration.)
“We should expect to see some impact on the operating performance this year,” Ellis said Friday.
In recent weeks, the number of cases of COVID-19 in the U.S. has increased, driven by the first instances of person-to-person transmission of the disease and a growing cluster of infections that has affected 79 people in four counties in Washington state. At least 11 people have died there.
However, at least three of the nation’s largest health insurers this week said they will waive copays and cost-sharing for people who are tested for COVID-19 to varying degrees.
Cigna Corp. CI, -2.64% said March 5 that it will cover coronavirus testing as a preventative benefit for people with fully-insured health plans. CVS Health Corp. CVS, -0.35% is waiving out-of-pocket costs and cost-sharing for members of its Aetna health plan and offering telemedicine visits with no copay for any reason for 90 days. Anthem Inc. ANTM, -1.76% is the latest company to agree to no out-of-pocket costs, including copays, coinsurance and deductibles, while EmblemHealth Inc., a privately held insurance plan in New York, said Wednesday it will cover all out-of-pocket costs for COVID-19 testing.
Certain states including California, New York, and Washington state have also ordered health insurers to waive patient fees associated with getting tested for the coronavirus. Among New York’s requirements is that insurers develop “robust telehealth plans.” California has a similar demand for telemedicine. The Centers for Medicare and Medicaid Services, which recently created a new billing code that will allow health-care providers to bill for the coronavirus lab test, also reportedly issued communications to Medicare beneficiaries telling them that the test is covered.
“With CMS effectively mandating insurance, Medicaid and Medicare coverage for the full cost of testing, testing candidates should not even face financial hurdles to confirming or excluding infection,” SVBLeerink analysts wrote March 6.
Offering to waive cost-sharing of the test and any related visits to the doctor may be one way to help limit spread of the virus. It is similar to why insurers offer free flu shots. It is cheaper to provide a free flu vaccine than it is to cover the cost of a visit to the doctor, Ellis said.
Year to date, shares of Cigna have fallen 6.7%, while CVS shares have tumbled 15.2%, and Anthem’s stock is 9.2%. The Health Care Select Sector SPDR Fund XLV, -0.54% has dropped 4.1%.