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Law360 (March 23, 2020, 7:31 PM EDT) -- California health insurance officials are projecting that the coronavirus pandemic could cause health care costs in the commercial insurance market to spike to as much as $251 billion during just the first year of the deadly crisis.
In what is being billed as a first-of-its-kind study of the health costs of the COVID-19 pandemic in the U.S., Covered California said in a Monday news release that its projections estimated that coronavirus tests and care will end up between $34 billion and $251 billion over the course of the year in the commercial health care marketplace.
Covered California, the state's health care marketplace, said the costs would spike without some sort of federal intervention.
"These increased costs could mean that many of the 170 million Americans in the commercial market may lose their coverage and go without needed care as we battle a global health crisis," Peter V. Lee, Covered California's executive director, said in a statement. "These are not 'insurer' costs — these are costs directly borne by individual Americans in the form of cost-sharing and premiums; these are costs to small and large businesses that are struggling; these are costs to individuals who may avoid needed care."
As for 2021, Covered California also said coronavirus costs would likely jack up premiums without federal intervention. Insurers would increase those premiums to make up for losses related to the pandemic and also to account for any losses related to the virus that may come up next year, according to Covered California.
Covered California said it sent its policy brief to Congress and made suggestions on how to dull the virus' financial impact, like expanding federal monetary assistance for people living well below the federal poverty line and temporarily limiting coronavirus' costs for self-insured employers and also insurers.
"We must take action now to prevent the pain of this epidemic from becoming worse for hundreds of millions of Americans next year," Lee said in a statement. "Reinsurance policies under consideration in Washington — that offer mechanisms to provide federal funding for portions of unforeseen COVID-19 costs for the individual and employer markets, along with Medicaid managed care programs — could provide needed funds and certainty for consumers, small and large employers and states across the nation."
Covered California has also recently said it has opened up a special enrollment time frame that will allow those without insurance to get coverage during the pandemic, saying eligible uninsured Californians have until the end of June to enroll.
James Scullary, a spokesperson for Covered California, told Law360 on Monday that health care companies are now coming up with their premiums, and Covered California's analysis is meant to give everyone an idea of the increased costs they could be facing.
He said in many of those costs would be passed onto consumers, absent federal action.
"While much of the attention right now is rightfully placed on the immediate needs of Americans during this time, we also want to shine a light on what's ahead of us in the next six months or so," he said.
--Editing by Adam LoBelia.
For a reprint of this article, please contact reprints@law360.com.
