The COVID-19 pandemic is toppling the U.S. health coverage market in surprising manners, compelling insurers to reimburse payments to customers this year and making the models perplexing which they use to determine the prices for next year’s premiums and copays.
“It’s a difficult process … and from a financial perspective what I’ve said to my board is we have to look at 2020 and 2021 as one fiscal year,” told Michael Carson, president and CEO of Harvard Pilgrim Health Care.
Harvard Pilgrim is offering discounts of 15 percent on premiums this fall to the clients with Medicare supplemental insurance or those having coverage policy through employers, with expectations that it will face significant repayments for the first half of the year as per the Affordable Care Act, which requires the insurers to invest and/or spend minimum 85 percent of premiums on medical claims.
“We’re giving it back to the consumer and the employer up front, rather than waiting,” told Carson. He added that they are beginning to witness a growth in medical claims. which will decide if there will be more repayments in the near future.
Growing Covid-19 outbreaks may be keeping medical costs deposits as backups for some carriers to this spring’s emergency levels in the West and South, where hospitals had started again elective surgery procedures. The previous month, Texas debarred elective medical procedures across 100 counties.
Carson is planning to keep premium increases low for 2021, though he says that he’s still expecting claims this month getting a better handle on next year’s costs.
Wide range of estimates
Analysts at PwC’s Health Research Institute tell that there’s a lot of ambiguity because of the Covid outbreak that it’s difficult to identify whether medical-cost tendencies will be distinctly higher or lower or higher next year.
The researchers told if most of the care deferred this year is moved into 2021, medical costs could significantly increase by 10% above pre-coronavirus levels next year, which would definitely be the highest rate of medical-cost inflation since 2007.
In the institute’s Behind the Numbers outlook for 2021, researchers anticipate that a troublesome second wave of coronavirus next winter could drive out more elective care, which may result in only a 4% growth in medical- cost tendencies—which is but one-third lower than the average growth over the last 5 years.
8 in ten Fortune 500 company employers investigated by the American Benefits Council are anxious about medical costs upsurge. Large self-insured employers fear that delayed treatment this year will lead to not only in a higher number of medical claims in 2021, but also higher overall costs for acute care.
Sicker next year
“They’re worried that some of these elective procedures will simply be bunched up next year and some people will be sicker next year … because certain things weren’t detected earlier,” told American Benefits Council president James Klein.
Without a 2nd wave of coronavirus outbreak next fall and winter, employers are also getting ready for higher costs in connection with Covid-19 testing to counter and curb the virus infection among their employees.
“With required testing in order for people to return to the workplace, that will be a big expense,” added Klein.
Physicians and hospitals fighting in terms of finances from the sudden and surprising lock-down of nonemergency care last spring are facing higher costs of operating for protective tools and safety measurements as they’ve rejoined the process of operations this spring.
Pharmaceutical prices could possibly be the biggest factors of medical-cost trend for next year. More than 100 drug-makers are striving to develope a Covid-19 vaccine as well as other more effective therapeutic treatments for the coronavirus that may possibly be available as early as 2021. Gilead, the first marketer of the vaccine, determined the price of its coronavirus treatment Remdesivir at more than $3,000 for patients who possess some private insurance.
Exactly as many insurers, Harvard Pilgrim provides health systems and clinicians in its networks with updated and sophisticated payments and financial aid during the emergency, but the carrier plans on holding the line for recompense grows up for 2021.
“It comes up for discussion, but I wouldn’t expect us to make up that lost ground,” Carson told. “We cannot address one-time revenue challenges of the hospital system by making that up in rate increases for our customers.”
Benefit managers investigated by research firm Piper Sandler told the rate increase requests of 3% to 4.4% from the main and bigger insurers, but with growing Covid-19 contaminations in the country which create an economic recovery, analysts say employers may take a more time this year to complete and set their coverage plans. “I think human resource managers are focusing on return to work protocols,” said Piper Sandler analyst Sarah James. “There’s a lot of fluidity, in that you don’t know how many of these people who were furloughed and still on their employer plan, will remain so.”
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