As Guy Carpenter helps clients, the societal, operational and human costs associated with COVID-19 are primary in our thoughts, discussions and efforts. While these costs are undoubtedly high, health insurers and reinsurers are also closely monitoring the direct and indirect financial impact of the virus, including the potential ramifications of growing unemployment.
Although the COVID-19 pandemic has only been going on for a few months, the economic, employment, and societal impact has been far-reaching. As the downstream ramifications of the pandemic unfold, key demographic and regional differences in the impact of these changes are becoming increasingly clear. Understanding these nuances is critical in determining how the healthcare landscape will change over the coming months and in predicting potential insurer revenue and profit shifts due to new coverage changes tied to the pandemic, according to Oliver Wyman Health & Life Sciences Partner Howard Lapsley, Principal Greg Berger and Senior Consultant Natalie Danckers. Oliver Wyman is an affiliate of Guy Carpenter.
If unemployment reaches 30 percent (a previously unthinkable possibility), then up to 35 percent of the national commercial group population will migrate out of the segment. Depending on assumptions for how these newly unemployed (and their dependents) choose to purchase (or forego) health insurance coverage, tens of millions of newly uncovered lives will migrate into the Affordable Care Act (ACA) exchanges, Medicaid, or choose to stay uninsured. A small portion will also stay in the commercial insurance market by switching to their spouse’s coverage. Or, those in the workforce over the age of 65 could transition to Medicare.
Guy Carpenter has been developing a view of how COVID-19 may impact the medical (re)insurance market.