As the COVID-19 pandemic continues through the summer, public health concerns are at the forefront of everyone’s mind and Guy Carpenter is actively developing a view of how COVID-19 may impact the healthcare industry and the medical (re)insurance market.
In early March, as the United States began coming to grips with the potential impact of the COVID-19 pandemic, many healthcare providers put a pause on elective procedures and shifted their focus from normal operations to preparing to care for COVID-19 patients, according to Oliver Wyman Actuarial Partner Kurt Giesa and Actuarial Principal Marc Lambright. Oliver Wyman is an affiliate of Guy Carpenter.
At the same time, Americans began avoiding emergency rooms, physicians’ offices and other healthcare settings, fearing the risk of infection.
To date, in most of the country, the cost savings from this foregone care have generally exceeded the cost of treating COVID-19 patients. As a result, many health plans have seen their margins increase (1). Some health plans are responding by offering premium discounts (2), waiving cost sharing for the treatment of COVID-19 and working to support providers, or a combination of the three (3). Health plans may be taking these actions, at least in part, to avoid having to pay medical loss ratio rebates under the Affordable Care Act.
At the same time, there is considerable uncertainty regarding the cost and utilization of healthcare services going forward. There is uncertainty regarding:
- The potential for additional waves of COVID-19-related illness
- The cost associated with treating the residual effects of those recovering from COVID-19
- The timing, efficacy and cost of any vaccine
- The cost of continued testing
- The impact of non-COVID-19 patients who delayed care and therefore present with more advanced disease
- How much of the care that has been foregone, for example joint replacement surgeries, will ultimately return
Guy Carpenter is actively developing a view of how COVID-19 may impact the medical (re)insurance market.
- Snowbeck, Christopher. “UnitedHealth Group Profits Soars.” StarTribune, July 16, 2020.
- Matthews, Anna. “Health Insurers Offer Premium Discounts.” The Wall Street Journal, June 4, 2020.
- Albrecht, Leslie. “Major Health Insurers Aren’t Charging Patients for Coronavirus Treatment – but that Doesn’t Mean It’s Free.” MarketWatch, May 11, 2020.