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Who’s going to pay for Covid-19 treatment?

    By: Max Hakanson and Sally Kim

    The federal government has already passed legislation requiring private insurers, Medicare, and Medicaid to cover testing for the novel coronavirus and coronavirus-related doctor visits without any cost to the patient.

    However, when it comes to the question of who’s going to pay for Covid-19 treatment, the answer is murky. For the majority of people who get Covid-19, symptoms are likely to be mild to moderate and can be treated by resting at home, but for those who require hospitalization, the costs could be very high.

    Many large national plans, such as Cigna, Aetna, Humana, Centene, and United, as well as some Blues plans including Florida Blue, BCBS of Michigan, and BCBS of North Carolina, have already agreed to waive cost sharing for members’ Covid-19 treatment in their fully-funded and Medicare Advantage plans.

    Read on for what the cost of coronavirus treatment could be and who will front the bill.  You can also jump to the section you are interested in: uninsured, Medicare, Medicaid, or commercial insurance.


    Who is most likely going to pay? The federal government through stimulus packages for providers.

    The millions of uninsured Americans will likely experience the greatest economic hardship for the cost of Covid-19 related treatments. Many of the top ten occupations reported by uninsured Americans are service-oriented (view the table below for a list). This makes uninsured individuals more likely than the rest of the population to have either lost their wages or jobs, or to be in a job that puts them at a higher risk of exposure to coronavirus.

    Uninsured patients who are hospitalized for Covid-19 treatment could face bills of nearly $70K. They most likely will not be able to pay, especially if they have lost their jobs recently, so some may be able to retroactively enroll in Medicaid.

    For Americans who remain uninsured, the CARES Act includes funding to pay providers for treating the uninsured. Currently, the HHS plans to reimburse providers for Covid-19 care of the uninsured population at Medicare rates and would prohibit providers from billing uninsured individuals the difference in cost.


    Who is most likely going to pay? Medicare and Medicare Advantage plans.

    Because of their age and higher likelihood of having pre-existing conditions, Medicare beneficiaries are at greater risk of becoming seriously ill if they are infected. Severe Covid-19 cases will cost approximately $10,561 to treat in Medicare, which will be covered through traditional Medicare or through Medicare Advantage plans.

    The cost sharing for individuals with Medicare Advantage will vary depending on their health plan. While some Medicare Advantage plans have already waived all member cost sharing for Covid-19 treatment, plans that have not are still required to cover the plan portion as they would for all medically necessary services. CMS has also issued a memo informing Medicare Advantage plans that they must bill their members at in-network rates for Covid-19 treatment costs, even if services were administered at out-of-network facilities (as long as the facility participates in Medicare).


    Who is most likely going to pay? States and MCOs, with Medicaid FMAP increases from the federal government.

    Medicaid patients will likely not face costs for Covid-19 treatment. The $7,533 bill will be fully paid by Managed Care Organizations (MCOs). Although the federal government will pay for the majority of Medicaid costs, states will face financial problems as Medicaid enrollment increases, health care spending from Covid-19 increases, and state revenues decrease as a result of the economic downturn.

    States will be reliant on federal assistance to help them stay afloat monetarily and to continue funding Medicaid in the face of this unprecedented public health crisis. The Families First Coronavirus Response Act included a temporary 6.2% boost in the Medicaid Federal Medical Assistance Percentage (FMAP), which has successfully supported states in the past during times of economic crisis.

    Even with this additional assistance, some states will still face large budget deficits. Since all states are required to balance their budgets, states may need to drastically cut spending on other programs. According to Reuters, states like Nevada that are heavily reliant on tourism and states like Maine that have a larger proportion of older individuals may need to aggressively reduce spending, which could come in the form of budget cuts in education, pensions, or even Medicaid itself.

    Commercial Insurance

    Who is most likely going to pay? Health plans and self-funded employers once members reach their out-of-pocket maximum.

    While a number of national and regional health plans have decided to waive Covid-19 treatment costs for members in fully-funded groups, members may feel the cost next year through premium increases in 2021. Covered California estimates that premiums in the commercial market could increase by 40% because of COVID-19 costs (see the graph below for total treatment cost estimates).

    Members of health plans that aren’t waiving cost sharing, employees of self-funded employers that aren’t waiving cost sharing, and members on the individual market will blow through their out-of-pocket maximum as Covid-19 treatment including inpatient stays could cost them nearly $40K. Adding to the problem, since the pandemic hit the US in the first quarter of the new plan year, coronavirus will likely be some of the first medical bills that most patients have on their deductible.

    Health plans should be concerned that these upset members could be very vocal about their dissatisfaction with their health plan to employers, to friends, and to the media, become over utilizers of care for the rest of the year since they’ve hit their out-of-pocket maximum and are likely to be sicker, and choose to shop for a different health plan the following year through employer offerings or on the individual market.

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