US health insurers face potential rise in claims due to coronavirus

By Cynthia Ang

US health insurers will experience an increase in medical claims with the spread of the coronavirus, driven by at-risk patients such as the elderly and those with pre-existing conditions, said AM Best in a report.

In its report, ‘Potential Rise in Claims Due to Coronavirus’, the rating agency also stated that treatment for non-urgent conditions could decline, as these individuals might choose to avoid becoming exposed at a medical treatment facility or physician’s office.

The higher severity cases, and in cases resulting deaths, thus far have been occurring in the elderly and in individuals with pre-existing medical conditions or compromised immune systems. “As such, exposure is expected to be greater for health insurers covering a large percentage of ‘at risk’ individuals—including those writing long-term care and support services contracts, Medicare and Medicaid, specifically special needs plans,” said Ms Sally Rosen, senior director, AM Best Rating Services.

The Centers for Disease Control and Prevention (CDC) is allowing the coronavirus test to be administered locally. Tests conducted by private laboratories will be paid for by an individual’s health insurer. The New York state Department of Financial Services (DFS) is requiring health insurers to waive all cost-sharing for fully insured plans and Medicaid recipients for claims related to testing.

Additionally, several carriers have announced they will be waiving co-payments and cost-sharing for fully insured members for coronavirus testing. The agency expects that insurers also will be liable for the coronavirus treatment of their members.

According to AM Best, several years of strong earnings has resulted in a strengthening of risk-adjusted capital, which should allow health insurers to absorb any potential impact. Furthermore, the coronavirus could impact medical stop-loss carriers for high dollar and high claims in aggregate.

At this time, AM Best’s outlook on the US health insurance segment remains stable, although it said that this outlook could be re-evaluated as further information about the impact of the coronavirus spread becomes available.

As the situation worsens, US officials are racing to implement new measures to stop the spread of the coronavirus, which has killed at least 32 people in the country and sickened nearly 1,000 by 11 March. Multiple states have declared a state of emergency to help free up resources to fight the virus.

Asia Insurance Review

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