What can we expect in the aftermath of the COVID-19 pandemic? If we simply go back to to the way things were, with the corporate healthcare industry calling the shots, signs are that we’re going to find a healthcare system that is more unaffordable than ever. Learn more in this commentary by HEAL California’s contributor, Mark Wrede.
Commentary
Coronavirus Aftermath:
Skyrocketing Insurance Premiums
Surviving the coronavirus pandemic and the resulting economic contraction will be hard enough. But after that, we will likely face another threat to our financial and healthcare security: health insurance premiums more costly than ever before.
Premiums may nearly double for individuals and families
Yes, actuaries with Covered California are projecting dramatic hikes in health insurance premiums in 2021 as a result of the pandemic. Covered California is California’s health insurance marketplace created under the Affordable Care Act (ACA).
Based on the predictable behavior of the corporate health insurance industry, Mr. Peter V. Lee, Executive Director, Covered California:
…warned that insurers are likely to seek rates that are double their additional costs from the virus. If their costs go up 20 percent, Mr. Lee says rates could jump as much as 40 percent in 2021.
These increased costs could mean that many of the 170 million Americans in the commercial market may lose their coverage and go without needed care as we battle a global health crisis,” Lee said. (New York Times, Coronavirus May Add Billions to the Nation’s Health Care Bill, Reed Abelson, 3/28/20)
Complete Lack of Cost Controls
Lee’s comments highlight the failure of the ACA to impose cost controls of any kind on health insurance premiums. When healthcare costs go up, health insurers simply pass on the additional costs to consumers (along with a substantial increase for themselves).
Moreover, the study also reflects that hospitals and other providers have few restraints on their pricing, as the Covered California actuaries estimated that:
…patients hospitalized due to COVID-19 will stay in the hospital an average of 12 days and generate an average bill of $72,000. A majority of those patients will likely be covered by Medicare, as the virus disproportionately hits older people. But the bills racked up by COVID-19 treatment could prove disastrous for the uninsured, or even those insured with a high deductible. And, down the line, that uptick in healthcare spending will raise future premiums across the entire risk pool, according to the Covered California estimate.” (Healthcare Dive, Coronavirus could hike premiums by double digits next year, Rebecca Pifer, 2/25/20)
Employer-sponsored insurance premiums expected to rise 12%
Naturally, the cost of employer-sponsored health insurance is also expected to rise dramatically in 2021.
Analysts at Willis Towers Watson found that employers’ healthcare costs could rise by as much as 7% this year in 2020, depending on how far the virus spreads and how deadly the outbreak proves to be. The analysts noted that the increases related to COVID-19 would be in addition to an expected 5% increase in costs for the year. (Fierce Healthcare, COVID-19 could cause insurance premiums to spike as much as $251B next year: report, Robert King, 3/23/20)
Skyrocketing healthcare prices and insurance premiums continue to command a greater and greater share of the U.S. economy, making it impossible for the country to adequately support infrastructure, but also for individuals to finance their personal education and retirement needs.
…growth in medical spending, which has largely been driven by constantly rising prices, is squeezing public and private resources that could be devoted to other priorities. It has caused wage growth for many to stagnate, and it has led to constrained state and local spending for education, infrastructure, and other priorities. (Health Affairs, Health Care Cost Control: Where Do We Go From Here?, Stuart Altman, Robert Mechanic, 7/13/18)
The real issue
The question should no longer be “how will we pay for Medicare for All,” but rather “how can we manage to restore a functioning economy without restraining healthcare costs?”
Only single-payer, universal healthcare coverage in a Medicare for All-system can do that because of the simplicity and transparency of financing and coverage. We can save lives and money at the same time with Medicare for All!
–Mark Wrede
Mark Wrede is a freelance content researcher and writer living in Los Angeles, California. markwrede@ca.rr.com
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