It’s been nearly two months since Covered California issued its report estimating that health care premiums could increase by 40% due to the COVID-19 outbreak but the landscape has changed dramatically in that short period of time.
“It was a good faith estimate issued at the very beginning of the crisis based on very little data,” said Anthony Wright, executive director of Health Access California, a health consumer advocacy coalition. “Now we have more information to work with.”
Covered California, created under the Affordable Care Act, is the health insurance marketplace for consumers who have incomes above the MediCal poverty line cutoff however millions of Californians have reportedly lost their job and Covered California health insurance due to COVID-19.
“Covered California established a special enrollment period for consumers who were uninsured or impacted by the pandemic,” said James Scullary, Covered California's communications and public relations broadcast and media relations branch chief.
As a result, more than 84,000 people signed up for Covered California coverage between March 20 and April 24, 2020, which is a pace more than 2.5 times higher than the same time period last year, according to Scullary.
While an anticipated 40% hike was based on potential costs of testing and treatment according to the best available data at the time, proactive steps have mitigated the impact of the coronavirus. Those steps include social distancing and increased use of face masks, experts say.
“There's been a significant reduction in claims because people following the shelter in place orders, especially older folks who are more likely to go to the doctor, have put physician appointments on hold,” Wright told the Southern California Record.
Staying home has also reduced the rate of coronavirus infection and its impact on hospitals, according to Edwin Park, research professor with the Center for Children and Families at the Health Policy Institute in the Bay Area, and as a result, the 40% projected increase could prove to be lower.
“It depends on what assumptions insurers make about what next year looks like and that depends on some factors that we don't entirely know right now,” Wright said in an interview.
One of the unknown factors is whether there will be a new spike in coronavirus infections later in the year.
To date, there are 67,939 coronavirus cases statewide and 2,770 fatalities, according to the Department of Health.
“The estimated premium projected could be higher than what was assumed or it could be less because of the success of the shelter in place orders in reducing the impact on hospital costs and other health care costs but if more elective procedures are allowed and people return to outpatient clinics for care that they've delayed and now there's a pent up need for those services, then that offsetting reduction in costs would no longer be there,” Park told the Southern California Record.
Experts foresee negotiations for 2021 health insurance premiums to begin in June 2020 with Covered California and the 11 healthcare plans that operate in the individual insurance market, including Blue Anthem, Blue Cross and Kaiser.
“Because COVID-19 costs weren't anticipated when premiums were set for this year, when insurers set premiums for 2021, they'll build in higher costs to make up for the unexpected losses as well as provide room for costs that may be associated with further outbreaks of COVID-19,” said Park.
The uncertainty around Covered California health insurance premium costs for 2021 comes at a time when the state budget has slipped into arrears.
Prior to the COVID-19 plague arriving in January, the state had projected a $6 billion budget surplus.
“Those numbers are completely flipped today,” Gov. Newsom said on May 11 at a Facebook Live press conference. “We now are struggling with a budget deficit of billions of dollars directly caused by COVID-19.”
Adding to the debt burden is the number of newly unemployed enrolling in MediCal.
“With all the people losing their jobs and health insurance through their employers, MediCal is a key coverage source for those losing job-based coverage,” said Park.
The Urban Institute expects Medicare enrollment to rise by more than 2 million people while Gov. Newsom told journalists at the press conference yesterday that the state had disbursed $13.1 million in unemployment assistance to 4.5 million people since March 12.
“The higher enrollment in MediCal and the potentially higher Covered California premiums is a clear lifeline for those who are losing coverage,” said Park. “Higher MediCal enrollment will add to the state budget deficit, which speaks to the need for further financial support for states and local governments that is being debated in Congress today.”