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According to a new report by Covered California, California’s marketplace, 2021 premium increases to individuals and employers from COVID-19 alone could range from 4 percent to more than 40 percent, if carriers must recoup 2020 costs and protect solvency.

COVID-19 has been an unprecedented situation with one-year projected costs in the national commercial market ranging from $34 billion to $251 billion. Patients hospitalized due to COVID-19 will stay in the hospital for 12 days on average and generate an average bill of $72,000, according to Covered California.

It is worth noting that, as reported by Healthcare Dive, other researchers have estimated lower costs. Researchers at the Kaiser Family Foundation estimate an average of $20,292 for a COVID-19 hospital stay.

Though most COVID-19 patients will be covered by Medicare, the uninsured and those with high deductibles may buckle under the weight of their bills. This uptick in healthcare spending will raise 2021 premiums across the entire risk pool.

Since carriers set 2020 commercial-population insurance rates in early to middle 2019, it is highly unlikely that they were prepared for such an unthinkable crisis.

If the full first-year costs of the epidemic had been priced into 2020’s premiums, premiums would have been 2 percent and 21 percent higher.

Covered California’s actuaries considered three scenarios of how COVID-19 could unravel:

  1. A “low impact” scenario: 400,000 people are hospitalized
  2. A “medium impact” scenario: 1.2 million people are hospitalized
  3. A “high impact” scenario: 3 million people are hospitalized

In all three scenarios, carriers would have to grapple with bills they didn’t plan for in 2019 and could send premiums up in 2021.

Carriers are currently calculating 2021 rates and will submit them in May, finalizing them around July 1. Covered California officials say now is the time for the federal government to implement reinsurance policies, which would provide federal funding for portions of unforeseen COVID-19 costs for the individual and employer markets, along with Medicaid managed care programs. This would bring more certainty to beleaguered carriers, states and consumers.

Covered California also calls on the federal government to:

  1. Increase the level of tax credits for those earning under 400 percent of the federal poverty level (FPL) and expand subsidies to those earning more than 400 percent FPL.
  2. Establish a temporary program to limit the costs of COVID-19 for health insurers, self-insured employers and those they cover.
  3. Establish a national special-enrollment period for the individual market.



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