At-home COVID-19 tests are the latest unplanned pandemic cost for health insurance companies. The impact of that on the cost of health insurance for patients won't be felt until next year in Florida.
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"The challenging thing is for our industry is that cost should be built into the premium, but our premiums are already set for 2022," said AvMed Chief Operating Officer Jim Repp.
AvMed is a health insurance company based in Miami-Dade County.
As of January 15, insurance companies have to cover up to $12 each for up to to eight at-home tests per month per person. "Across the industry, the compliance with this requirement will be a drain on financial performance of organizations," he said.
Repp acknowledged the importance of testing and the potential cost savings for patients and plans with at-home testing. While there have been supply constraints on at-home test kits, reducing or eliminating the out-of-pocket expense to patients "there is a benefit."
For example, patients may decide not to go to an urgent care facility or emergency room hoping for a COVID test, and the at-home testing may catch cases earlier, helping slow the spread of the virus, and reducing strains and costs in the health care system.
The virus has killed more than 63,000 Floridians according to official state health department data. That’s about one out of every seven people in the U.S. who have died from COVID.
Cost of Care
The delta wave of COVID over the summer and early fall was deadly. Thousands of Floridians died during the surge that saw a record number of COVID hospitalizations.
The financial impact of COVID in 2021 on AvMed could be $50 million, according to Repp. The company's full year finances aren't due with state regulators until March. "Wherever we end up for the full year, if COVID didn't exist, put $50 million back on top of that number," Repp said.
As COVID has mutated and presented different health risks to people, it also has meant volatility for the business of health care. "The delta variant of the virus was more intense than what we forecast and drove additional cost. So from a pricing perspective, we were really underpriced in 2021," Repp said.
In March, it will be two years since the World Health Organization declared COVID-19 a global pandemic. White House medical advisor and director of the National Institute of Allergy and Infectious Diseases Anthony Fauci said last week the virus won't be eradicated, and called it "an open question" whether the omicron will mark a transition to an endemic disease. "But I would hope that that's the case," he said during a World Economic Forum virtual panel.
As a health insurer, Repp is approaching that possibility by trying to predict how patients will utilize COVID care going forward.
"We've now got two years of history to use as the foundation to predict into the future," Repp said. "And that gives us some confidence that we'll be able to right price business."
In fact, Repp said as AvMed is working on its 2023 insurance premium rates now, it is "pricing for the future cost of COVID that it turns into more of an endemic." Still, given the experience, especially with delta, he's on guard for a variant "that could change all of that thinking right out of the blue."
Obamacare
It has been eight years since Americans have been able to buy so-called Obamacare health insurance plans. The government mandated health insurance marketplace has changed a lot, including essentially doing away with the individual mandate that required eligible people to get health insurance coverage.
Still, the program keeps growing. And Florida has more people who get their health insurance through Healthcare.gov than any other state. Last year it was more than 2 million people. This year’s enrollment had to be completed by January 15 and it’s expected to continue growing.
AvMed took its time to get into the Obamacare health insurance market. This year is only the second year is was selling health insurance plans through the government website. It signed up about 20,000 people to one of the dozen plansit offered its first year. This year, it sold 14different so-called on-exchange plansin 22 of Florida's 67 counties, including Miami-Dade, Broward and Palm Beach.
AvMed was the only provider that decreased its average individual premium – down 2.9%. Repp expects to almost double the number of the company's Obamacare patients this year as he expects demand to continue growing for Affordable Care Act health plans.
He pointed to three drivers: companies dropping medical insurance benefits for employees outright, companies shifting employees to the federal exchange with some incentives from the employer, and companies shifting into self-funded health insurance.
Power of Price
There are several price transparency efforts happening in the healthcare industry. For years, health insurers and healthcare providers have offered patients versions of calculators in the effort to give them an estimate for their out-of-pocket costs.
In July, new federal rules will take effect, taking what could be a much bigger and more complicated step toward putting the power of price into the hands of patients. The federal government’s Centers for Medicare and Medicaid Services called the law a "historic step toward putting health care price information in the hands of consumers."
The rule was created by the Trump Administration.
"We fully embrace transparency. We think that transparency is one of the aspects that will help solve part of the health care challenges that we have in the country," Repp said. But he worried the new rule may not provide clarity for patients.
"The challenge is, that cost variations occurs across the board. Every provider has a unique contract."
How this rule may affect what prices patients can see is unknown.
Over the past several years, health insurers and healthcare providers have provided cost calculators for some procedures and medical devices. They usually include out-of-pocket expenses for patients such as co-pays and deductibles, but not the cost insurance companies have agreed to reimburse the provider. Those costs can help influence overall heath insurance premiums.
Oftentimes, those negotiated payment rates health insurance companies strike with heathcare providers include non-disclosure agreements prohibiting the public release of those contracted rates.
"Those are some of the challenges that we have to deal with — non-disclosure requirements that are built into existing contracts," Repp said.
