Insurance Premiums Could Rise By Up To 40% In 2021 Due To Coronavirus: Report

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Insurance premiums in the United States could rise up to 40% in 2021 due to the impact of the novel coronavirus (COVID-19) outbreak, a report by Covered California said Tuesday.

COVID-19 Could Cost Insurers Up To $237.6B

The government-run health insurance marketplace in its report said that the premiums for 2020 were decided months before the COVID-19 outbreak became known, and the insurance companies will take an unexpected loss due to the increased number of hospitalizations.

The companies will expectedly increase premiums for about 170 million commercially insured individuals in 2021 to recoup the losses, according to the report.

Covered California described three scenarios for the number of COVID-19 cases in the United States, including "low," with about 4 million cases, "medium," with 8 million cases or "high," with 15 million cases.

The report estimated that about 400,000 people could require hospitalization due to the virus if the spread is low, 1.2 million people if the spread is medium, and 3 million people if it is high.

These severe cases would require up to 12 days of hospital stays. The rest of the COVID-19 patients will still require outpatient services. According to Covered California, the total costs incurred as a result, including those borne by the insurers and the individuals, would be $31 billion, $94.6 billion, and $237.6 billion in the three respective scenarios.

These costs could result in a premium increase of anywhere between 4% to 40%, the report noted.

Report Calls On Federal Govt. For Action

"Covered California's analysis shows the impact of COVID-19 will be significant, and that absent federal action, consumers, employers and our entire health care system may be facing unforeseen costs that could exceed $251 billion," Covered California Executive Director Peter Lee said in a statement.

"Consumers will feel these costs through higher out-of-pocket expenses and premiums, as well as the potential of employers dropping coverage or shifting more costs to employees." At least 55,222 COVID-19 cases have been confirmed in the U.S. at press time, including 797 deaths, according to the data from Johns Hopkins University.