From a clinical perspective, the costs of coronavirus (COVID-19) are thought to be similar to the flu for all but the most acute cases. The Kaiser Family Foundation recently presented a brief outlining the average costs of pneumonia (found in acute cases) treated on an inpatient basis in 2018: $20,292 with major complications or comorbidity; $13,767 with minor complications or comorbidity and $9,763 for a case without complications, with employee costs for those covered by employer-sponsored plans of $1,300, $1,365 and $1,464 respectively (the inverse relationship is due to employees with more severe cases reaching deductibles earlier). These costs would be trended up for increases in employee cost-sharing, but do give an indication.

HM Insurance Group projected the implications of potential stop-loss claims related to coronavirus. An acute case might result in an intensive care unit (ICU) stay, estimated at 25 days – and if the kidneys are impacted 13% of survivors require permanent, ongoing dialysis. Costs are estimated at $700,000 for hospitalization plus $60,000 per month for ongoing dialysis.

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Viewpoints from Craig Hasday

While these costs are no doubt high, our EPIC financial team believes there are offsetting factors. For example, elective healthcare utilization will be significantly reduced. It has been estimated that 20% or more of current healthcare expenditures fall into this category. With hospitals and medical providers deferring these procedures, the savings could be significant. Fascinating to me is the increase in utilization of telemedicine. This is a lower-cost care alternative that had not previously gotten the uptake benefits advisors and medical professionals expected.

Now, this lower-care cost option is exploding as patients and caregivers are avoiding in-person contact in any form. Interestingly, I got a call from my dermatologist, who wanted to shift my upcoming visit to virtual. This will have a dampening effect on costs. And the catastrophic exposure of COVID-19 is nowhere near as significant as other costly categories of care. Additionally, the most severe COVID-19 claimants are in the 65+ age category with comorbidities while employer plans trend towards younger and healthier populations. And, plans covered by stop-loss programs limit exposure to the individual deductible amount.

Although predicting costs is not easy, it doesn’t look like the medical costs are going to be the big issue. The obvious, bigger issue is survival.

Craig Hasday

President, National Employee Benefits Practice