Study Estimates Financial Impact of COVID-19 as Insurers End Grace Period for Hospital Costs

February 24, 2021
Jill Murphy, Associate Editor

The estimate is based on a new analysis of out-of-pocket costs for influenza-related hospitalizations in 2018 that were paid by people with Medicare Advantage plans, which are Medicare plans run by private insurance companies.

A new study estimates that many people over 65 years of age hospitalized for coronavirus disease 2019 (COVID-19) in 2021 may owe an average of nearly $1000 after they are admitted from the hospital due to co-pays, deductibles, and co-insurance, according to a Michigan Health Lab press release.

The estimate is based on a new analysis of out-of-pocket costs for influenza-related hospitalizations in 2018 that were paid by people with Medicare Advantage plans, which are Medicare plans run by private insurance companies. Nearly 40% of Americans over 65 years of age who have a high chance of needing hospital-level care if they catch COVID-19 have the kind of insurance analyzed in the study.

“Insurers may choose to extend their waivers for enrollees with Medicare Advantage and private insurance coverage,” said study author Kao-Ping Chua, MD, PhD, an assistant professor at the University of Michigan Medical School, in a press release. “But if they don’t, patients will be faced not only with the physical and emotional toll of COVID-19 hospitalizations, but also the financial toll.”

For the study, a pair of health care researchers from the University of Michigan and Boston University described data from 14,278 people hospitalized during one of the worst flu years in the present day.

The flu patients in the study were hospitalized for an average of 6 days and one-third of the patients needed intensive care. This number was around the same or slightly lower than the averages for hospitalized adults over 65 years of age who have COVID-19.

Patients who needed intensive care for flu and those with longer stays at any level of care faced out-of-pocket costs that were higher than the general average. Approximately 3% of the flu patients faced out-of-pocket costs over $2500, according to the study.

Another study of cost-sharing among people with private non-Medicare insurance who were hospitalized for respiratory infections in pre-COVID times suggests out-of-pocket costs could be even higher for these patients. Chua notes that the choice of flu or other respiratory infection hospitalizations is not a perfect stand-in for COVID-19, which is having a far greater impact on the United States than even the worst flu year, but is as close a stand-in as possible.

In 2018, 40% of Americans lacked enough savings to pay for a $400 emergency, according to federal data. Further, the pandemic has put even more economic pressure on the lowest-income Americans.

The study authors note that worries about out-of-pocket costs might keep some people from seeking emergency or inpatient care. They add that federal legislation should be mandating insurers to fully cover the costs of COVID-19 hospitalizations for the duration of the pandemic and for insurers to extend waivers due to expire soon.

REFERENCE

An insurers end grace period for COVID-19 hospital costs, study estimates potential bills. Michigan Health Lab. https://labblog.uofmhealth.org/industry-dx/as-insurers-end-grace-period-for-covid-19-hospital-costs-study-estimates-potential. Published February 18, 2021. Accessed February 19, 2021.