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The Cost of COVID Hospitalization Is on the Rise

Expiring insurance waivers are sending out-of-pocket payments through the roof.

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Clinicians care for a COVID-19 patient at Lake Charles Memorial Hospital on Aug. 10 in Lake Charles, LA. Photo: Mario Tama/Getty Images.

In California and across the country, the effort to contain COVID-19’s lethal spread has relied upon two cornerstones: accessibility and affordability of the tools to combat the virus. For almost everyone, COVID testing costs little or nothing. Immunization via one of the three vaccines approved for use in the U.S. — Pfizer, Moderna and Johnson & Johnson — is free.

The rollout of that campaign, though, has at times been wildly uneven, with vaccine distribution in California initially weighted heavily toward higher income and predominantly white communities. Right out of the gate, minority and lower income groups fell behind in the race to keep people safe. According to the California Department of Public Health, Latinos make up 38.9% of the state’s population, but currently account for 52.9% of its COVID cases and 45.6% of its deaths.
 


“Compared with well insured patients — for example, those who only have to pay a copay for hospitalizations — underinsured patients will face particularly large bills for COVID-19 hospitalizations going forward.”

~ Dr. Kao-Ping Chua, assistant professor of pediatrics at the University of Michigan Medical School

 
Now comes the double whammy: For COVID patients who wind up in the hospital, the concept of “free” quickly vanishes. Costs may run into the thousands. And, often, the people stuck with those bills are from the same lower income families who were disadvantaged from the start.

According to the authors of a report recently published at JAMA Network Open, patients hospitalized with COVID in 2020 averaged nearly $4,000 in out of pocket expenses even with health insurance. This occurred despite most major insurers waiving deductibles, copays and other costs for a large portion of that year — waivers which, for the most part, have since been quietly revoked.

Thus, the authors suggest, those hospitalized with COVID in 2021 are likely taking a larger financial drubbing. And for those who are underinsured or have no insurance, the picture is particularly grim.

“Compared with well insured patients — for example, those who only have to pay a copay for hospitalizations — underinsured patients will face particularly large bills for COVID-19 hospitalizations going forward,” said Dr. Kao-Ping Chua, an assistant professor of pediatrics at the University of Michigan Medical School and a co-author of the study.

How large? In an interview with Capital & Main, Chua said that one study found the average reimbursement to medical facilities for the hospitalization of privately insured COVID patients was roughly $42,000. Although circumstances can vary, Chua said, “The uninsured could pay more than that, because they are typically responsible for what hospitals charge, which is often several times higher than the amount reimbursed.”
 


Toward the end of 2020 and the early months of this year, industry giants like Anthem, UnitedHealth and Aetna began rolling back or rescinding their COVID-related hospitalization waivers.


 
The researchers looked at results from both privately insured and Medicare Advantage patients from March to September of 2020, “a period during which the vast majority of insurers had cost-sharing waivers for COVID-19 hospitalizations,” Chua said. Despite the waivers, some private insurance carriers did not cover “facility fees” for such things as accommodations and inpatient pharmacy services, which led to the out-of-pocket costs.

Those costs ranged from an average of $1,536 for Medicare Advantage patients to $3,840 for those privately insured. Though the vast majority of patients in both categories had coverage that was more fully inclusive, “The findings suggest that out-of-pocket spending for COVID-19 hospitalizations may be substantial if insurers allow cost-sharing waivers to expire,” the authors wrote.

By and large, the insurers already have done so. Toward the end of 2020 and the early months of this year, industry giants like Anthem, UnitedHealth and Aetna began rolling back or rescinding their COVID-related hospitalization waivers. Research by the Kaiser Family Foundation found that by last month, more than 80% of major insurers had eliminated the waivers.

The insurers’ motives in providing waivers weren’t entirely altruistic in the first place. Under the Affordable Care Act, all insurers must put at least 80% of their premium revenue back into direct health care services, rather than marketing or administration. Since most insurers were banking massive profit in 2020 off of people who paid their premiums but didn’t want to use the system during a pandemic, absorbing some COVID-related costs was one way of staying within the ACA guidelines — and it bought the insurers a little positive PR as well.
 


Hospitals may still request federal reimbursement for COVID care via the Provider Relief Fund, which was established by the CARES Act. But hospitals aren’t required to apply, and many will choose to bill patients directly.


 
Regardless of the motive, waiving thousands of dollars in costs was a benefit to those who had to be hospitalized, especially considering the unknown factor of how many days they’d have to stay. With the waivers now mostly history, those costs are going to skyrocket. And much like the health care system in general, the financial burden will fall heavily on those who already struggle to afford decent insurance or suffer under a lousy or insufficient employer-based plan.

For the fully uninsured, the picture is less clear. Chua said hospitals may still request federal reimbursement for COVID care via the Provider Relief Fund, which was established by the CARES Act in 2020. But just as they were not required to issue waivers last year, hospitals aren’t required to apply via that fund, and many will choose to bill patients directly, possibly because they can charge the insurers higher rates than they can the government.

It may simply be a business decision for hospitals. The ramifications for lower income patients and those from vulnerable populations, however, are distressingly real and very human.

“I imagine that many patients were surprised” to find that not all their costs were covered for COVID hospitalizations in 2020, Chua said. “Given [the waiver system], some of the patients who received bills may have been under the impression that their hospitalization would be fully covered.”

It would have been an unwelcome surprise, but in terms of scale, it’s almost mild compared with what may await those hospitalized with COVID in 2021. What financial protections were in place for patients last year have vanished almost completely — and those who can least afford it may well wind up being billed the most.


 
Copyright 2021 Capital & Main

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