In-Depth: Why COVID-related medical bills are going up

Expiring waivers will raise out-of-pocket costs
Health insurance
Posted at 11:35 AM, Sep 12, 2021

SAN DIEGO (KGTV) -- For months, most Americans who got sick with COVID-19 had their medical costs covered, with treatment at no charge.

Now, people who get hospitalized with the coronavirus could be on the hook for thousands of dollars. In San Diego County, 98.8 percent of those hospitalized with COVID since Jan. 1 have been unvaccinated.

The federal government requires providers to make medically necessary COVID testing and vaccines available to the public for free. But there is no federal requirement that health insurers cover the out-of-pocket costs associated with COVID-related treatment.

Still, the vast majority of insurance companies elected to cover these costs anway in the early part of the pandemic. According to an August 2020 analysis by the Kaiser Family Foundation, 88 percent of people with full health insurance had a plan that would waive all costs for a COVID hospitalization.

But in the months since, that’s changed, said KFF health policy expert Krutika Amin.

“With these cost-sharing waivers expiring, more and more people who are hospitalized are going to face significant medical bills that could lead to additional financial instability,” she said.

KFF recently surveyed the two largest health plans in each state and the District of Columbia. By the end of this month, the group estimates 78 percent of these large plans will have ended waivers and implemented normal billing for COVID treatment.

That means patients who get hospitalized with COVID now will be subject to their standard deductibles and copays, which can add up rapidly.

A study from researchers at the University of Michigan estimated the average out-of-pocket cost for a privately insured person who gets hospitalized with COVID is $3,840. That’s just the average. Intensive interventions or emergency transportation can send the bill much higher.

“Some plans have deductibles that can exceed over $8,000,” Amin said. “For people who have not met their out-of-pocket maximum, they could be charged a significant amount.”

The cost of COVID testing is also beginning to change. Tests ordered by a doctor remain free, but insurers can charge for routine screening tests that are becoming more common at workplaces and schools.

Some companies that have implemented mandatory weekly testing of unvaccinated workers have picked up the costs of these tests, but others have not. Some people have been charged up to $200 for screening tests, according to the New York Times.

While testing may affect many Americans, the largest bills will likely be generated by lengthy hospital stays. Six states and the District of Columbia have mandates or agreements with insurers to cover these out-of-pocket costs, but not California.

Amin said a mix of moral and financial obligations may have motivated insurers to temporarily cover these expenses last year.
Despite the surge of COVID patients at hospitals, overall health spending dropped during the pandemic as people socially distanced and patients delayed elective procedures, Amin said. Insurance payouts remain below expected levels in 2021.

That left insurance companies with extra cash they legally couldn’t pocket. There’s a provision in the Affordable Care Act that controls how much money insurers can make. The provision, known as the Medical Loss Ratio, says insurers must give their customers rebates if profits exceed a certain percentage of health spending.

Instead of offering rebates, insurers used the extra revenue to temporarily waive out-of-pocket treatment costs for COVID. But the arrival of vaccines changed the equation, Amin said.

“The overwhelming majority of the COVID hospitalizations are avoidable,” she said.

Under federal law, insurers cannot charge people different rates based on their vaccination status. (Employers, however, can add surcharges through wellness programs that effectively raise rates on the unvaccinated.)

With overall health spending below projected levels, insurance companies have already indicated they will not raise premiums in 2022 on everyone next year due to COVID, Amin said.

But companies can -- and have -- begun to start charging again for COVID hospital stays in general. That places the bulk of those costs on the unvaccinated, who account for the overwhelming majority of hospitalizations.

“People can avoid these costs by getting vaccinated, which are free,” Amin said.

In June and July, KFF estimated that hospitalizations of the unvaccinated cost the U.S. health system $2.3 billion. Now more of those patients will have to pick up a bigger part of the tab.