COVID-19 Uncertainty Forces Health Insurers to Demand average 11.5% of Hike in Premium
State-regulated health insurance companies have requested premium rate changes for the year 2021. Like other industries, the health insurance industry is also facing many uncertainties due to the COVID-19 pandemic, and so leading insurers are requesting for a hike in health insurance premiums. The health insurers have requested the New York State Department of Financial Services for an average premium increase of 11.5%.
A healthcare policy analyst of Empire Center, Bill Hammond, has gone through the documents submitted by the health insurers and said that the request for the premium hike is all over the map. He also disclosed that the health insurers demand great varies, as one health insurer is asking for a 29% increase whereas another company is proposing a 4% cut in premium prices.
In this spring, there has been a significant decline in the number of claims submitted. During the pandemic-related shutdown, many elective surgeries across New York were canceled and people even avoided doctor’s offices and emergency room visits. According to Hammond, some of the health insurance companies may also have to offer discounts on premiums to policyholders. This is because, under the law, the health insurers are supposed to spend around 82 to 85 cents of every dollar directly on healthcare.
Hammond also stated that this may sound illogical, we are facing the worst health care crisis but a reduced number of people are using the healthcare system.
Erik Linzer, head of the New York Health Plan Association, which is the lobby group for several health plans offering coverage to 8 million New Yorkers said, today there is so much uncertainty that it is hard to plan for the future. He added, COVID-19 pandemic is going to cost New York’s health care industry $2 billion, which will be spent on the care of COVID-19 patients. Besides, there will also be the requirement of additional cleaning, sanitization, increased testing, extra personal protective equipment.
Linzer also said, health insurers are waiving off fees for testing and telemedicine visits and are also giving a grace period to individual and business policyholders to schedule late payments. He said, people at some point will have to resume seeking healthcare services and making medical appointments, as the delay in obtaining healthcare may have made them sicker. With people delaying their treatment will likely become more complex and costly.
Linzer said in 2021 there is a concern about implementing a possible vaccine program and on its costs. The health insurance plan will have to provide coverage for any vaccine, which gets the approval of the national Centers for Disease Control. Therefore, it is vital for the drug manufacturers who come out with a vaccine to price it reasonably. Meanwhile, he also said that a vaccine is essential to keep the state and economy moving.
Health insurance companies need to also consider the high unemployment rate, a majority of residents of New York depend upon their job for health insurance, and by losing their job they will also lose their health insurance. In previous years the department that approves the rate changes has not approved the request of the premium increase, though they have granted a slight increase in the premium prices.