Most private insurers are no longer waiving cost sharing for COVID-19 treatment due to the widespread availability of vaccines rendering the illness largely preventable.
While federal law requires private insurance plans to cover COVID-19 testing and vaccinations, there are no national regulations regarding out-of-pocket costs for treatments.
Now, the majority of health plans including Kaiser Permanente, UnitedHealth Group and Anthem have ended or are about to end their policies of waiving out-of-pocket costs for COVID-19 treatment, as it is no longer seen as necessary. Medicare will continue to waive cost sharing until the end of the public health emergency.
"With the economy continuing to improve and vaccinations readily available, treatment is currently covered subject to the standard cost-share provisions of the member's health plan," Oakland, California-based Kaiser Permanente said in an email statement.
Out of the largest insurers in each state and the District of Columbia, 72% are no longer waiving COVID-19 treatment cost-sharing, and another 22% of plans are phasing out cost-sharing waivers by the end of the year, according to a Kaiser Family Foundation (KFF) analysis. KFF is not affiliated with Kaiser Permanente.
At the beginning of the pandemic, many insurers voluntarily waived deductibles and other forms of cost sharing because they were profiting from the lack of non-COVID-19 claims as patients avoided medical facilities, said Sabrina Corlette, a research professor at Georgetown University's Center on Health Insurance Reforms.
Waiving cost sharing was also a way for insurers to generate public and political goodwill and to avoid a federal mandate, said Cynthia Cox, vice president of KFF. The Affordable Care Act's medical-loss ratio requirements would have required insurers to pass their pandemic windfalls on to policyholders in the form of rebates anyway, she said.
Because insurers are now seeing those pandemic-related profits shrink, and as sympathy dwindles for unvaccinated people who become infected, insurers will increasingly revert to normal cost-sharing policies, Corlette said. The alternative would be to make every policyholder shoulder those expenses.
"If insurers are spending more money because they're waiving cost sharing for COVID-19 treatment, it means they're going to ultimately pass that on in the form of higher premiums that everybody pays," Corlette said.
In June and July , there were more than 100,000 preventable COVID-19 hospitalizations among unvaccinated adults, which cost the U.S. health system at least $2.3 billion, according to a KFF analysis of data from HHS, Centers for Disease Control and Prevention and Centers for Medicare and Medicaid Services.
On average, the cost for hospitalization as a result of COVID-19 is around $20,000, KFF estimates. COVID-19 outpatient treatment out-of-pocket costs can average between $500 and $1,000 per privately insured patient. Medicare enrollees previously hospitalized for COVID-19 face an average of $164 in out-of-pocket costs for subsquent outpatient care.
Even with cost sharing waivers for hospital care, more than 70% of privately insured patients and half of Medicare Advantage patients owed out-of-pocket costs for COVID-19 hospitalizations last year, according to a University of Michigan Medical School and Boston University study.
Out-of-pocket spending for professional or ancillary services for COVID-19 patients with private insurance was $788 in 2020, and the mean for facility services was $3,840. Costs for those with Medicare Advantage coverage were $277 and $1,536, respectively.
With higher out-of-pocket expenses, there is greater risk that providers will be exposed to more unpaid medical bills, said Glenn Melnick, professor at the University of Southern California's Sol Price School of Public Policy.
Patients may be surprised by large bills, but because hospitalization rates for COVID-19 are lower than they were earlier this year, and vaccination rates have increased, restoring cost sharing isn't likely to have a large overall effect on the healthcare system, Melnick said.
Other insurers are bucking the trend and stil waiving cost sharing for COVID-19 care to aid their customers and their communities financially, at least for a time.
Independence Blue Cross in Philadelphia will continue excusing commercial members' cost sharing for in-network, acute inpatient COVID-19 treatment through Oct. 31.
"We take our mission to enhance the health and well-being of the people and communities we serve seriously, and it's never been more important than it is right now," Dr. Victor Caraballo, vice president of quality management at Independence Blue Cross, wrote in an email.
UCare stated will waive cost sharing for members' COVID-19 treatments and services through the end of the year. "We took this step to ensure the best possible health outcomes and help reduce the spread of COVID-19," Minneapolis-based UCare said in an email statement. "We have a long-held commitment to removing barriers—including cost— to accessing the care our members need. This investment in our members' health will save costs in the long run."
Although health systems strongly encourage vaccination to avoid hospitalization, patients who become ill should not face any barriers—financial or otherwise—to accessing care, an American Hospital Association spokesperson wrote in an email.
"We have long been concerned that some health plans have excessively high cost-sharing, which has resulted in some individuals forgoing or delaying necessary medical care," the AHA spokesperson wrote. "This avoidance of care can not only result in worse health outcomes for an individual, but it also can increase the spread of the virus across communities."
Given that Black and Brown people have been the most disproportionately affected by COVID-19 and are more likely to have lower income levels due to systemic inequity, increasing their healthcare costs is problematic and won't bring the pandemic to an end any sooner, said Michael Gusmano, research scholar at the Hastings Center.
"Refusing to waive cost sharing for treatments once you become ill is unlikely to be effective at increasing vaccination rates," Gusmano said. "It's wrongheaded from an ethical perspective, because you're blaming [people] for things for which there are larger structural and political explanations."
Even though insurance companies' cost-sharing strategies align with public health goals, workplace vaccination mandates, aggressive education strategies and positive financial incentives to prevent severe illness, hospitalization and death would be more effective and ethical, Gusmano said.
"I don't believe in punishing people because they have made poor decisions with regard to vaccination that have been driven by fear and in many cases by overt manipulation," Gusmano said. "We have to double our efforts to understand why people are hesitant and to reach people who are just frightened [but] open minded."
