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Insurance premiums to spike in 2021 because of COVID-19, report forecasts

The cost of COVID-19 testing and treatment is likely to squeeze U.S. health insurers' profits, which could lead to higher premiums in 2021 (Source: “COVID-19 could prompt higher 2021 insurance premiums, benefit cuts,” Modern Healthcare, March 23, 2020).

A new report from Covered California, the state's Affordable Care Act marketplace, projected that commercial insurers and employers across the United States could face a $34 billion to $251 billion bill for coronavirus testing and treatment this year. Their best estimate is $103 billion.

Absent any federal action, those costs could prompt commercial health insurers to increase premiums between 4% to 40% in 2021 to make up for increased medical claims and stay solvent, according to the report.

The report by Covered California's chief actuary John Bertko focuses on costs for the commercially insured, which includes about 170 million Americans who receive coverage through their jobs and the individual market. It doesn't address the separate and likely significant costs to Medicare, Medicaid or other public programs, though Bertko said those costs would be "huge."