Estimated Cost of Treating the Uninsured Hospitalized with COVID-19

The three COVID-19 stimulus bills Congress passed provide additional funding for hospitals and for free coronavirus testing for the uninsured through Medicaid. While Congress did not appropriate any money specifically for COVID-19 treatment or coverage for the uninsured, President Trump has declared his intention to reimburse hospitals for treating the uninsured by utilizing new $ $100 billion in funding for hospitals and other health care entities included in the third stimulus, the coronavirus aid, relief and economic security (cares) act. the legislation provided few details about how the funds would be distributed, giving significant discretion to the secretary of health and human services.

To date, few details have been released about the new policy to cover COVID-19 treatment costs for uninsured patients, but administration officials have said hospitals would be reimbursed at Medicare rates. , which are substantially lower than the prices paid by private insurers. . The administration has not provided any cost estimates for this new policy, other than to say that the funding will come from the $100 billion in care law. How much of that funding will be used to pay for care for the uninsured is an important part of thinking about the implications of this policy. In this roundup, we estimate a range of costs to reimburse hospitals for COVID-19 treatment for the uninsured and discuss some remaining questions about the Trump administration’s new policy.

Reading: How much does covid treatment cost without insurance

estimate the cost of hospital care for covid-19 for people without insurance

There is still much uncertainty around how the covid-19 epidemic will evolve, including how many people will become infected and how many will become seriously ill and require hospitalization. therefore, we present a variety of cost estimates for the trump administration’s proposal to reimburse hospitals for covid-19 treatments for uninsured patients, based on the results of recent studies and models.

Our key assumptions include:

Between 20% and 60% of people will eventually be infected with the coronavirus, according to estimates by epidemiologist Marc Lipsitch of the Center for Communicable Disease Dynamics at Harvard T.H. chan school of public health.
15% of infected people will require hospitalization, similar to that assumed in a hospital use model for covid-19 developed by the harvard global health institute.
reduced the hospitalization rate by 20% to 12% to reflect the fact that the uninsured are almost entirely under the age of 65, and therefore in many cases at lower risk of getting sick severely from covid-19, according to a model recently published in the proceedings of the national academy of sciences (pnas).
15% of all hospitalizations will require the most intensive care, including admission to an intensive care unit and use of a ventilator. This is consistent with Centers for Disease Control estimates and Institute of Health Metrics and Assessment model results.
We estimate that between 2% and 7% of the uninsured will require hospitalization for COVID-19, ranging from about 670,000 to just over 2 million hospital admissions. This range is very similar to the results (weighted by population age distribution) in the model published in the PNAS, which presents a range of hospitalization rates based on alternative assumptions about virus transmission and how many people are isolated afterwards. from the onset of symptoms.

To project how much the federal government would pay hospitals to treat uninsured patients, we looked at payments for admissions for similar conditions. For less serious hospitalizations, we use the average Medicare payment for respiratory infections and inflammations with comorbidities or major complications in 2017, which was $13,297. For more serious hospitalizations, we used the average Medicare payment for a respiratory system diagnosis with ventilator support for more than 96 hours, which was $40,218. each of these average payments was then increased by 20% to account for the add-on to medicare inpatient reimbursement for covid-19 patients that was included in the care law.1

Before accounting for the additional 20%, Medicare payments are about half of what private insurers pay on average for the same diagnoses. In the absence of this proposed new policy, many of the uninsured would normally be billed based on hospital charges, which are the non-discounted “list prices” for care and are often much higher than even the reimbursement of the hospital. private insurance.

Based on the above, we estimate that total payments to hospitals for treating uninsured patients under the trump administration’s policy would range from $13.9 billion to $41.8 billion. At the high end of the range, payments on behalf of the uninsured would eat up more than 40% of the $100 billion fund created by Congress to help hospitals and others respond to the Covid-19 epidemic. Given the uncertainty of our estimates of the total funding that will be needed to reimburse hospitals, and the fact that infections may come in several waves over the next year,2 it is unclear whether the new fund will be able to cover the costs of without insurance in addition to other necessities, such as the purchase of medical supplies and the construction of temporary facilities.

Depending on how the remaining funds are allocated, this policy could lead to more of the $100 billion fund going to hospitals in states with higher rates of the uninsured that chose not to expand Medicaid. This would leave less funding for hospitals in states with lower uninsured rates that have expanded Medicaid and, in some cases, also instituted new open enrollment periods on state exchanges. Under the Affordable Care Act, states have the option to extend Medicaid to adults without dependent children up to 138% of the poverty level, with the federal government paying 90% of the cost.

warnings and pending questions

These estimates are highly uncertain, driven in particular by uncertainty about how many people will become infected with the coronavirus. Much is still unknown about how the epidemic will evolve, which will be affected by policies such as social distancing and the extent to which the public follows them. we will be able to refine the estimates as more data becomes available.

The estimates used to calculate the number of hospitalized uninsured people are likely to be conservative, as they are based on a total of 27.9 million uninsured people based on the most recent data from 2018. That number certainly has increased, especially as millions of people have recently lost their jobs and, in many cases, their employer-provided health insurance. Many of the previously uninsured, and many of those who have recently lost their jobs, are eligible for Medicaid or premium subsidies under the Affordable Care Act.

Our average hospital cost calculations also used several conservative assumptions regarding Medicare payments. The average Medicare payment data we used was from 2017 and has not been updated for inflation or Medicare payment updates since that time. In addition, we do not take into account a likely difference in the geographic mix of COVID-19 patients compared to those previously treated under those same Medicare codes in 2017. A geographic mix of COVID-19 patients more concentrated in high-stakes areas. like new york would increase the total cost of reimbursement for the care of the uninsured. This analysis also does not take into account the temporary end of the 2% cut to Medicare that was part of the sequestration and does not take into account Medicare’s atypical payments, which provide additional reimbursement for “cases involving extraordinarily high costs.” 3

While the trump administration’s policy will provide relief to uninsured patients who become seriously ill from covid-19 and the hospitals that treat them, the amount of relief will depend on a number of implementation details that remain to be seen. they are not clear. For example, the administration statement refers to reimbursement from hospitals for care provided to uninsured patients. however, hospital physicians generally bill patients separately for the medical service component of their care, and uninsured patients may still be responsible for those bills. our analysis of private insurance claims shows that non-hospital charges for hospital admissions related to covid-19 treatment are typically around 10% of the total bill and average several thousand dollars or more for patients requiring a ventilator.

Our analysis does not take into account the likelihood that patients may also face substantial medical bills for outpatient care outside of hospitals, or the fact that this policy could encourage the uninsured to seek care in hospitals rather than from lower-cost settings where the federal government will not reimburse for your care. the uninsured will also not be covered for necessary follow-up care if that care is not provided in a hospital. Additionally, the administration has not specified whether it will cover treatment costs for patients who seek care for typical COVID-19 symptoms but ultimately test negative for the coronavirus. In addition, it is unclear whether the uninsured will continue to be required to pay cost sharing for their hospital care, although Secretary Azar stated that hospitals receiving these funds will not be able to bill patients for the difference between the Medicare reimbursement and the costs. hospital charges.4 there have been no changes to cost sharing in traditional medicare, but most medicare advantage plans have said they will waive cost sharing for covid-19 treatment,5 and all medicare patients are protected against balance billing. privately insured patients are not protected from balance billing by providers or hospitals and do not have federal cost-sharing protection, although some insurers have said they will waive cost-sharing for their fully insured plans.6 Medicaid, on the other hand, does not have cost shares for the treatment of covid-19. Ultimately, while this policy will help uninsured patients and deter them from delaying care if they develop COVID-19, it is not a substitute for comprehensive health insurance.