COVID-19 Impact on Health Insurance Sector in Healthcare Industry
Similar to different sub-sectors of the healthcare industry, the novel strain of Coronavirus named COVID-19 has impacted the health insurance industry as well. The sudden threat of increase in medical expenses shooting up has impacted a significant share of patients. As a result, the health insurance sector is also striving to come up with products to meet the requirements for COVID-19 specific policies.
The pandemic has augmented the market for digital health products and hence, health insurance providers are also focusing towards seamless app/web based processes. As the demand for health insurance is expected to increase post recovery, companies are focusing towards cost efficient processes to ensure greater productivity. This will lead to higher degree of centralization of health insurance claims and functions of policy administration.
In the wake of the pandemic, health insurance providers across the U.S. are widening coverage and giving their policyholders greater access to health care facilities.
Patient cost-sharing with COVID-19 medical assessment programmes offered by employer-sponsored community insurance benefits has been abolished by the government. This has been implemented as part of the Families First Coronavirus Response Act signed on March 18, 2020 as the second major legislative initiative.
Moreover, many health insurers have waived the co-payments and customer cost-sharing for Coronavirus treatment including hospitalization. These waivers and reductions in patient out-of-pocket costs are expected to benefit not only the policyholders but the healthcare providers as well. They will benefit as the burden of billing is reduced.
The private insurance policies consistent with the Affordable Care Act are a big private health benefits programme in the U.S. The nation has numerous forms of private health care policies available.
TABLE 1. ATTRIBUTES OF FOUR TYPES OF HEALTH PLANS
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OFF-EXCHANGE MAJOR MEDICAL PLANS
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QUALIFIED HEALTH PLANS
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CATASTROPHIC PLANS
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GAP (SHORT-TERM) PLANS
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Start of Coverage
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Within 45 Days
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Within 45 Days
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Within 45 Days
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Within 2 Weeks
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Tax Penalty for Previous Year
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No
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No
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No
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Yes
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Application Decline for Pre-Existing Conditions
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No
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No
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No
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Yes
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ACA Benefits
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Yes
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Yes
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Yes
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No
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Government Subsidy
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No
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Yes
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No
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No
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Purchase on State Exchange
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No
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Yes
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Yes
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Typically No
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EXPANSION OF TELEHEALTH SERVICES
Several routine healthcare services are currently available to patients through telehealth only due to the outbreak of COVID-19. Telehealth has become necessary for many providers and important for others to increases provider capacity. The growth of telehealth is during the pandemic is primarily due to need for safety of both patients and healthcare providers by reducing or avoiding in-person appointments.
For non-COVID-19 health problems that lead to greater telehealth acceptance, several health care providers eliminate all co-payments and deductibles for telehealth facilities.
Telehealth is being promoted as a saving measure by insurers as they are expecting that the expansion of telehealth will help reduce the cost of claims. As telehealth access improves, notably due to the decreased routine office visits as a result of COVID-19, telehealth promotion would increase the experience of patients with this form of delivery of treatment. This will help in broadening the customer base by increasing the patients’ base even after the COVID-19 crisis has receded.
INCONSISTENCY IN INSURANCE PREMIUMS PAYMENTS
Several states have allowed individuals and businesses to defer the payment of insurance premiums for a period time through legislation. For instance, the State of Connecticut enabled allowing for a 60-day deferral of insurance premiums for individuals and businesses impacted by COVID-19. The enactment definitely has certain terms and conditions that the policyholder must abide to, but this is negatively impacting the insurance companies.
The delay in payments of premium will reduce the cash inflows of insurance companies while they are attempting to accelerate claim payments to healthcare providers amid the pandemic.
Health insurance policy cancellations are also anticipated to increase during the outbreak of the Coronavirus as a result of increased unemployment and the overall economic downturn. The cancellations of large number of insurance policies will also place an additional burden on the healthcare system with increased number of uninsured patients. Different acts including the Coronavirus Aid, Relief and Economic Security Act will aid businesses retain employees through funding, increased policy cancellations will negatively impact insurance companies.
CONCLUSION
The demand for health insurance is expected to see a rise in the coming months amid pandemic. However, the long term demand will also stay unaltered due to the benefits of health insurance. The existing market leaders holding major share in the market that are cash rich and have strong strategic teams will be least impacted. However, for a brief duration, the supply chain of health insurance will be impacted due to restrictions on movement of goods and equipment. However, as the situation eases, the sales will bounce back. Taking the right steps will help the companies to exhibit planning and demonstrate stability to the end users.
