A severe COVID-19 pandemic could cost health insurers in the U.S. more than $90 billion in medical claims, according to analysis from S&P Global Ratings.
S&P analysts looked at two scenarios: a severe pandemic and a moderate one. Under a severe scenario, 4 million people would be hospitalized compared with nearly 1 million in the moderate scenario. The pandemic stress tests looked at the 170 million people with private insurance.
Insurers would see medical claims costs rise 3 percent to 4 percent in a moderate morbidity scenario, which would be manageable by most insurers, according to the analysis. However, a severe morbidity scenario could lead to a 10 percent to 12 percent jump in medical claims costs, which would result in insurers reporting losses and needing to use capital buffers to cover the increased claims.
Under both scenarios, hospital costs made up the bulk of total costs. For a severe pandemic, hospital costs made up $80.4 billion of the $93.1 billion in total costs. Under the moderate scenario, hospital costs would be roughly $17.6 billion and total costs would be $30.4 billion.