Coronavirus Out-of-Pocket Healthcare Spending May Exceed $1,300

March 23, 2020 - Since the beginning of the pandemic, healthcare stakeholders have guessed that overall and out-of-pocket healthcare spending for coronavirus treatment will be high. But now researchers from the Peterson-Kaiser Family Foundation Health System Tracker have confirmed that suspicion.

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The Families First Coronavirus Response Act made some headway in ensuring universal coverage for coronavirus testing, lowering healthcare spending for patients and healthcare stakeholders.

However, notable gaps remain in covering treatment, leaving patients and employers wondering what their overall coronavirus-related costs will be.

To identify potential costs of coronavirus treatment, researchers with the Peterson-Kaiser Family Foundation Health System Tracker compiled the total costs of pneumonia treatment, which, like COVID-19, is a respiratory disease.

The researchers tracked costs for three diagnosis-related groups: one group with no comorbidities or complications, one with complications or comorbidities, and one with major complications or comorbidities.

The researchers found that, generally, the employer and patient in the most costly group—pneumonia patients with serious complications or comorbidities—saw a wide range of potential costs. The twenty-fifth percentile paid $11,533 and the seventy-fifth percentile paid $24,178. 

Thus, while the average cost for someone with serious complications was $20,292, the actual costs could be a little over half that price, depending on the patient and her condition.

For those with less serious complications, the cost was closer to $13,767 and those with no complications or comorbidities paid on average $9,763 for treatment.

Next, the researchers outlined how much of those costs fell on employees and how much was covered by their employer-sponsored health plan. Employee costs encompass deductibles, copays, and coinsurance.

Most employees (82 percent) have a deductible. On average, the typical employer-sponsored health plan deducible is nearly $1,400. For pneumonia patients without complications, the out-of-pocket healthcare spending for pneumonia was $1,464—meaning that the patient would shoulder approximately 95 percent of the healthcare costs.

That being said, while $1,400 may be the average deductible for large health plans, many patients have higher deductibles, with the seventy-fifth percentile paying over $2,000. Small businesses and the individual market can have even higher deductibles.

Furthermore, because the pandemic hit the US in the first quarter of the new plan year, coronavirus will be the first medical bills that most patients have on their deductible—meaning that they will likely have to pay the full deductible to cover their coronavirus-related healthcare spending.

On average, the researchers found that coronavirus patients can expect to see around $1,300 out-of-pocket healthcare spending or more. However, given the potential for higher deductibles and the timing of this pandemic, the costs could be far higher.

Another factor which could aggravate patients’ out-of-pocket healthcare spending on coronavirus, is surprise billing.

Congress has been hammering out a solution to surprise medical billing for years, with industry stakeholders’ interests often standing in the way of a final compromise.

In February, before the community spread of coronavirus accelerated in the US, proposals in the House and Senate were moving forward and offered hope of nearing a resolution.

However, the resolution did not come in time for the pandemic. 

As a result, the 18 percent of pneumonia patients with major complications or comorbidities who receive out-of-network charges could translate to a similar percentage for coronavirus patients, Peterson-Kaiser Family Foundation researchers suspect.

Even patients who receive treatment at an in-network facility can experience surprise billing. Fifteen percent of patients treated at in-network facilities are billed for out-of-network treatment.

“Medical costs are already a common concern in the U.S., particularly for people without insurance, those with high deductibles, and those in worse health,” the researchers concluded.

“In the context of the COVID-19 pandemic, it is of even greater concern, as many people could be incurring high out-of-pocket costs, at a time when there is also risk of a recession. The pandemic could add more costs to the healthcare system, employers, and insurers as well, though that will depend on how many people are infected and how many become seriously ill.”