The wide variance in cost estimates depends upon how many people are infected by the virus, the availability of testing, and compliance with preventative measures such as social distancing.
The federal government is making available more than $100 billion to cover costs for the nation's hospitals under the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act.
That $100 billion averages about $108,000 per hospital bed. Is it enough?
Moody's Investors Service doesn’t think so, particularly if the pandemic extends for months. The rating agency called the federal aid "extraordinary" but also "unlikely to fully cover the material revenue decline facing hospitals as a result of the pandemic."
Moody's Vice President Dan Steingart said the $100 billion "provides some relief to hospitals by supporting their operations and providing access to critical supplies."
"However, it is unlikely to fully compensate the sector for the two main financial challenges facing providers as a result of the coronavirus outbreak," he said.
"The first is a material decline in revenue and cash flow as profitable elective surgeries, procedures and other services are postponed to preserve resources and avoid spreading the virus," he said. "The second is difficulty curbing expenses as surge preparation costs offset any expense reductions from postponed or canceled services."
Citing anecdotal evidence, Moody's estimates that postponed elective services will reduce hospital revenues by as much as 40% per month and strain cash flow. These reductions are occurring, Moody's said, even at hospitals and areas of the country that have not seen that many COVID-19 patients.
That's because many states have suspended nonessential hospital services indefinitely, creating uncertainty for hospitals about when they can resume providing these money-making elective services, Moody's said.
Up to $556B Over 2 Years
A study released Wednesday by America's Health Insurance Plans offers a canyon-wide estimate of the pandemic's cost for commercial health plans, ranging from $56 billion to $556 billion over the next two years.
The wide cost variance in the study, conducted by Wakely Consulting Group, depends upon how many people are infected by the virus, the availability of testing, and compliance with preventative measures such as social distancing.
Assuming a 20% infection rate among the study population, for example, Wakely estimates that more than 50 million people will become infected, with at least 5.5 million requiring hospitalization – of which 1.3 million will require intensive care, with average ICU costs per patient exceeding $30,000.
"This new data provides us with better insight to help policymakers, private sector leaders, and other stakeholders understand the investments required to successfully care for every American subjected to this life-threatening virus," AHIP President and CEO Matt Eyles said.
Wakely estimates enrollee cost sharing would average approximately 14%-18% of annual allowed costs and would range from $10 billion to $78 billion. That estimate does not take into account decisions by some payers to waive out-of-pocket costs for COVID-19 testing and treatment.
Treating the Uninsured
A study this week by Kaiser Family Foundation estimates that providing care for up to two million uninsured Americans infected with the virus could cost between $13 billion and $42 billion, consuming more than 40% of the CARES Act funding for hospitals.
The variance of the estimate is owing to uncertainty about how may people will become infected.
"Covering COVID-19 hospital costs for patients who are uninsured would give them peace of mind that their inpatient costs will be covered," KFF President and CEO Drew Altman said. "While the details are spotty, uninsured patients could still be on the hook if they test negative for coronavirus and if they receive care outside hospitals."
Altman said the KFF analysis raises questions about how the federal government will help offset the bills of uninsured patients, and whether it reimburses physicians who treat uninsured COVID-19 patients.
John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.
KEY TAKEAWAYS
Moody's estimates that postponed elective services will reduce hospital revenues by as much as 40% per month and strain cash flow.
These reductions are occurring even at hospitals and areas of the country that have not seen that many COVID-19 patients.
An AHIP-commissioned study estimates of the pandemic's cost for commercial health plans at between $56 billion to $556 billion over the next two years.
A KFF study estimates that providing care for up to two million uninsured Americans infected with the virus could cost between $13 billion and $42 billion, consuming more than 40% of the CARES Act funding for hospitals.