State Mitigation of COVID-19 Related Costs

health-affairs-logoOn April 25, 2020, Health Affairs published a piece by one of the editors of Health Policy News, entitled “States Should Act Now To Mitigate Commercial Insurance Costs Associated With COVID-19[1].

The piece focuses on actions states can take to potentially mitigate costs associated with COVID-19—specifically, examining the impact that COVID-19-related health insurance expenditures in 2020 will have in 2021 and discussing how states can work with health insurers to protect the individual and small group health insurance markets during this turbulent time.

The simple steps states can take now to engage with health insurers include:

Engaging with Carriers

Regulators can engage with insurers on a number of topics and action items to ensure timely review of Plan Year 2021 rates and form filings—for example:

  • Health insurer predictions on how much COVID-19-related care, as well as delayed medical services, will carry over into Plan Year 2021.
  • The ability of health insurers to submit accurate rate filings in accordance with state and federal timelines.
  • Scheduling discussions with insurers in all markets, including Medicare Advantage, around any solvency concerns due to the costs of care and losses occurring in Plan Year 2020.

Market Stabilization Measures

Although the timing may be tight for operation of a Plan Year 2021 market stabilization effort, states should start laying the groundwork for Plan Year 2022 by exploring the best approach to ensure a healthy marketplace moving forward. One idea detailed in the Health Affairs article is for states to examine the feasibility of a Section 1332 State Relief and Empowerment Waiver[2] to address any potential large rate increases in response to the COVID-19 pandemic. For example, states could use this type of waiver to establish a reinsurance as a way to reimburse issuers for high cost claims, targeting COVID-19 claims in particular.

As noted in the piece, most states will receive initial rate filings in a matter of weeks, and have already begun review of form filings in order to meet the initial transfer deadline set forth by Centers for Medicare and Medicaid Services. The impact of COVID-19 and pent up demand for healthcare services will become more apparent as regulators dive into the details of plan and rate filings. States should use this time to connect with insurers operating in all markets (large, small, individual, and self-insured) to understand the modeling they are using to develop rates and gauge their interest in a market stabilization program.


[1] “States Should Act Now To Mitigate Commercial Insurance Costs Associated With COVID-19, ” Health Affairs Blog, April 25, 2020.DOI: 10.1377/hblog20200422.991599

[2] For more information on 1332 Waivers, please consult our previous work on this topic:

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