Americans keep hearing that it is important to test frequently for COVID-19 at home. But just try to find an “at-home” rapid COVID test in a store and at a price that makes frequent tests affordable.
Testing, as well as mask-wearing, is an important measure if the country ever hopes to beat COVID, restore normal routines and get the economy running efficiently. To get Americans cheaper tests, the federal government now plans to have insurance companies pay for them.
You can either get one without any out-of-pocket expense from retail pharmacies that are part of an insurance company’s network or buy it at any store and get reimbursed by the insurer.
Congress said private insurers must cover all COVID testing and any associated medical services when it passed the Families First Coronavirus Response Act and the Coronavirus Aid, Relief and Economic Security, or CARES, Act. The have-insurance-pay-for-it solution has been used frequently through the pandemic. Insurance companies have been told to pay for polymerase chain reaction tests, COVID treatments and the administration of vaccines. (Taxpayers are paying for the cost of the vaccines themselves.) It appears to be an elegant solution for a politician because it looks free and isn’t using taxpayer money.
1. Are the tests really free?
Well, no. As many an economist will tell you, there ain’t no such thing as a free lunch. Someone has to pick up the tab. Initially, the insurance companies bear the cost. Cynthia Cox, a vice president at KFF who studies the Affordable Care Act and private insurers, said the total bill could amount to billions of dollars. Exactly how much depends on “how easy it is to get them, and how many will be reimbursed,” she said.
2. Will the insurance company just swallow those imposed costs?
If companies draw from the time-tested insurance giants’ playbook, they’ll pass along those costs to customers. “This will put upward pressure on premiums,” said Emily Gee, vice president and coordinator for health policy at the Center for American Progress.
Major insurance companies like Cigna, Anthem, UnitedHealthcare, and Aetna did not respond to requests to discuss this issue.
3. If that’s the case, why haven’t I been hit with higher premiums already?
Insurance companies had the chance last year to raise premiums but, mostly, they did not.
Why? Perhaps because insurers have so far made so much money during the pandemic they didn’t need to. For example, the industry’s profits in 2020 increased 41% to $31 billion from $22 billion, according to the National Association of Insurance Commissioners. The NAIC said the industry has continued its “tremendous growth trend” that started before COVID emerged. Companies will be reporting 2021 results soon.
The reason behind these profits is clear. You were paying premiums based on projections your insurance company made about how much health care consumers would use that year. Because people stayed home, had fewer accidents, postponed surgeries and often avoided going to visit the doctor or the hospital, insurers paid out less. They rebated some of their earnings back to customers, but they pocketed a lot more.
As the companies’ actuaries work on predicting 2023 expenditures, premiums could go up if they foresee more claims and expenses. Paying for millions of rapid tests is something they would include in their calculations.