Amid one of the worst public-health crises in history, a record number of Americans are without health insurance.

A severe coronavirus pandemic in the U.S. could cost the nation's health insurers roughly $90 billion in medical claims, leading to losses that could force some insurers to tap into reserves to pay those costs, according to a new analysis from S&P Global analysts.

The analysts calculate that under a more moderate scenario, COVID-19 medical costs would top $30 billion. The impact of a moderate outbreak would be in line with a very strong flu season, which would pressure profits, but not result in a loss.

"The key difference is saying how many people end up in a hospital … in the hypothetical severe scenario we are looking at about 4 million people in a hospital, whereas in a moderate scenario we're looking at about a million people," explained Deep Banerjee, lead insurance analyst at S&P Global Ratings.

The analysts modeled a pandemic stress test, looking at the 170 million people covered under the insurers' Medicare Advantage, small employer group, and individual health insurance plans, as well as state Medicaid contracts.

They estimated that roughly 50 million people in these plans would become infected. While the majority would not require major medical care, the analysts calculate outpatient claims for doctor visits and testing would top $12.75 billion under both a moderate and a severe outbreak.

The estimated hospitalization costs would be the key variable. Costs would near $18 billion for a moderate coronavirus outbreak, which would be comparable to a severe flu season, while a severe coronavirus pandemic could see hospital costs balloon to $80 billion.

The impact on insurers' profits would also vary considerably. A moderate outbreak could increase medical costs by 3 to 4 percentage points; that would mean about 90% of revenues taken in from premiums would be spent on claims. A severe outbreak would push medical costs to about 97 percent of insurance revenues, and would result in a loss after factoring in administrative costs.

The financial impact could also be substantial for consumers who become infected with the virus and seek treatment.



"Right now what we are assuming is that more and more insurers will bear the costs of cost-sharing for testing, but not necessarily for the treatment," said Banerjee.

S&P estimates that Americans on insurer plans could wind up paying $3.5 billion in out-of-pocket costs collectively under a moderate outbreak scenario, for hospital stays and doctor visits beyond initial testing. Under a severe outbreak, patient out-of-pocket costs could top $16 billion.

How much individuals would pay out-of-pocket depends on where they live, and their individual plans. Many self-insured employer plans have not yet declared whether they will pay for initial testing costs.

In Seattle, which has been hard hit by COVID-19, out-of-pocket costs for an urgent care visit range from $96 to $324 for workers who have not met their deductibles, according to Castlight Health, an employer health benefits platform.

While cost-sharing for flu lab tests range from $5 to $154, it's not clear what the price is for the newly available commercial tests for coronavirus in the area.

One independent lab in the Seattle area is billing $200 for the COVID-19 test, said Ali Diab, CEO of Collective Health. But he notes that pricing in a hospital or other facility "could well be several times that amount, based on cost variances we have observed for other lab tests."

The S&P Global estimate did not include medical costs for self-insured large employer plans, seniors on traditional Medicare, or for the care of uninsured patients which would be born by hospitals or the government.

They calculate that under a severe pandemic, the potential number of people needing hospitalization would double to nearly 8 million nationally, numbers which would overwhelm the nation's hospital system.