Insurers should transfer premium dollars to hospitals on front lines of pandemic, scholars argue

Health insurers should direct premium dollars to providers who are on the front lines of the COVID-19 pandemic now, two academics wrote in an op-ed for the Harvard Business Review.

Extra funds from the reduced costs of elective care that has been canceled or suspended should be funneled into the healthcare system, Sean Nicholson, PhD, an Ithaca, N.Y.-based Cornell University professor, and David Asch, MD, a professor at the University of Pennsylvania in Philadelphia, wrote.

The scholars argue that health insurers have already budgeted and collected premium money, and should pay it upfront to hospitals that are currently facing financial strain from elective cancellations. They suggest while the pandemic continues, private and government insurers should send each in-network provider on the first day of each month a 12th of the total amount the insurer paid the provider in 2019.

"This is not a loan to keep those hospitals afloat. Nor is it an advance payment for care that will be delayed. This is payment today for the services these hospitals are providing today," the authors write.

They acknowledge the health insurance industry will face its own financial hardships during the outbreak. A severe COVID-19 pandemic could cost health insurers in the U.S. more than $90 billion in medical claims, according to an analysis from S&P Global Ratings. Fitch Ratings also predicts U.S. health insurers will see their profitability and debt service metrics weaken as claim costs associated with COVID-19 testing and treatments, including hospitalizations, grow. Still, the economists argue health insurers are more resilient than their hospital counterparts. 

More articles on healthcare finance:
CMS provides reporting exemptions for Medicare payment programs
Trump signs $100B coronavirus relief plan: 5 things to know
Hospitals face financial fallout from COVID-19: 6 things to know

© Copyright ASC COMMUNICATIONS 2020. Interested in LINKING to or REPRINTING this content? View our policies by clicking here.

 

Featured Webinars

Featured Whitepapers