Covid-19’s Effects on Health Insurance: Experiences of Insureds and Insurers

Covid-19 has had sweeping effects across the world, as worldwide, 3.5 million people have died.[1] An estimated 591,000 of these deaths occurred in the U.S.[2] Future impacts on health insurers and insureds are uncertain and difficult to project. While economists are aiming at a moving target, the pandemic will have an estimated 4.5 percent GDP loss, equating to ~3.94 trillion dollars lost in global economic output.[3]

What are the effects to date on health insurance and insureds in the U.S.? While the data is still being collected and analyzed, here is what we know so far:

Effect on Insureds

  • “Although employment rates fell by 6.2% from March to September 2020, enrollment in the fully-insured group market decreased by just 1.5% over the same period.”[4] Approximately 2 to 3 million people may have lost their employer sponsored health coverage (according to the authors, this is a very rough estimate because it does not include self-insured employer data).[5]
  • Because many employees who lost jobs qualified for Medicaid or could purchase individual market health coverage, there was an increase in enrollment in both. Medicaid saw an increase in enrollment by 4.3 million people from February through July 2020 and enrollment in managed care plans increased by about 5 million from March to September 2020.[6]
  • Insureds utilized telehealth services at a significantly greater rate. Private health care claims for telehealth services increased from .15% in April 2019 to 1% in April 2020.[7] The increase in telehealth utilization did not offset the decrease in in-person doctor visits.[8] There was pent up demand for routine services going into 2021.

Effects on Insurers

  • UnitedHealth Group’s net income nearly doubled during the second quarter increasing from $3.4 billion in 2019 to $6.7 billion in 2020. And Anthem Inc.’s net income more than doubled over that same time going from $1.1 billion to $2.3 billion.[9] This performance was caused by a reduction in utilization (i.e. individuals not seeking routine care or elective surgeries).
  • Health insurers will likely owe significant Medical Loss Ratio rebates under the Affordable Care Act[10] (which will be fully rebated in 2023), as they can only retain 15 or 20% of the premiums for administration and profit.[11]
  • Insurers are facing the following challenges arising out of Covid-19’s disruptive effect:
  • Planning around the actuarial uncertainty arising from uncertainty of enrollment. This uncertainty is leading to insurers’ difficulty setting premiums and service prices. [12]
  • Determining whether and how to adapt their benefit structures. For example, insurers may incentive employers to increase cost-sharing to control the anticipated increase in medical spend.[13]

While this data is interesting, there is not enough data yet to predict what is going to happen 3-5 years down the road. While the surveys and research start to trickle in, we are completely missing data from a key source — self-funded employers. Employees insured by self-funded plans made up 67% of all insured employees in 2020.[14] We simply do not know what that data will show — has their been a decrease in covered employees, has the coverage changed, what was the financial impact on self-funded employers, etc. Additionally, insurers appear to be taking a wait and see approach, as they evaluate data from 2020 and are looking to see what happens in 2021.

The fallout from Covid-19 (which is ongoing) is not clear yet and it will likely be a while longer before we realize the range of effects.





[4] How Has the Pandemic Affected Health Coverage in the U.S.?, Daniel mcDermott, Cynthia Cox, Robin Rudowitz, Rachel Garfield, Dec. 9, 2020 ( )

[5] Id.

[6] Id.


[8] Id.

[9] Unexpected Health Insurance Profits and the COVID-19 Crisis, Caroline Plotts, MS, Allen B. Kachalia, MD, JD, Joshua M. Sharfstein, MD, JAMA Health Forum, Aug. 27, 2020 (

[10] How have health spending and utilization changed during the coronavirus pandemic?, Cynthia Cox, Krutika Amin, Rabah Kamal, March 22, 2021 (

[11] See, Unexpected Health Insurance Profits and the Covid-19 Crisis.


[13] Id.