COVID: How insurers may be expected to cover testing costs

Chris Meekins, Raymond James Healthcare Policy Analyst, joins Yahoo Finance Live to discuss how private insurers are approaching COVID-19 test costs and the Biden administration's testing plan amid the spread of the Omicron variant.

Video Transcript

- Welcome back. The White House has announced expanded coverage for COVID-19 testing. Starting later this week, insurance companies and health plans will be required to cover eight free over-the-counter at-home COVID tests per person per month. For more, we're welcoming in Chris Meekins, Washington health policy research analyst, at Raymond James. Chris, thank you so much for joining us.

And for many families having to purchase multiple COVID-19 tests per month, to test to go to school or to work has gotten extremely costly. How much of a burden does this new testing coverage policy lift for these individuals? And is eight tests enough?

CHRIS MEEKINS: The reality is that it probably doesn't move the needle, to be honest with you. I think there are some families that are going to be willing to put out the money upfront and submit to insurers to get reimbursed for these tests. But there are a lot of caveats in what they did.

So they set up to eight tests a month per person. Insurers have to cover. They can reimburse up to $12 per test. They have an option to do more. The insurers are encouraged to partner with someone like, let's say, CVS, a Walgreens, Rite Aid, Walmart, so that individuals don't have to pony up that money initially.

But they're not required to. So if you're an insurer, and you're worried about trying to limit your cost per person, you're probably not going to lean into this to make this as easy as is humanly possible for individuals, going forward. So I think it's one of these things out of DC that sounds good and people might be encouraged by. But from a functional standpoint, to the companies that will have to cover this as part of the market, I think there's a reason insurers were up today.

- I'm trying to wrap-- I think a lot of us are trying to wrap our minds around how this is going to work. On one hand, you see stories every day-- lines, lines, lines to go get a test. I got to tell you, I'm in New York City. Every frickin' corner, there's a free PCR test, no line. You can schedule with Clear M.D. and get a PCR test, and you get the results within 48 hours.

What is going on? Is this a total misfire on the part of the administration to try and get us to do in-home testing and having the insurance companies pay for it? Shouldn't we just, like, flood the market with the PCR, the free PCR tests?

CHRIS MEEKINS: I think PCR is an option. But I do think, when you look at a lot of parts of the country, where there's not as much accessibility to PCR tests, what you're seeing is at home can be a way to alleviate some of that [INAUDIBLE] in other parts. So what we've seen with the administration is initially, in early December, they said, oh, insurers are going to have to cover it. That's going to solve the problem.

Then as Omicron really ramped up, they said, no, no, we're going to buy 500 million tests. And we just learned today in testimony before the Senate Health Committee that the administration has only procured about 50 million of the 500 million they say they're going to buy and then allow people to request and send to their homes for free. So I think we're just in a situation where the administration kind of got caught behind the eight ball with both the Delta wave, that we all knew was going to come in the winter, and then this new variant Omicron and really were not prepared for that. And now they're trying to make up lost ground, going forward. The reality is most of these changes are going to be put in place probably at a time when we've already turned the corner from Omicron, which we think, in most parts of the country, is going to be in the next few weeks.

- So Chris, to that point you wrote in your notes to us that the Biden administration's latest actions are unlikely to make a difference in combating the current spread. What more do you think needs to be done at this point, if anything, to actually have that impact?

CHRIS MEEKINS: Yeah, there's very little you can do in the next two or three weeks, right? Which is we've got Omicron peaking across the country. We're three times the highest level of cases average per day being identified than at any point previously in the pandemic. Hospitalizations are now reaching the lowest we've seen in the pandemic, as well, with people with COVID in the hospital, going forward. So there's not much you can do in the next couple of weeks other than encourage people to hunker down and test themselves regularly, if they have access to it, and try to avoid people for the next few weeks.

I think over the longer term, we need to accept the fact that this is not the last variant we're going to see. There will be more. And I would expect to see an uptick in the summer in the South.

And so we can prepare and take steps that we should have been taking all along. One step, Senator Sanders proposed it today. It would have been nice earlier this year, but better late than never, just saying individual N95 or KN95 masks, every American, as long as in addition to at-home test, if you get these things to individuals and make it easy for them, especially for lower-income Americans, we'll probably see a decrease in the potential impact of future surges.

- When we look at the insurance companies and the-- the hit to their bottom lines, since they are for profit, from COVID, is it going to be big, or is it really quite minuscule, when you're talking about an industry, the health care industry, that's in the multi-trillions of dollars?

CHRIS MEEKINS: I mean, it matters. I think it mattered earlier with Delta. We saw, no question, with individuals, and you had greater hospitalizations, greater individuals in the ICU. I think what we're seeing now is, when you have an increase in COVID cases, you're seeing on the flip side, a decrease, in some instances, of elective surgeries for individuals. So it's a bit of a wash.

So the early days of COVID, they saw dramatically lower costs. Last year, they saw higher costs, which got some people in trouble with their medical loss ratios. And so I think going forward, they found a way to balance it in a more effective way for the market.

I think what we've seen with the insurers is this testing requirement isn't going to move the needle in a meaningful way, in my opinion, not going to impact earnings, going forward. And I think we're getting to a point where hospitals and others, once we get through Omicron and the big staffing shortages and others, once we get through that, I think we're going to get on a more sustained endemic approach to this, going forward. It's just a matter of getting through the next month or six weeks.

- Well, and Chris, from a behavioral standpoint for consumers and for the American public, when do you think people will start responding to new variants and waves as though COVID is endemic, rather than as a pandemic? And what might that actually look like, once we get to that sustained path that you're talking about?

CHRIS MEEKINS: That's such a great question, Emily. And the reality is, most of the American public are already-- 56% of Americans, according to recent polling, have said they believe COVID should be treated like an epidemic. Less than 1 in 3 say it should be treated like an emergency. There was a recent AP poll just out this week, where what should the government focus most on in 2022? COVID didn't make-- only made the top 5 issues for 1 in 3 Americans, at this point in time.

So the American public is really over this. What we need to do, and policymakers need to focus on, is preparing people, so that when they see additional waves, they have the tools necessary to be responsible-- at-home testing; allowing, encouraging people to wear high-quality masks when they're in groups of people; and just adjusting behavior. So they know, OK, things are starting to get bad. I need to change what I do a little bit, compared to what otherwise I would go about living my life as though nothing was going wrong.

So the reality is, we're moving toward that direction. The public is already there. Policymakers are a little behind. Now it's just giving them the tools, so they can be responsible when we see additional case counts go up, going forward.

- All right, we'll leave it there. Chris Meekins is Washington health policy research analyst, at Raymond James. And we thank you so much for your time.