As the Covid-19 pandemic has upended business and healthcare systems around the world at alarming speed, healthcare companies are at the epicenter of management and response. Payers are working in overdrive to do the right thing for their employees, customers and communities while adapting their operations to a rapidly shifting landscape. Payers will play a critical role throughout the crisis to ensure patients get the care they need. Here we outline the most significant implications of Covid-19 for payers and offer an action plan to support business during this challenging time.

Implications of Covid-19 for payers

In an overstrained clinical environment, most non-Covid patients will have challenges gaining access to care. From a financial standpoint, payers will face significant pressure on their medical loss ratios. That shift will be offset by a severe decline in high-cost elective surgeries. Payers need to plan for potentially rising costs linked to longer-term respiratory conditions resulting from coronavirus infections. And Covid-19 strains may recur over time, extending pressure on medical loss ratios over time.

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The economic impact of Covid-19 will also have indirect effects on payers’ financial performance. A recession will reduce already-limited commercial growth, and state budget constraints could limit Medicaid managed care payments. The sharp decline in equity markets and lower interest rates may also impose new constraints on risk-based capital.

Finally, the pandemic is a catalyst for increased health awareness globally. In emerging markets such as China, we already see a significant rise in insurance penetration above and beyond the levels that followed previous pandemics such as SARS.

Near term

• Remove barriers to Covid-19 testing and treatment (such as co-payment) to ensure access for all members—a step many payers already have taken.
• Encourage the use of telemedicine for remote care to protect patients and healthcare providers.
• Communicate with members and pledge support. Enroll members in communication platforms such as online portals and apps to reduce their sense of isolation and build loyalty.

Longer term

• Invest in digital technology to connect with members. Offer to serve as first point of outreach for health-related incidents and crises.
• Integrate telemedicine more consistently in plans.
• Develop innovative commercial products to address evolving consumer needs during a downturn.
• Identify gaps in capabilities and consider mergers and acquisitions in care management and healthcare services.
• Automate processes to reduce administrative costs, including those resulting from previous acquisitions.
• Prepare for growing demand for health coverage in emerging markets as the Covid-19 pandemic increases health awareness among previously uninsured patients.

The healthcare industry faces unprecedented challenges as Covid-19 upends traditional health norms. Payers that make the right decisions now will play a critical role in helping their members with prevention and treatment. That in turn will deepen loyalty and strengthen the business to meet the demands of this crisis and beyond.

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Joshua Weisbrod is the leader of Bain & Company’s Healthcare practice in the Americas. Vikram Kapur is the leader of Bain’s Healthcare practice in Asia-Pacific

The authors wish to thank Tim van Biesen, leader of Bain’s Global Healthcare practice, and Loïc Plantevin, leader of the firm’s Healthcare practice in Europe, the Middle East and Africa, for their contributions to this article.