A severe influenza pandemic could cost U.S. traditional health insurers about $68 billion.
Jim Toole has given that estimate in an analysis of the potential impact of pandemic influenza on the U.S. health insurance industry. Toole prepared the analysis for the Society of Actuaries, Schaumburg, Ill.
Toole considered a moderate pandemic that would cause 209,000 U.S. deaths and a severe pandemic — comparable to the 1918 pandemic — that would cause 1.9 million U.S. deaths.
Typical seasonal flu costs traditional health insurers an average of about $4.5 billion per year, and a moderate pandemic might cost insurers about $13 billion, Toole estimates. In a severe pandemic, about half of the $68 billion in total costs would be due to hospital bills for patients who recovered and about half due to bills for patients who died, Toole says. He believes net claims for a severe pandemic could amount to $38 billion.
Major medical insurers have about $80 billion in capital and surplus, and net claims from a severe pandemic would reduce their capital about 50%, Toole says.