I tried searching for reports on reserves for some of the big health insurance companies and I had trouble finding them. If I understand how most insurance companies operate, they take in premiums, invest those premiums in bonds and equities to generate returns and use those funds to pay claims that are filed by their customers.

With the stock market crashing and the bond market in turmoil and the potential for insurance claims to soar as people get sick, is this the perfect trifecta to crash the health insurance market?

According to this news report, a woman who got coronavirus and was treated, ended up with a $35,000 bill. The report doesn’t offer too many details but if that is the average bill and health insurance companies end up getting inundated with 100,000 claims then that’s a staggering $3.5 billion per 100k claims. If we end up with 1 million sick that’s $35 billion and 10 million sick, it’s a whopping $350 billion.

So are health insurance companies even solvent at this point? I don’t know the answer to that question but it is frightening to think that the health coverage I think I have may not even be there if I need it.

Plan accordingly. Stay home and stay healthy.