OREANDA-NEWS. The arrival of the Zika virus in the United States punctuates the need for health insurers to be vigilant in developing pandemic preparedness plans to respond to new health risks, according to a new A.M. Best special report. About two dozen cases of the virus have been confirmed in Florida via local mosquito transmission, and nearly every other U.S. state has reported cases as well.

The Best’s Special Report, titled, “Spread of Zika Virus Brings New Risks and Uncertainties to Carriers and the Insured,” notes that health insurers with a concentration of membership in Florida could be exposed to medical expenses for treating individuals who contract the virus. Florida has the third largest combined membership of the three major business lines—commercial, Medicare and Medicaid. Insurers with significant Medicare and Medicaid business could be impacted disproportionately because the most severe medical complications from the virus impact pregnant women, newborns and the elderly. The current Florida cases are geographically concentrated in a small region north of Miami. A.M. Best is monitoring insurers with larger concentrations in the southern United States, especially smaller regional insurers.

The full health impact related to the Zika virus is still being researched, as well as how the virus is transmitted. Nevertheless, catastrophic cases of newborns with severe birth defects and, in some cases, deaths have occurred.

In states that have not expanded Medicaid, many adults and families fall into a “coverage gap” of having incomes above Medicaid eligibility limits but below the lower limit for marketplace premium tax credits. Unfortunately, 89% of the population that falls within the coverage gap is located in the southern United States, the prime area for the spread of Zika. Furthermore, of the 20 states where the mosquitoes, which can transmit Zika, are present, half have not expanded Medicaid and have an average uninsured rate of 13%, compared with 9% for those states that have expanded Medicaid. If the spread of the virus increases significantly, hospital systems within non-expansion states may face an increasing level of bad debt by those falling within the coverage gap, leading to larger revenue shortfalls or patient volumes they may not be able to fully handle.