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Age of Coronavirus: Pandemic Exposes Health Insurance Gaps

America Remains an Outlier Among Industrialized Countries

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As unemployment claims skyrocket to unprecedented levels amid the COVID-19 outbreak, millions of Amercians suddenly are being pushed out of work – and often out of health insurance coverage.

In just three weeks, nearly 17 million Americans have filed first-time unemployment claims. Within weeks, the nation’s unemployment rate is widely expected to surge into double-digits. If the economy remains shut down for long, unemployment could approach levels not seen since the Great Depression.

With roughly half of the nation – about 156 million people – getting health insurance through their employers, industry experts say the current public health crisis could morph into a health insurance disaster. 

“There are 40 million people one paycheck away from poverty and we are going to see it playing out in real time when bills are due this month,” said Daniel Barlow, executive director of Business for Medicare for All. “People are in a crisis where they have no income and no health benefits.”

Scott Behrens, director of government relations at Lockton Cos., said there could be about 30 million people unemployed before the COVID-19 pandemic runs its course.


Weekly Unemployment Claims


source: tradingeconomics.com

To be sure, not all of those employees and their dependents will be uninsured. There are options like short-term insurance, COBRA plans, state health exchanges and Medicaid. But not everyone is eligible for these plans and some are cost-prohibitive.

Some observers say a surge in the uninsured during the pandemic could possibly change the way people view the current system. And they question the way America has historically linked health insurance with employment – unlike most other industrialized nations. 

New Reality

As an ever-increasing number of people get furloughed and fired, the federal government has made it both more and less difficult to get health care.

Notably, the Trump administration is requiring insurance to cover COVID-19 treatments and has set aside money to pay for virus-related treatment for the uninsured. The administration also changed the requirements for short-term health plans – which last a year – in 2018. The regulations made the plans more prevalent, but with less comprehensive coverage. 

The administration, however, has refused to reopen the enrollment period for Affordable Care Act (ACA) plans administered by the federal government, which includes Missouri and Kansas. The Trump administration also recently doubled down on a lawsuit filed to overturn the ACA. 

Employers and insurers are also working to ease the insurance burden. Barlow said some employers are paying for insurance premiums for at least a few months. 

A lot of clients at Overland Park’s Watko Benefit Group are undergoing about a 25 percent to 30 percent “pullback” of employees, said founding principal Greg Watkins.

Some employers are waiving employees’ costs and paying the full premiums for workers. Some are paying for COBRA. Still others are paying for plans but expect to recoup the outlay through payroll deductions after employees return to work.

Many insurers are becoming more creative as well. Watkins has seen some allowing employees who can only get part-time hours to remain insured, which is highly irregular in the industry, he said. 

State Plans

Although not all states are reopening their ACA enrollment periods, many people will be able to get on plans. Every state allows people to sign up when they have a special issue, such as a job loss.

The people who won’t be able to enroll in Kansas and Missouri without the re-enrollment period are those who opted out of plans because they didn’t think they needed it – but may be reconsidering with the current health crisis. 

According to the New York Times, Washington state had 500 people sign up for a plan after they opened enrollment in mid-March. During the first four days of the new enrollment period, 150 people signed up in New York, and 233 have signed up in Rhode Island with about 150 more currently in the enrollment process.

In spite of the Trump administration’s push to overturn the ACA, Congress has floated the idea of increasing subsidies for people in the system to help pay for premiums. 

“I hope this situation does open up people’s eyes that this option for purchasing insurance is really important,” said Ryan Barker, vice president of strategic initiatives at the Missouri Foundation for Health. “In times like this, we want as many people as possible to be covered.” 

Medicaid

With the increasing number of people losing their jobs or reducing hours, one might assume they’ll be signing up for Medicaid. But that’s not the case in Missouri or Kansas, where the income eligibility levels are some of the lowest in the nation. 

Although coverage is somewhat generous for children, non-disabled adults without children are not eligible for Medicaid in Missouri. Parents are only eligible if their income is below 22 percent of the federal poverty level, or $4,700 annually for a family of three. 

States that have expanded Medicaid under the ACA have an easier time providing coverage in this kind of situation.  

“The way the ACA was intended to work was to create seamless coverage – people would either be eligible for Medicaid or the marketplace,” Barker said. 

In states like Missouri, which didn’t expand, a gap was created. If someone’s income isn’t extremely low, they don’t qualify for marketplace subsidies, meaning they pay full price for coverage, which can be costly. Expanding Medicaid, according to Barker, would reduce the number of uninsured in Missouri by 250,000. 

Medicare for All

Employer-sponsored health insurance gained steam in the United States during World War II to help businesses attract workers during a labor shortage.

At the time, wage controls were imposed, but the National Labor Board decided insurance was not to be counted as earnings. Unions also pushed for employer-provided health insurance in contract negotiations.

Over the years, however, costs have risen and become untenable for many employers, particularly small businesses. 

For Barlow and his organization, Medicare for all would be a logical step out of the current situation. Among other things, he thinks it would place people in a better position during an economic downturn or pandemic. 

“We will have the opportunity to build a new system and I hope people will realize the folly of tying insurance to a job after this,” he said. “People can’t lose their job and health care at the same time.”

Short-term Insurance

One option for short-term insurance coverage is COBRA. The plans, however, tend to be cost-prohibitive for most. 

The average cost of an individual insurance plan is about $7,000 a year; family plans are around $20,000, according to Barlow. A company typically pays about 70 percent of those premiums but once unemployed, the worker is on the hook for it all. 

Another option is short-term coverage, but Barker tends to recommend against these plans. There is no essential benefit package like the state exchange plans, which means services like annual exams and vaccinations aren’t covered. These plans can also have high out-of-pocket costs, which means the individual pays most of the fees. 

“It’s not something we’ve supported but in a situation like this, if there is nothing else someone can find, they can talk to a broker about limited-duration plans,” Barker said. “People should just be careful about what is covered and how much it’s going to cost.” 

Regardless of how or when the coronavirus pandemic ends, it has highlighted gaps in both treatment and coverage in the current health care insurance system that may shape the ongoing debate about how we care for our citizens.

Tammy Worth is a freelance journalist based in Blue Springs, Missouri.

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