Covered California, March 22, 2020

This policy/actuarial brief provides projections and models the potential costs associated with coronavirus (COVID-19) testing and treatment on the national commercial health insurance markets (individual, small and large group employers — including both those employers that are insured and self-funded). There are additional cost and access implications for Medicare, Medicaid, other public programs, and the uninsured, but this brief focuses only on the impacts on Americans with commercial insurance coverage.

Highlights

The potential impacts detailed in this report reflect what could happen absent decisive federal action. If these impacts are not mitigated, the public health and economic consequences to consumers, small and large employers and health insurers are potentially staggering, including:

• Consumers and employees not getting needed testing or treatments due to cost barriers, both for COVID-19 but also for other health conditions.
• Employers no longer being able to offer affordable coverage, or dramatically shifting costs to employees.
• Consumers and employers no longer being able to afford coverage, leading to employer groups dropping coverage or individuals deciding to go uninsured.
• Even more unsubsidized marketplace enrollees being priced out of individual markets.
• Small insurers risk insolvency, and if they close, put covered consumers at financial risk, damaging competition that benefits consumers and the employers that purchase on behalf of millions of Americans.
• Dramatic cost increases, many of which will be borne by the federal government in the form of higher Advanced Premium Tax Credits (APTC), or by both federal and state governments paying for increased Medicaid enrollment as individuals and employers drop coverage.

https://hbex.coveredca.com…

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Comment:

By Don McCanne, M.D.

There have been many similar reports to this one. Although we already have an inequitable, fragmented, dysfunctional health card financing system, in spite of the highest per capita health care spending of all nations, the current COVID-19 pandemic crisis is revealing the severe instability in our health care financing infrastructure.

MSNBC’s Yasmin Vossoughian: “Our health care system seems to be crumbling underneath this crisis. There is not enough support for the health care system; there is not support for the American people inside of the health care system. Are you now reconsidering your position when it comes to single payer health care?”

Former Vice President Joe Biden: “Single payer will not solve that at all.”

Sorry, Mr. Biden, you are wrong.

All nations are now facing this pandemic. They each have to deal with the added costs of the burden placed on their public health systems and the costs of rendering health care to those who develop COVID-19. But the United States is unique in that the instability in health care financing and coverage will expose tens of millions to personal financial hardship and possibly even bankruptcy. That does not happen in nations that have stable, universal health care financing systems.

Mr. Biden, a single payer, Medicare for All program would remove financial barriers to care and prevent financial hardship due to medical bills. Yes, additional public health measures are required, and the nation would benefit from better social insurance programs covering other individual and family costs related to the pandemic, but that is certainly no reason to reject the vastly superior Medicare for All model of financing health care. And, remember, it is the people who are the patients, not the commercial insurers.

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By Samantha Brown, M.P.H., Raina D. Brooks, M.P.H., and Xiuwen Sue Dong, Dr.P.H.
The Center for Construction Research and Training, Data Bulletin, April 2020

This Data Bulletin examines the latest trends in health insurance coverage among construction workers, using data from the Annual Social and Economic Supplement (ASEC) of the Current Population Survey (CPS), a nationally representative survey administered by the U.S. Census Bureau to American households each March. The ASEC collects health insurance information on the prior calendar year, as well as current coverage at the time of the interview.

Key Findings

• Nearly 24% of construction workers did not have any health insurance in 2018, more than double the uninsured rate among all U.S. workers (11%).
• Nearly half (48%) of Hispanic construction workers were uninsured, more than triple that of their white, non-Hispanic counterparts (13%).
• Less than 30% of Hispanic construction workers had employment-based insurance coverage in 2018.
• In 2018, 28% of construction workers in small establishments had employment-based insurance, 60% less than their counterparts in large establishments (69%).
• Unionized construction workers were nearly 50% more likely than their non-unionized counterparts to have employment-based coverage (71% vs 47%), and twice as likely to have their premiums fully paid by their employer (47% vs 22%).

Many construction workers continue to lack basic insurance coverage. This is particularly concerning given that serious occupational health hazards are common at construction worksites. Hispanic construction workers experienced the lowest rates of health insurance coverage, and the gap in insurance coverage between Hispanic and non-Hispanic white workers enlarged in recent years. Workers in small establishments and certain occupations were also less likely to be insured. In contrast, unionization greatly increased coverage and improved the quality of insurance plans. It is essential to expand insurance coverage among construction workers to better their overall health.

https://www.cpwr.com…

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Comment:

By Don McCanne, M.D.

Many in the policy and political communities, reinforced by the corporate media, keep telling us that we do not want single payer Medicare for All (guaranteed coverage for life) because that would cause us to lose our choice of private plans, especially employer-sponsored plans that supposedly are working so well for us. Well, let’s see how well employer-based insurance really is meeting the health care needs of our construction workforce.

• One-fourth of construction workers have no health insurance
• Half of Hispanic construction workers are uninsured
• Only one-fourth of construction workers in small establishments had employment-based insurance
• Over one-fourth of unionized construction workers did not have employment-based coverage, and over one-half of non-union workers did not either (some, but not enough, had other private insurance)

Although these are recent numbers, they do not include the impact of policies put in place during the Covid-19 pandemic. This past month unemployment skyrocketed, and with that the risk of losing employer-sponsored coverage greatly increased. COBRA? How many who lost their jobs can afford the high premiums? Union insurance? It’s difficult to extend union-negotiated insurance if you didn’t have it in the first place. ACA plans? During closed enrollment? Medicaid? Negotiating hoops with built-in barriers.

When they tell us that we don’t want single payer Medicare for All, this is the system they are trying to protect? They aren’t listening. It’s time to end the niceties; it’s time for us to respond with delicately phrased belligerence (to communicate more effectively, but not to engage in nonproductive hostilities). They have to hear us. Perhaps the construction workers could help us with our rhetoric.

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Kaiser Health News, March 19, 2020

Julie Rovner: Now it’s 10 years later, the law is more popular than ever. And yet there are still some big problems in the nation’s health care system, including levels of cost sharing, surprise bills, so that even people who do have insurance are worried about costs when accessing care. Why didn’t the Affordable Care Act fix everything?

Kathleen Sebelius: Frankly, it probably would have been better to be a government takeover of health care. We got blamed for it. And yet we really didn’t do that. We ran most of this through the private system. So costs are still blossoming out of control. We’ve talked about how the public option would have been a lever for that, which we don’t have. Surprise billing wasn’t even an issue until investment bankers began buying specialty practices and figuring out, Oh, there’s a new way to make money.

And, I also think, often the Affordable Care Act is blamed for employers shifting massive costs onto their employees in employer-based health care plans, which weren’t really tampered with by the Affordable Care Act. That was always to be left alone. So we own all the bad.

https://khn.org…

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‘A Monumental Effort’: How Obamacare Was Passed

The Commonwealth Fund, March 20, 2020

Liz Fowler: So, as much progress as we made with the Affordable Care Act in covering 20 million people, we still have almost 30 million who don’t have coverage. And those with coverage I think are seeing really large out-of-pocket costs. So I think we’re at a point now where we need to look and hopefully decide together what direction we want to go to continue to make progress on this road to universal coverage. With the ultimate goal, getting people covered with something they can afford that gives them the care that they need at the time they need it.

https://www.commonwealthfund.org…

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Comment:

By Don McCanne, M.D.

Ten years into the Affordable Care Act and it is clear that we still have severe deficiencies in our health care financing system in spite of funding it with a very generous $4 trillion. People are still facing financial hardship and even bankruptcy, and many others are exposed to unnecessary physical suffering and even death because of access barriers that were not removed by the legislation.

It is instructive to hear from two of the most important individuals involved in the creation and implementation of ACA. Kathleen Sebelius says, “it probably would have been better to be a government takeover of health care.” Liz Fowler says the ultimate goal should be “getting people covered with something they can afford that gives them the care that they need at the time they need it.”

Well, we don’t need a government takeover of health care, but we do need a government takeover of health care financing if we really want people to have affordable care that they need at the time they need it.

Patching the current financing system and adding a public option will never get us there. We really do need single payer Medicare for All.

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By Allison K. Hoffman
The Hill, April 1, 2020

With three relief bills passed, Congress addressed the most immediate health and economic threats from COVID-19. Yet, it has neglected a secondary threat that follows just behind. Many Americans will face unmanageable medical bills for coronavirus care.

The relief legislation that Congress passed over the past two weeks addressed only a small sliver of the costs of COVID-19 medical care, primarily to remove financial barriers to testing. The second and third relief bills required health plans to cover COVID-19 testing and medical visits related to that testing without any cost to patients. It also did the same for future preventive care or a vaccine, if either becomes available. These are laudable steps, but not enough.

Congress must address the debt that many Americans will face for medical care when they become infected with COVID-19. More than 180,000 Americans have tested positive, and the number of new cases grows exponentially. Early estimates of the cost of intensive inpatient COVID-19 care range from $20,000 to over $70,000. Many people will be left with a sizable part of that bill, or all of it, possibly at the same time that they lose their jobs (3.3 million people already have filed for unemployment). Unless Congress acts, the costs of coronavirus medical care will cripple many American families.

People in the U.S. are financially vulnerable to coronavirus because of four deeper problems with how we pay for health care.

The first is cost sharing. People in the U.S. face higher cost sharing than in most of our peer nations, which means that even after paying premiums, they are still responsible for more of the costs of their care. This problem is especially acute for someone who does not have insurance through work. For someone who buys a health plan directly, such as through an Affordable Care Act (ACA) exchange, the average annual deductible, or the amount of money she must pay for health care on her own before the insurance plan starts to pay, can be upwards of $4,000 for single coverage and more than twice that for family plans.

For those with insurance through an employer, over fifty percent have deductibles of $1,000 for single coverage and the average deductible for family coverage is nearly $5,000. Even once a deductible is exhausted, people are often still responsible for a share of the costs of their care. The ACA caps total out-of-pocket spending on health care, but this out-of-pocket maximum ($8,150 for an individual and $16,300 for a family in 2020) does not apply to all spending. For example, it largely does not apply to bills for out-of-network care. Aetna was the first insurer to voluntarily waive cost sharing for coronavirus care, but only for some of its plans and only in-network care. Humana and Cigna followed. These private, voluntary efforts are meaningful but will reach only some insured.

Second, overall prices for medical care in the U.S. are high compared to peer nations. This means a high baseline on which cost sharing is calculated.

The third is the especially high price tag for out-of-network medical care. Insurers negotiate prices with in-network providers. Otherwise, the sticker price, or “chargemaster” price applies, and it can be many times higher than already high negotiated rates (see point two). Some uninsured face chargemaster rates subject to ACA limitations, and even people with insurance might be subject to them for out-of-network care.

Even in normal times, someone might use out-of-network care without intending to do so. He or she might go to an in-network hospital but receive treatment from an out-of-network doctor or be transported by an out-of-network ambulance to the hospital. This care can result in extremely high surprise medical bills. By one estimate, 18 percent of in-network admissions for pneumonia with major complications led to an out-of-network bill. Even more, as hospitals reach capacity, someone might not have the choice of an in-network hospital. Congressional efforts to stop surprise medical bills have stalled out.

The fourth is lack of insurance. Even 10 years after the ACA was passed, 10 percent of the population under age 65 remains uninsured, many of whom cannot afford insurance and are the least able to pay for unanticipated medical care.

These problems will be counterbalanced if intensive care is more common among older Medicare beneficiaries, who are the best insured population. But even they face cost sharing in some cases, and most are retirees with fixed incomes.

With the third relief bill, the Coronavirus Aid, Relief, and Economic Security Act (CARES), Congress provided needed aid to families through cash and unemployment support. But this support is temporary and for most families will pay for basic needs like food and housing. Many families lack reserves for unplanned medical care expenses.

The legislation that House Democrats proposed as an alternative to CARES, Take Responsibility for Workers and Families Act, addresses these gaps to some degree. It eliminated cost-sharing for coronavirus care and complications, providing federal funds to reimburse private insurers these costs. It also attempted to increase the number of insured Americans. It gave states the option to cover COVID-19 care for the uninsured through Medicaid, provided premium assistance for people who lose a job to keep their health plan under COBRA, and created special enrollment periods to sign up for an ACA plan or, for Medicare enrollees, to sign up for supplemental insurance coverage.

Even this proposed bill, a significant step forward overall, left gaps. For example, it recognized but did not fix surprise medical billing, and it left some Americans uninsured. But it offers a starting place for round four of relief legislation. Congress cannot devise a quick fix to these four large structural problems, but it can and must act now to head off avoidable coronavirus bankruptcies and financial stress.

Allison Hoffman teaches health law and health law reform at the University of Pennsylvania Law School, where she is also a senior fellow of the Leonard Davis Institute of Health Economics. She is co-editor of the Oxford Handbook of U.S. Health Law, which offers the most comprehensive review of U.S. health law in the post-ACA era.

https://thehill.com…

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Comment:

By Don McCanne, M.D.

As of 2020, our national health expenditures are $4 trillion, or $12,118 per capita. Considering that we are already spending that much, you would think that everyone could receive health care without experiencing financial hardship. But in spite of employer-sponsored health plans, in spite of individual plans within or outside of the ACA exchanges, in spite of Medicare, in spite of Medicaid, in spite of publicly-funded safety-net institutions, and in spite of the cash market in health care, Professor Allison Hoffman shows us that our method of allocating these very generous funds is highly dysfunctional – to the degree that the additional stress of the COVID-19 pandemic will significantly expand the already too prevalent problem of personal financial hardship and bankruptcy.

Congress has already passed three emergency relief bills, and Hoffman describes a fourth bill that is urgently needed. Because our current health care financing system does not have even as much integrity as a mangled sieve, it is imperative that this fourth bill be passed.

There is a very important lesson here. We have enough funds to support a high performance health care system that can take care of everyone, even in a crisis, but the financing infrastructure is a disaster. We have four approaches that we can take:

1) Do nothing. That would leave in place the four major problems that Hoffman describes not to mention the multitude of other dysfunctions of our current system. Polls confirm that the public wants reform.

2) We could reduce public funding and rely more heavily on the marketplace through consumer-directed health care. Kenneth Arrow explained many decades ago why the market cannot possibly ensure that everyone has access to essential health care services. Even Friedrich Hayek advocated for the state helping to organize a comprehensive system of social insurance. At nearly one-fifth of our economy, the health care marketplace is unaffordable for the majority of Americans.

3) We could apply patches to our current system and add a public insurance option. This would leave in place the highly inefficient and inequitable financing infrastructure with its profound, costly administrative excesses. It would leave in place the private insurance industry which has been responsible for much of the dysfunction in our system. It is by far the most expensive model of reform and yet still would fall far short of a high performance system.

4) We could build a new financing infrastructure by correcting the deficiencies in the Medicare program and then expanding it to include everyone. By funding a universal risk pool with equitable progressive taxes, health care would become affordable for each and every one of us. Besides, this would be the least expensive model of truly comprehensive reform, likely costing less than what we are now spending, primarily because we would be recovering the profound administrative waste in our system.

Today we have no choice but to tackle directly the problems that have been dumped on us by this pandemic. While most of us have been diverted from engaging in many of our usual activities, it should give us reason to give more thought to strategies to fix our health system, not only to be prepared for catastrophic epidemics, but also to be much better prepared to deal with prevention and management of everyday health problems, you know, that $4 trillion of health care that we are already receiving – only we need to fix how we allocate those funds so the system works well for all of us. We need a well designed, single payer, improved Medicare for All.

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It’s not too late to start protecting employment or to make medical care for Covid-19 free.

By Emmanuel Saez and Gabriel Zucman
The New York Times, March 30, 2020

The coronavirus pandemic is laying bare structural deficiencies in America’s social programs. The relief package passed by Congress last week provides emergency fixes for some of these issues, but it also leaves critical problems untouched. To avoid a Great Depression, Congress must quickly design a more forceful response to the crisis.

Start with the labor market. In just one week, from March 15 to March 21, 3.3 million workers filed for unemployment insurance. According to some projections, the unemployment rate might rise as high as 30 percent in the second quarter of 2020.

This dramatic spike in jobless claims is an American peculiarity. In almost no other country are jobs being destroyed so fast. Why? Because throughout the world, governments are protecting employment. Workers keep their jobs, even in industries that are shut down. The government covers most of their wage through direct payments to employers. Wages are, in effect, socialized for the duration of the crisis.

Instead of safeguarding employment, America is relying on beefed-up unemployment benefits to shield laid-off workers from economic hardship. To give just one example, in both the United States and Britain, the government is asking restaurant workers to stay home. But in Britain, workers are receiving 80 percent of their pay (up to £2,500 a month, or $3,125) and are guaranteed to get their job back once the shutdown is over. In America, the workers are laid off; they must then file for unemployment insurance and wait for the economy to start up again before they can apply for a new job, and if all goes well, sign a new contract and resume working.

Even if unemployment is generously compensated — as it is in the $2.2 trillion bill Congress passed — there is nothing efficient in letting the unemployment rate rise to double digits. Losing one’s job is anxiety inducing. Applying for unemployment benefits is burdensome. The unemployment system risks being swamped soon by tens of millions of claims. Although some businesses may rehire their workers once the shutdown is over, others will have disappeared. When social distancing ends, millions of employer-employee relationships will have been destroyed, slowing down the recovery. In Europe, people will be able to return to work, as if they had been on a long, government-paid leave.

The battle for the speediest recovery starts today. The next congressional bill needs measures to protect employment for the duration of the shutdown. This does not raise insuperable technical difficulties. The bill passed last week provides support for wages in one industry, airlines. Congress could easily extend this program to other sectors. Some countries — like Germany, with its Kurzarbeit system, a policy aimed at job retention in times of crisis — already had the government infrastructure in place to send workers home while the state replaced most of their lost earnings. But several nations with no experience in that area — like Britain, Ireland and Denmark — were able to introduce brand-new employment guarantee programs on the fly during the epidemic.

This situation for laid-off workers would be bad enough if it were not aggravated by a second American peculiarity. As they are losing their jobs, many workers are also losing their employer-provided health insurance — and now find themselves faced with the Kafkaesque task of obtaining coverage on their own.

One option involves continuing to be covered by one’s former employer, a program known as COBRA. It is prohibitively expensive: Participants have to bear the full cost of insurance, $20,500 per year on average. Another option is to go shopping for a plan on the Affordable Care Act insurance exchange, where one is faced with a bewildering choice between plans like Blue Shield’s Bronze 60 PPO (with a deductible of up to $12,600 per year) and Aetna’s Silver Copay HNOnly (with a $7,000 deductible and up to $14,000 in annual out-of-pocket expenses). The last option is to join the ranks of the uninsured, a catastrophic solution during a pandemic.

The bill passed last week does nothing to reduce co-pays, deductibles or premiums on the insurance exchanges; nor does it reduce the price of COBRA. The next bill should introduce a Covidcare for All program. This federal program would guarantee access to Covid-19 care at no cost to all U.S. residents — no matter their employment status, age or immigration status. Fighting the pandemic starts with eradicating the spread of the virus, which means that everybody must be covered.

The big battles — be they wars or pandemics — are fought and won collectively. In this period of national crisis, hatred of the government is the surest path to self-destruction.

Emmanuel Saez and Gabriel Zucman are economists at the University of California, Berkeley.

https://www.nytimes.com…

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Comment:

By Don McCanne, M.D.

Much has been written about how having an equitable, efficient, comprehensive national health program (i.e., single payer Medicare for All) would have been extremely helpful combating illnesses caused by the coronavirus pandemic. We would still have other problems such as the pending permanent closure of a multitude of businesses that are not able to survive the shutdown that is occurring during this pandemic.

Emmanuel Saez and Gabriel Zucman are experts in income and wealth inequality and the adverse consequences that occur when the one entity that could remedy these problems fails to act, and that entity is the government.

In this article, they provide, as an example, an explanation of how in other nations many of the businesses will survive because of implementation of beneficial government policies. They contrast that with the dire prognosis in the United States which we can expect because of our failure to enact and implement socioeconomic programs that would help protect all of us, even during crises like the current pandemic. A recession would be understandable, but our lack of foresight could result in a prolonged depression.

The authors explain why our current health care financing system is not satisfactory. They propose an emergency financing program, but it would have been far better to have had a single payer Medicare for All system already in place. The crisis is difficult enough without adding the additional task of creating a massive new Covidcare for All program.

We are hardly into our national nightmare and yet the lesson for us is already obvious. We need greater solidarity in working together through our government, and that includes following the Willie Sutton rule (go where the money is) in establishing equitable, progressive taxes.

As Saez and Zucman state, “The big battles — be they wars or pandemics — are fought and won collectively. In this period of national crisis, hatred of the government is the surest path to self-destruction.”

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