Health insurers are calling on Congress to allow uninsured people to enroll in Obamacare to ensure coverage if they contract Covid-19, the disease caused by the new coronavirus. They also say subsidies on monthly payments for insurance should increase.
“Given the risk posed by Covid-19, it is more important than ever for people to have health coverage,” America’s Health Insurance Plans (AHIP) and the Blue Cross Blue Shield Association (BCBSA) said in a letter of recommendations to congressional leaders. Among other things, they propose allowing a one-time special enrollment period for the individual market “regardless of an individual’s current health status or whether they have coverage today.”
The request comes as lawmakers are negotiating at warp speed a third economic stimulus package to respond to the pandemic. Health providers and insurers are weighing in because they face severe economic uncertainties. Fitch downgraded its outlook for the insurance industry to “negative.” Hospitals are on the front lines of combating the new disease, which requires “expensive and complex treatment” while the reimbursement mechanisms are difficult to predict,” research firm CreditSights said in a report Thursday.
Nine states, including disease epicenters Washington and New York, have allowed special Affordable Care Act enrollment periods to get more people covered as the virus has spread. But there hasn’t yet been a national mandate to do so. If more people are covered, it would reduce some pressure on hospitals and doctors to treat sick people because they know they’ll be paid.
Normally, people must enroll in coverage during regular open enrollment periods unless they have a life-changing event that qualifies for special enrollment, such as marriage, the birth of a child, or change in employment status.
The Centers for Medicare & Medicaid Services earlier this week told Bloomberg Law it wasn’t offering a special open enrollment period for Obamacare. But the agency has been consistently working with states and lawmakers to respond to the crisis, so that position could change. “Consumers who are not currently enrolled in coverage can see if they qualify for other Special Enrollment Periods by visiting HealthCare.gov. We will continue to work closely with states and health plans around the country to assess what additional actions are necessary to ensure the American people have coverage for and access to the services they need during this time,” a CMS spokeswoman said March 15.
A broad group of 18 health-care industry groups, including health insurers, hospitals, and medical practitioners are also asking for quick actions to enhance medical supplies and ensure the availability of medical facilities for patients. The seek emergency funding for hospitals, support for independent health-care providers, and enhanced funding for testing and treatment of Covid-19 for the uninsured.
Insurers have already waived copayments for testing for coronavirus, but they haven’t yet waived copayment for treating Covid-19.
Increase Premium Subsidies
AHIP and BCBSA also called on Congress to increase financial assistance to cover premium tax credits for people who currently make too much money to qualify for the subsidies. The Affordable Care Act allows premium subsidies for individual market enrollees with incomes between 100% and 400% of the poverty level, but many people above that level can’t afford the policies if they don’t receive enough subsidies. The average monthly premium for a silver-tier plan without subsidies is $388 for a 27-year-old. For a family of four, it’s $1520.
The insurers said the subsidies should be adjusted to favor more young people. “Tax credits for those with incomes over 400% of the federal poverty level should be made available, and adjustments to the tax credit formula by age to would encourage more younger people to get covered,” the letter said.
In early 2019, the BCBSA called for increasing premium subsidies to cover higher-income people, which it said would cost $10.2 billion a year starting in 2021.
Supporting businesses in covering people could take the form of payroll tax relief, which President Donald Trump has suggested, a refundable tax credit against employment tax withholdings for firms providing coverage, or direct subsidies for the premiums employers pay, the insurers suggested.
Congress should also subsidize coverage for people who lose their jobs by paying 90% of the cost of maintaining their policies under the Consolidated Omnibus Budget Reconciliation Act (COBRA) or other insurance coverage, the insurance trade associations said. During the so-called great recession in the Obama administration, such subsidies were available.
In addition, the insurers asked for a temporary risk mitigation program to cover high cost care to prevent future premiums from spiking.
The BCBSA also announced Thursday that the 36 BCBS health plans across the country are waiving copays for telehealth services related to Covid-19.
Fitch Ratings Downgrades Health Insurers
Market analysts who follow health insurers earlier said the industry might initially benefit from delayed elective surgeries, but Fitch Ratings has now revised its outlook for the U.S. health insurance industry to negative from stable “due to expectations for an adverse effect on industry fundamentals related to Covid-19" as claims costs increase.
The negative rating is driven by “the extremely wide range of expert estimates” of the infection rate, which creates “significant uncertainty” in Fitch’s ability to forecast 2020 earnings. “The higher end of forecast infection rates could eliminate 2020 earnings for the industry as a whole.”
Fitch said that once infection rates in the U.S. become more predictable it will revisit its outlook.
—With assistance from Chris Brown.