Health insurers are pushing Congress for more government help in the face of Covid-19—including near total premium subsidies for people who lose their jobs and stay on their employer-sponsored insurance—but they’re steering clear of the next step, full government-sponsored coverage.
The insurance industry has pushed back against Medicare for All or a public option to allow people to buy government health plans. They say the private market works better than a government system. But if insurer advocates succeed in their quest to get more subsidies in future pandemic aid packages, it may prove difficult to argue later against more government involvement.
“If there really is an insurance industry kind of bailout in all this, then I think that there would be serious consideration—certainly among Democrats, and I think some Republicans would also want to think about this—[of the] limits on what cost-sharing can be,” Joseph Antos, a scholar in health care and retirement at the American Enterprise Institute, said in an interview.
Shoring up the “existing coverage system,” rather than creating a new one, is the only way to ensure people have affordable health coverage during the Covid-19 crisis, Bill Kramer, executive director for health policy of the Pacific Business Group on Health (PBGH), said in an interview.
The group has approached congressional offices about including subsidies in future federal relief packages to make premiums affordable for Obamacare and COBRA, which lets people stay on their employer-sponsored health coverage after losing a job. The group also backs expanded eligibility for Medicaid, which covers poor and disabled individuals.
The group, whose 41 members together spend spend $100 billion a year on health coverage for more than 15 million employees, is worried about rising health-care costs due to the pandemic. In one recent survey of PBGH members, 43% of respondents said they were worried about the virus’s impact on costs.
“For the longer term, we can and should have a debate about Medicare for All or other proposals to expand coverage,” Kramer said. “But that’s not going to address our current crisis.”
America’s Health Insurance Plans (AHIP) and the Blue Cross Blue Shield Association (BCBSA) have also called for more federal subsidies to lower the cost of Obamacare premiums for middle-class people, aid for employers to maintain employee coverage, and assistance for people who lose their jobs or are furloughed so they can keep their employer coverage under COBRA.
Tough on the Middle Class
There are no subsidies for COBRA, which takes its name from a 1985 budget law. Without help, maintaining COBRA coverage under an employer’s plan after losing a job is almost impossible. Last year, the average annual premium for employer-sponsored health insurance was $7,188 for single coverage and $20,576 for family coverage, according to the Kaiser Family Foundation. That amounts to more than $1,700 a month to cover a family if the plan enrollee loses his or her job.
Affordable Care Act premiums are now subsidized for lower-income people, and the poorest enrollees also get help for out-of-pocket costs like deductibles and copayments. But the ACA costs can still be steep for people in the mid-income range.
The average unsubsidized deductible for ACA plans offered through HealthCare.gov increased 4% in 2020 to $5,316 a year, the Department of Health and Human Services reported April 1. That’s more than three times the $1,600 average deductible for employer-based plans, said Joel White, president of the Council for Affordable Health Coverage, a group that includes employers, insurers, pharmaceutical companies, physician organizations, and patient groups.
Both AHIP and the BCBSA have called for subsidies for COBRA and Obamacare plans on a temporary basis to respond to Covid-19.
Some employer groups have focused exclusively on making a case for COBRA subsidies. About 26 million people have lost their jobs as a result of the economic shutdown from Covid-19, and forcing them into ACA coverage means their deductibles reset.
Deductibles are the amount people have to pay for health care annually before health insurance starts paying their claims. People who enroll in a new plan must pay that plan’s full deductible regardless of what they’ve already paid on their former plan. In ACA plans, deductibles are generally high, around $8,000 for a family, according to eHealth, an insurance clearinghouse.
A recent letter from CAHC and nearly three dozen other business and labor groups called for COBRA subsidies for workers who lose coverage due to job loss or reduced work hours.
The BCBSA called for COBRA subsidies to cover 100% of the cost. The CAHC letter didn’t specify the level of subsidy, but its president said workers should only shoulder a fraction of the cost. “I think 80 or 85% is reasonable as that is close to what employers give, on average, to current workers,” White said.
The CAHC estimated it would cost $14 billion to $31 billion to subsidize COBRA over three years. That’s a lot of money, but it would mean that five to 12 million separated workers would be able to remain on their employer’s plan at peak unemployment in 2020, and the number of uninsured would go down by 5 million to 7 million, the organization said.
Some Democrats have called for expanded ACA premium and COBRA subsidies. A proposal from Sens. Mark Warner (D-Va.), Jeanne Shaheen (D-N.H.), and Doug Jones (D-Ala.) includes subsidy increases to respond to the pandemic.
So far, Congress hasn’t included insurance subsidies in virus-related federal relief packages. Republicans have shown no indication they would go along with Obamacare premium subsidy increases. Progressive lawmakers who back expanding Medicare reject subsidies for private plans altogether.
Some criticize the health insurers’ proposals as self-serving. “Of course they’re saying put more money into all of these programs” insurers profit from, Antos said.
Antos has called for reopening the HealthCare.gov exchange to allow people to enroll in Obamacare coverage during the pandemic, which the administration has so far refused to do.
Antos doesn’t think the Covid-19 crisis will lead to Medicare for All because Sen. Bernie Sanders (I-Vt.), who made the issue a cornerstone of his campaign, is no longer seeking the Democratic presidential nomination. Letting more people pick a plan similar to how Medicare Advantage, which is run by private insurers, may be a more realistic option in the future.
“We’re at least a couple years away from any serious consideration of any of these things because of the virus,” Antos said. “People aren’t going to be looking at this particular issue before we get a vaccine that really works and we really are back to normal.”