Millions of Americans risk losing health insurance as the jobless rate rises to a postwar high, adding pressure on the White House to cover the healthcare of laid off workers.
The US launched a publicly funded programme this week that will cover the 28m uninsured Americans — and rising — for the cost of coronavirus tests and treatment.
But with the jobless rate reaching 14.7 per cent on Friday, insurers and healthcare providers warn the Trump plan is not enough. Democrats, including Joe Biden, are pushing policies to help the estimated 7m people who are likely to lose their insurance.
Scott E Harrington, a professor of healthcare management at Wharton, said so far the White House had taken a “very targeted approach”, helping out only patients who test positive for Covid-19 rather than looking for new ways to support healthcare for the unemployed.
Instead, they will have to navigate a “complex” system, he said. “The worse you are hit by the lay-offs, the better the safety net gets,” he said. “But that does not mean it is not a shock.”
About half of all Americans get their insurance through their jobs and the average family pays more than $20,000 for insurance every year, according to the Kaiser Family Foundation, which researches health policy.
The Affordable Care Act is facing its first financial crisis, a test of whether it can help the unemployed. But it is no longer President Obama’s Obamacare: the Trump administration has rolled back provisions, pushing up the number of uninsured in the past two years, and allowing so-called “skinny plans”: so minimal that some do not even include hospitalisation.
Molly Smith, a vice-president at the American Hospital Association, whose members are lumped with unpaid bills from the uninsured, said it is “very, very nervous” about people who think they have comprehensive coverage, but do not.
Some employers, in particular the large retailers such as Macy’s and Gap, are continuing to pay the premiums of workers on furlough. But no one knows how long that will last.
The poorest will be able to turn to Medicaid, the public insurance for people on low incomes. But that risks stretching the states that pay for it, just as they are losing tax revenue.
When Americans lose their jobs, they are allowed to keep their insurance through Cobra, a law passed in the 1980s, if they pay both their premiums and those the employer was paying. Many cannot afford to do this and so only the sickest tend to cough up.
Foremost among the Democratic proposals is a bill promoted by Bobby Scott, the chair of the House education and labour committee, that would cover the cost of emergency Cobra plans in full. The Obama administration did something similar during the financial crisis, but only covered 65 per cent of costs, leading to low take up.
Mr Scott’s bill would cover 100 per cent, which policy researchers said could end up costing the US government hundreds of billions of dollars.
“This is not going to bring costs down,” said Brandon Barford, a partner at the Washington-based consultancy Beacon Policy Advisers. “There is going to be a hefty government bill attached to such a plan.”
Health insurers argue this allows patients to continue to see the same doctors. Justine Handelman, senior vice-president at the Blue Cross Blue Shield association, which represents insurers, said people may have already paid their deductible, a contribution required at the start of the year until insurance kicks in.
“We believe strongly that supporting Cobra is the best way that families can keep their existing coverage without disruption,” she said, adding that changes in providers can cause “unnecessary stress”, especially for people with serious chronic conditions.
However, many on the left have objected to this plan because it would funnel billions of dollars’ worth of government money straight to private insurers.
Ro Khanna, a Democratic congressman from California, said: “Putting more money into our current system isn’t actually helping solve the problem. It’s just putting more money in the pockets of profit-skimming insurance companies.”
Mr Khanna is one of many on the left — including Bernie Sanders, the leftwing senator from Vermont — who wants instead to see an expansion of the state-provided Medicare and Medicaid schemes for the duration of the current crisis.
But even the most ardent supporters of a temporary “Medicare for All” programme admit it has zero chance of passing the Republican-controlled Senate. And so a third option has emerged — to allow anyone who wants to enrol in a plan for free under the Obama-era Affordable Care Act.
The ACA insurance exchanges usually only allow people to switch insurance once a year. Many states have already done this, so recently laid off workers can buy their own plans, subsidised on a sliding scale if their household income is between 100 per cent and 400 per cent of the poverty line. But not all states have their own exchanges, and their residents rely on the still-shut federal exchanges.
Many argue that opening up ACA enrolment would cost less than subsidising Cobra, while maintaining the private insurance market. Jon Gruber, economics professor at the Massachusetts Institute of Technology, said: “The right approach is that if anybody loses their job, we will let them get a ‘Gold’ [high level of coverage] plan for free.”
But such an option is also politically difficult. Republicans who have spent much of the past few years rolling back the ACA are unlikely to back a plan to extend it. Many Republican states are battling the law in court. And there is an election coming.
However, some warn that doing nothing poses an even bigger electoral risk to their party. “This is not something the Republicans are going to like,” said Mr Barford. “But they are scared of getting hammered by the kinds of economically vulnerable voters who turned out for them last time.”
Additional reporting by Alistair Gray