The arrival of the novel coronavirus (COVID-19) has been an unprecedented shock to our healthcare system and economy. Although many of the challenges could have been anticipated, the government was slower than most had hoped to pass relief packages to support millions of workers across the country. We now have three waves of aid legislation, but none address the critical gaps in healthcare costs that burden most Americans.
Wave 1: Coronavirus Preparedness and Response Supplemental Appropriations Act, March 6, 2020
On March 6, 2020, President Trump signed an 8.3-billion-dollar emergency coronavirus funding bill into law. So much has changed in the three weeks that have followed. The intent of that bill was to aid in treatment and to quell the spread of COVID-19. While 8.3 billion (B) dollars is a lot of money, given the scale and scope of need it was largely insufficient to meet the actual healthcare demands of our country.
How the money was slated [1]:
$3.1B for the Office of the Secretary for Health and Human Services, available through 2024 - will be used for therapeutic development, vaccine development, the purchase of protective equipment, with $100 million (M) directed to community health centers
$950M for state and local health departments - will be used for staffing, equipment purchases, and purchasing of data analytic capabilities
$300M to buy vaccines and treatments
$1.25B for international activities - will support low and middle-income countries that may lack resources to contain outbreaks
A noted gap:
This legislation lacked any provisions or money to reimburse hospitals or individuals for medical care associated with COVID-19 treatment. Hospitals, physician practices, and community health centers are facing significant increases in costs due to ramped up requirements, new containment protocols, installation of virtual medicine, and a surge in patients, many without health coverage [9]. The American Hospital Association, American Medical Association, and American Nurses Association outlined the case for further relief in a letter to Congress on March 19, 2020. For many rural hospitals already on the brink financially, COVID-19 could be a breaking point [10].
Wave 2: The Families First Coronavirus Response Act, March 18, 2020
The Families First Coronavirus Response Act was signed into law last week and will take effect on April 2, 2020. The legislation contains provisions around COVID-19 testing, sick leave, FMLA expansion, food assistance and unemployment assistance. While this legislation is another step in the right direction, it still has critical gaps. The table below outlines the Act’s provisions, important components, and some of the gaps it creates or fails to address.
Still a gap for the healthcare system:
The gap from The Coronavirus Preparedness and Response Supplemental Appropriations Act was not addressed in The Families First Coronavirus Response Act. There are no provisions or money to reimburse hospitals or individuals for medical care associated with COVID-19 treatment. With the uninsured rate estimated at 27.9M Americans [5] and rising, the most vulnerable will face devastatingly large medical bills should they contract COVID-19 and require specialized care.
Additionally, over the last two decades, insured Americans have been pushed into high deductible health plans (HDHPs) either through their employer or due to the high cost of non-HDHP individual plans. The most recent data shows that through 2017, 21.8M Americans were enrolled in an HDHP [8]. Many Americans in these plans will face thousands of dollars in deductibles and coinsurance costs that they will be unable to pay should they require intensive COVID-19 treatment. The inability to pay these cost-shares will create bad debt for hospitals and community health centers.
Wave 3: The Coronavirus Aid, Relief, and Economic Security Act (CARES Act), March 25, 2020
After considerable political wrangling, the Senate unanimously passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) on March 25, 2020. It was quickly passed in the House on March 27, 2020 (H.R. 748) and was signed into law by the President the same day.
This aid package will [6,7]:
Send money directly to Americans making up to $75,000 a year in the amount of $1,200 and $500 for each child. The direct payments phase down and out as salaries increase up over $99,000 a year.
Significantly expand unemployment benefits, providing an additional 13 weeks of coverage and four months of enhanced benefits. Individuals will receive an additional amount of $600 per week from the Federal Government to combine with the benefits they receive from their states. These benefits will be extended to freelancers and gig workers for the first time ever.
Create $349B in federally guaranteed loans available to small businesses. Includes a loan forgiveness program that incentivizes these businesses to retain employees.
Establish a $500B government lending program for businesses, states and municipalities in distress due to the COVID-19 crisis, including the ability for the administration to take equity stakes in airlines receiving aid.
Sends $130B to hospitals and community health centers already dealing with the COVID-19 impact, and those bracing for the impact.
Increase Medicare payments by 20% for those being treated for COVID-19.
Expand telehealth services in Medicare, including those services related to COVID-19.
Expand the Defense Protection Act.
Provide the Secretary of the Treasury the authority to make loans or loan guarantees to states, municipalities, and eligible businesses, and loosens a variety of regulations that prior legislation imposed (Dodd-Frank Wall Street Reform and Consumer Protection Act, the Economic Stabilization Act of 2008).
Adds supplemental appropriations to help the government respond to this pandemic.
These three pieces of massive legislation are overwhelmingly critical, and it is a hopeful sign that a divided Congress was able to pass these important measures to support our citizens and economy.
However, we still face a perilous gap of how the uninsured or the underinsured (such as HDHP members) will be able to pay for their treatment. The amount of bad debt created as a result of this gap could be devastating to some hospitals and community health centers. These institutions will find some relief through the CARES Act, but the individuals or families facing mounting bills due to COVID-19 treatment remain vulnerable. Very recently, we have seen some insurers act to waive COVID-19 cost-shares (Cigna and Humana waiving all cost-shares and Aetna waiving some), but nothing has been done on a national level, and these waivers don’t address the uninsured.
The American healthcare system has been inadequately covering our populace for decades. As this crisis unfolds, the impact of underinsuring some is quickly becoming a problem for all. The lack of coverage or the under-coverage that some people face inevitably results in bad debt that gets passed on to the healthcare system through increased premiums and prices for services. The financial vulnerability may be felt especially by those that identify as middle class, but who live paycheck-to-paycheck with little in the way of savings. If they are enrolled in an HDHP, it won’t take much to send them into financial dire straits should they be faced with large medical bills.
This pandemic will have serious consequences for millions of Americans at all socioeconomic levels of society. While we mourn the economic hardships and personal losses faced by so many, we also look for the hope and benefits that come from change. As more Americans face financial vulnerability due to healthcare hardship, perhaps COVID-19 could be the unifier and motivator that gets us to finally close the healthcare gap for all citizens. What is it going to take, America?
Steph Passino leads the Market Insight and Consulting Operations at Spring Street Exchange - a services firm that focuses on transformation and social needs related to healthcare. She is an advocate for universal coverage and addressing issues related to social and healthcare access inequity.
Citations:
1 – The Corona Virus Crisis - Where That $8.3 Billion In U.S. Coronavirus Funding Will And Won't Go, March 6, 2020, NPR, All Things Considered https://www.npr.org/sections/health-shots/2020/03/06/812964894/where-that-8-3-billion-in-u-s-coronavirus-funding-will-and-wont-go
2 – President Trump Signs Families First Coronavirus Response Act, March 23, 2020, https://www.natlawreview.com/article/president-trump-signs-families-first-coronavirus-response-act-0
3 –Gould, E., Shierholz, S., Senate coronavirus bill is crucial—but it’s a fraction of what’s needed, March 18, 2020, Economic Policy Institute, https://www.epi.org/blog/senate-coronavirus-bill-is-crucial-but-its-a-fraction-of-whats-needed/
4 – Rosenbaum, D., Bolen, E., Neuberger, Z., Dean, S., USDA, States Must Act Swiftly to Deliver Food Assistance Allowed by Families First Act, March 23, 2020 Center on Budget and Policy Priorities, https://www.cbpp.org/research/food-assistance/usda-states-must-act-swiftly-to-deliver-food-assistance-allowed-by-families
5 – Tolbert, J., Orgera, K., Singer, N., Damico, A., Key Facts About the Uninsured Population, December 13, 2019, Kaiser Family Foundation, https://www.kff.org/uninsured/issue-brief/key-facts-about-the-uninsured-population/
6 – Senate Passes the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), March 26, 2020, National Law Review, https://www.natlawreview.com/article/senate-passes-coronavirus-aid-relief-and-economic-security-act-cares-act
7 – Siegel Bernard, T., Lieber, R., F.A.Q. on Stimulus Checks, Unemployment and the Coronavirus Bill, March 27, 2020, New York Times, https://www.nytimes.com/article/coronavirus-stimulus-package-questions-answers.html
8 – Health Savings Accounts and High Deductible Health Plans Grow as Valuable Financial
Planning Tools, April 2018, AHIP, https://www.ahip.org/wp-content/uploads/2018/04/HSA_Report_4.12.18.pdf
9 – Kaiser Health News, Coronavirus Threatens Rural Hospitals – The added financial hit from the coronavirus outbreak could be the final straw for many rural hospitals, March 23, 2020, https://www.usnews.com/news/healthiest-communities/articles/2020-03-23/covid-19-threatens-rural-hospitals-already-stretched-to-breaking-point
10 – Ellison, A., Hospitals face financial fallout from COVID-19: 6 things to know, March 23, 2020, Beckers Hospital Review, https://www.beckershospitalreview.com/finance/hospitals-face-financial-fallout-from-covid-19-6-things-to-know.html