A longtime patient of mine recently had his first telemedicine visit. John is a 50-year-old construction worker with multiple medical comorbidities who I have seen since residency. It had been a few months since I had heard from him, so I was relieved to see his face on my computer screen and ready to check on his hypertension, diabetes and depression.
That relief was short-lived because John told me about hardship after hardship that the pandemic had caused him and his family. An uncle had tested positive for COVID-19 and was subsequently hospitalized. There was uncertainty about who in the family could care for John's elderly parents and how to do so safely while maintaining social distancing. And to top it off, John had been laid off the week before and faced the financial uncertainty of unemployment.
As we were finishing up our visit, John asked for a year's worth of refills on all of his medications even though we had refilled them recently. It took a moment for me to realize this might be the last time I would see him. Like nearly 50% of Americans, John, until recently, had employer-sponsored insurance. It was an all-too-familiar one-two punch: John had lost his job and was now losing his health insurance. The full weight of the COVID-19 pandemic had come crashing down on this man and his family.
Unfortunately, more patients like John likely will lose their ESI as unemployment continues to rise due to the pandemic. Although the full economic impact of the pandemic is difficult to grasp, the data around job loss and unemployment rates is bleak. Since March, more than 45 million Americans have filed for unemployment benefits, although only about 20 million are currently receiving benefits. The Bureau of Labor Statistics reported the unemployment rate peaked at 14.7% in April, the highest level since the Great Depression, while simultaneously acknowledging that the real percentage is likely much higher. Although the unemployment rate improved to 11.1% in June, certain areas of the country have been hit much harder, including those that rely on tourism and COVID-19 hot spots.
A recent Kaiser Family Foundation analysis estimated that as of May 2, nearly 27 million Americans may have lost their ESI. This projection was similar to an estimate of at least 25 million from the Robert Wood Johnson Foundation and Urban Institute. Both analyses estimate that roughly 70% to 80% of those who lose ESI will be eligible for publicly subsidized health insurance through Medicaid or the Patient Protection and Affordable Care Act marketplace. But this leaves as many as 8 million Americans who will have to find coverage somewhere else or go uninsured.
Of those who have lost their insurance, 12.7 million are eligible for Medicaid. This is more likely to be true in the 37 states (plus Washington, D.C.) that have expanded Medicaid under the ACA to include those whose incomes fall below 138% of the federal poverty level.
This expanded Medicaid enrollment comes at a terrible time for states struggling with unprecedented projected budget shortfalls of as much as 30%. Although the federal government covers a majority of Medicaid costs, Medicaid still accounts for nearly 20% of expenditures from state general funds (though there is large variation between states). States looking to balance budgets likely will have to decrease Medicaid funding, which may include reductions in provider rates, member eligibility and member benefits.
The Kaiser and Robert Wood Johnson reports estimate that only 25% of those who lose their ESI (between 6 and 8 million people) will be eligible for ACA marketplace subsidies. Losing ESI allows for a special enrollment period through the ACA marketplace, but not everyone will qualify for federal subsidies to make those plans more affordable. Because ACA marketplace subsidies are based on annual income and tax returns, it can be difficult to qualify after losing a job and depends on unemployment benefits and the income of other household members.
All of this comes at a time when the ACA is being challenged in the Supreme Court. A ruling is not expected until next year, but meanwhile, the number of Americans covered by the ACA through either Medicaid expansion or ACA marketplace subsidies is expanding during the pandemic.
If a person doesn't qualify for Medicaid or subsidies, they are left with few options. One option is to continue their current insurance plan for 18 to 36 months through the Consolidated Omnibus Budget Reconciliation Act of 1985, better known as COBRA. To obtain COBRA insurance, an individual has to pay the full premium from their existing health plan. For perspective, the average premium in an ESI plan costs about $7,000 per year for an individual and $20,000 a year for a family of four, and employers typically cover about 75% of that cost. For many, the cost of COBRA coverage is unrealistic and out of reach because the cost of premiums goes up right when paychecks stop. There are other options, which include health savings accounts, buying short-term (catastrophic) coverage or going without health insurance. None of these are great options for those with chronic medical conditions or limited resources.
In the short term, there are some immediate solutions and temporizing measures to ensure that our patients have continued insurance coverage. On April 28, the AAFP, along with 30 other medical and business organizations, sent a letter to congressional leaders imploring them to act swiftly to provide coverage for those who have lost their ESI and others who are uninsured. The letter requested that Congress subsidize COBRA insurance to make it more affordable, expand the use of HSAs to include premiums and increase federal subsidies for the ACA marketplace. There has already been increased federal support of Medicaid through the Families First Coronavirus Response Act and the Coronavirus Aid, Relief and Economic Security Act, which will help states offset some of the cost of increased Medicaid enrollment.
All of the above are merely Band-Aids for a hemorrhaging wound, however. Millions of Americans are losing their health insurance through no fault of their own. The economic impact of a global pandemic should not be a reason to lose health insurance. In fact, a global pandemic is a vital time to have health insurance and receive care.
Ultimately, the pandemic has magnified the numerous flaws in our health care system. Tying insurance to employment status is fraught with downsides even when the economy is good. ESI ties patients to a single job for fear of losing health insurance. ESI is the most expensive tax reduction/break in the country, costing the U.S. government approximately $273 billion in taxes in 2019, and that tax break works in favor of individuals in higher income brackets.
Why does the U.S. health care system tie insurance to employment in the first place? ESI is largely an after-effect of World War II, when wages were frozen and businesses used health insurance as an incentive. There was no long-term strategy or plan that ESI was the best health policy approach, and the consequences for patients like John are playing out in front of us.
Now add a global pandemic to the equation, and the only viable solutions to a new crisis of uninsured Americans are publicly funded programs. Can we come up with a long-term solution so patients who lose their job don't have the added burden of losing health insurance at the same time?
Kyle Leggott, M.D., is a family physician doing a fellowship in health politics and policy at the University of Colorado. You can follow him on Twitter @KyleLeggott.