As people lose their jobs, reporters need to explain these key health coverage programs

If our current COVID-19 health crisis teaches us anything, it is how vulnerable we all are when it comes to our insurance arrangements and the ability to pay for medical treatment when things go so unexpectedly wrong. The rapid march of the coronavirus has laid bare the fragility of the American health insurance system — its weaknesses and inequities are more visible than ever. Nearly 17 million Americans have lost their jobs and with that has come the loss of health insurance that was part of their benefit package. In other countries with large outbreaks like France, Italy, England, Germany, South Korea and Australia, health insurance has not been a problem because their national systems cover everyone in good times and bad.

The pandemic in the U.S. has laid bare the deficiencies in our main vehicle for providing health insurance — employer-based coverage. The anchor of the American health insurance system, workplace coverage was born after World War II as a recruitment tool for employers, gradually morphing into the major source of health insurance in the post-war years. As long as employment grew and companies could afford to offer coverage — excellent coverage especially in unionized industries — that arrangement worked well. Now, staggering job losses from the pandemic mean that millions of people will lose their insurance, and a report recently issued by the Peterson Center and the Kaiser Family Foundation brought more ominous news.

The pandemic in the U.S. has laid bare the deficiencies in our main vehicle for providing health insurance — employer-based coverage. 

The share of the population covered by job-based coverage has declined substantially, the report revealed, noting that the share of non-elderly Americans with such coverage dropped by more than 8% points, from 67% to 58%, between 1998 and 2018. Despite modest coverage gains between 2013 and 2018 as the economy improved, that improvement was “not enough to offset long-term decline.” What’s more worrisome for our current moment is that the share of people with employer coverage during the 20-year period studied dropped for all income groups below 400% of poverty. That’s $104,800 for a family of four and $51,000 for a single person. The U.S. median household income in 2018 was about $62,000.

How can people with middle incomes afford the other coverage alternatives available?

The long-term decline in workplace plans and mounting job losses challenge the assumption that employer coverage is our best model moving forward. On Thursday, Vox’s Ezra Klein tweeted, “America’s employer-based health care system is a disaster and always has been. And the coronavirus will make it much worse. It’s time to build something better.” But the future of employer-based insurance is a political question best saved for another day. The loss of coverage and the scarce options for workers cut loose from insurance is the more immediate concern. Laid-off workers and those whose jobs may be in jeopardy in the coming weeks need to understand the options they have and the choices they must make. Their financial futures may well depend on it.

In general, the best health insurance choice you can make is the one that gives you greatest coverage for the lowest price for the longest time given the uncertainty of the economy even after the virus threat passes. Now more than ever, reporters need to be ready to communicate coverage alternatives to their audiences in the weeks to come. Here are the main options families have:

COBRA, the shortened name for a provision in the Consolidated Omnibus Budget and Reconciliation Act passed 35 years ago during the Reagan administration, is a stop-gap measure for workers who have lost their employer coverage. If you worked for a business with 20 or more employees, you and your dependents can remain on your employers’ plan for 18 months, providing you pay the entire premium plus an administrative fee (usually 2%). Last year, the average annual premium for an employer-sponsored family plan was about $20,500. Employees paid on average about $6,000 of that amount. So you see COBRA is not likely to be a great alternative for someone who has just lost a job unless that person has a large bank account.

A few more things to know about COBRA: Coverage can last longer, up to 29 months if you’re disabled and eligible for Social Security disability benefits when employment ends, or it can last 36 months if you are insured through a spouses’ plan and the spouse dies, if you divorce or separate, or if your spouse becomes eligible for Medicare. Beware that you can lose COBRA coverage if your former employer drops coverage for its current workers. If employers switch carriers or change the terms of the plan, COBRA recipients still must be offered the new plan during the COBRA eligibility period. Of course, the premium might change, explained Steve Wojcik, vice president of the Business Group on Health. In this economic climate, that may be a possibility — especially among small employers where coverage is becoming harder to maintain. Richard Master, a small-business owner who runs a company that makes picture frames in Pennsylvania, told me the cost to cover his 140 employees and their families rose 16% this year. Other companies have complained of similar increases. Those higher costs hit COBRA enrollees even harder, since they’re paying full freight, without employer subsidies.

Even with such uncertainty, as a new report from the United Hospital Fund in New York City points out, there might be advantages to maintaining employer coverage under COBRA for a while if you are undergoing treatment or have already paid substantial amounts of money for coinsurance and deductibles this year and don’t relish the thought of starting the clock again. But if such circumstances don’t apply, shopping in your state’s Affordable Care Act marketplace might offer lower-cost options, especially if you qualify for premium subsidies and additional help paying deductibles and coinsurance.

Some employers are laying off employees temporarily but letting them remain on their group insurance plan, Wojcik said. Depending on how much you’d have to pay to stay on the plan, that may be the best option for now.

MEDICAID is an excellent choice for people with low incomes who qualify. It generally provides comprehensive coverage, but it’s hard to get. In most states, an adult’s income must be no greater than 138% of the federal poverty level or $17,609 to qualify. Some states, primarily in the South and Midwest, have lower thresholds, which make it even harder to get benefits. The good news about Medicaid is that there are no more work requirements to get benefits, a barrier to coverage some states tried to impose. “There are none in effect. Nor can states add them,” says Joan Alker, director of the Center for Families and Children at Georgetown University. Alker also points out that right now no one on Medicaid can lose coverage. “There was a disenrollment freeze as of March 18,” she said.

One big problem with Medicaid remains, however, arising from the Supreme Court decision in 2012 that allowed states to opt out of the Medicaid expansion that brought coverage to some of the country’s poorest citizens. In the 14 states that did not expand, poor Americans have no options. They are too poor to buy their own insurance, and they can’t shop in the ACA exchanges and receive premium and cost-sharing subsidies.

AFFORDABLE CARE ACT POLICIES are a great option for some people, but more problematic for others. Open enrollment is officially closed until fall, and the Trump administration has decided not to open enrollment to accommodate the millions of Americans who have lost their insurance coverage. However, those who have lost their jobs can still apply for a policy through the special enrollment option offered by the ACA to people who’ve had a change in life circumstance. Losing health insurance qualifies. Also preexisting health conditions are not a barrier to obtaining an ACA policy — insurers can’t exclude anyone who is sick.

You qualify during this special enrollment period if you’ve lost coverage within the last 60 days or expect to lose it in the coming 60 days. That lost coverage can be from an employer or purchased on your own. You can also qualify if you lost coverage you had through a family member. When you apply, be prepared to submit documents substantiating your need to enroll in an ACA plan. If the Trump administration had re-opened the federal health insurance marketplace for those impacted by COVID-19, that would have made it somewhat easier for people to apply and get covered. It chose not to. Eleven states and the District of Columbia, which operate their own Obamacare marketplaces, have set up special enrollment periods. Those states are: California, Colorado, Connecticut, Maryland, Massachusetts, Minnesota, Nevada, New York, Rhode Island, Vermont, and Washington.

The real problem with an ACA policy isn’t establishing eligibility if you’ve lost job coverage, it’s affording new insurance, maintaining it, and paying medical bills until you resume employment. Depending on your state, coverage can be expensive — not only to buy but also to use. “If you’re income is below 250% of poverty ($64,375 for a family of four), you’re feeling no pain, but those with incomes over 250% are screwed,” insurance consultant Robert Laszewski told me. He’s referring to the premium and cost-sharing subsidies the ACA provides to families with the lowest incomes, which are intended to make insurance more affordable for them. But thousands of families with middling incomes — above the median household income of around $62,000 and into the $70,000 range and even higher — are likely to struggle with medical expenses.

The lower the income, the more help the government gives. Individuals and families with incomes up to 400% of the federal poverty level, or $104,800 for families and about $51,000 for individuals, get government help paying the premiums. But equally important is that those with incomes up to 250% of the poverty level also get additional government help paying deductibles, coinsurance, and copays, which increasingly are becoming a very big expense. A study last fall by the Kaiser Family Foundation showed that more than 25% of covered workers — including nearly half of those working for small employers — were in plans with a deductible of at least $2,000. That was nearly four times as many who encountered such high deductibles in 2009.

It’s important to remember that the cheaper the premium, the higher the deductibles, coinsurance and copays are likely to be. A low-premium policy can result in thousands of dollars of out-of-pocket costs if you or your family gets sick. In New York, for example, one carrier’s bronze plan for family coverage has a premium of $1,341, but the family would have to pay as much as $16,300 out of pocket before insurance kicks in, and each person on the policy must satisfy a $4,425 deductible. By contrast the same company offers a platinum plan for $2,700 a month, with no deductible and a maximum out-of-pocket spending limit for the family of only $4,000, with a maximum of $2,000 per person. New York is a high-cost state, but these kinds of tradeoffs in insurance policies are the same everywhere, and warrant careful thought if you venture into the ACA marketplace.

If you don’t get any government subsidies, or very small ones, the choice narrows to which bet you want to place: Go with the cheaper premium and higher cost-sharing if you get sick or pay a higher premium upfront and less out-of-pocket should illness strike.

SHORT-TERM POLICIES are an option made available by the Trump administration last year as an alternative to Affordable Care Act coverage. These are sold by commercial carriers and offer coverage for up to three years. I call them the “buyer-beware” option because stories abound of buyers who have bought these plans only to learn they had little coverage when they got sick. These policies are cheaper — perhaps as much as 50% less expensive than an ACA policy — and they typically cover much less. They don’t have to cover the 10 essential benefits offered by an ACA policy like maternity care, mental health services, and drug coverage. If there is a drug benefit, it might be limited. One policy offered only $3,000 worth of coverage — beyond that, the enrollee had to pay out of pocket for any health care costs. Others may offer only discount cards for use at a local pharmacy.

Short-term plans are not required to cover preexisting health conditions, so if you buy one thinking that your care for asthma is covered, think again. These companies have many ways of denying claims and desperate as you may be, you could be wasting your money. Katie Keith, an insurance expert with the consulting firm Keith Policy Solutions, told me these companies are not paying out much in claims — only about 30% to 40% of every dollar paid in through premiums. That compares to at least 80% for an Obamacare policy.

Some stories discussing how much hospitalization for COVID-19 will cost have begun to show up. Estimates have varied from around $20,000, from the Peterson-KFF Health System Tracker, to a range of between $42,000 to $74,000 for out-of-network coverage and $22,000 to 39,000 for in-network coverage, according to FAIR Health, an independent organization that collects billions of health insurance claims from insurers. People receiving intensive care for COVID-19 are in no position to ask anyone whether they’re in or out of their network. For some patients the bills can be much larger. Even though the president has said money from the stimulus package will help uninsured Americans who get the virus pay for their medical bills, there are many other costs families may face — stays in long-term acute care facilities, and the occupational, speech, and physical therapy often needed after weeks in a hospital bed and ventilator treatment.

Then there are non-COVID-19 related health expenses looming for families, whether or not they’ve experienced illness. If a family has no insurance because a job disappeared, or the insurance they can afford covers so little, the economic hit will be huge. How are they going to cover the medical bills even for minor ailments like a kid’s broken leg, or an emergency appendectomy? What kinds of essential care will they skip?

This is the next big health story to follow when virus fever subsides.  

Veteran health care journalist Trudy Lieberman is a contributing editor at the Center for Health Journalism Digital and a regular contributor to the Remaking Health Care column.