Wealthiest Hospitals Got Billions in Bailout for Struggling Health Providers
Twenty large chains received more than $5 billion in federal grants even while sitting on more than $100 billion in cash.
A multibillion-dollar institution in the Seattle area invests in
hedge funds, runs a pair of venture capital funds and works with elite
private equity firms like the Carlyle Group.
But it is
not just another deep-pocketed investor hunting for high returns. It is
the Providence Health System, one of the country’s largest and richest
hospital chains. It is sitting on nearly $12 billion in cash, which it
invests, Wall Street-style, in a good year generating more than $1
billion in profits.
And this spring, Providence
received at least $509 million in government funds, one of many wealthy
beneficiaries of a federal program that is supposed to prevent health
care providers from capsizing during the coronavirus pandemic.
With
states restricting hospitals from performing elective surgery and other
nonessential services, their revenue has shriveled. The Department of
Health and Human Services has disbursed $72 billion in grants since
April to hospitals and other health care providers through the bailout
program, which was part of the CARES Act economic stimulus package. The
department plans to eventually distribute more than $100 billion more.
So
far, the riches are flowing in large part to hospitals that had already
built up deep financial reserves to help them withstand an economic
storm. Smaller, poorer hospitals are receiving tiny amounts of federal
aid by comparison.
Twenty large recipients, including Providence, have received a total of more than $5 billion in recent weeks, according to an analysis of federal data
by Good Jobs First, a research group. Those hospital chains were
already sitting on more than $108 billion in cash, according to
regulatory filings and the bond-rating firms S&P Global and Fitch. A
Providence spokeswoman said the grants helped make up for losses from
the coronavirus.
Those cash piles come from a mix of
sources: no-strings-attached private donations, income from investments
with hedge funds and private equity firms, and any profits from treating
patients. Some chains, like Providence, also run their own
venture-capital firms to invest their cash in cutting-edge start-ups.
The investment portfolios often generate billions of dollars in annual
profits, dwarfing what the hospitals earn from serving patients.
Many
of these hospital groups, including Providence, are set up as
nonprofits, which generally don’t have to pay federal taxes on their
billions of dollars of income.
By contrast, hospitals
that serve low-income patients often have only enough cash on hand to
finance a few weeks of their operations.
After the
CARES Act was passed in March, hospital industry lobbyists reached out
to senior Health and Human Services officials to discuss how the money
would be distributed.
Representatives of the American
Hospital Association, a lobbying group for the country’s largest
hospitals, communicated with Alex M. Azar II, the department secretary,
and Eric Hargan, the deputy secretary overseeing the funds, said Tom
Nickels, a lobbyist for the group. Chip Kahn, president of the
Federation of American Hospitals, which lobbies on behalf of for-profit
hospitals, said he, too, had frequent discussions with the agency.
The
department then devised formulas to quickly dispense tens of billions
of dollars to thousands of hospitals — and those formulas favored large,
wealthy institutions.
One formula based allotments on how much money a hospital
collected from Medicare last year. Another was based on a hospital’s
revenue. While Health and Human Services also created separate pots of
funding for rural hospitals and those hit especially hard by the
coronavirus, the department did not take into account each hospital’s
existing financial resources.
“This simple formula used
the data we had on hand at that time to get relief funds to the largest
number of health care facilities and providers as quickly as possible,”
said Caitlin B. Oakley, a spokeswoman for the department. “While other approaches were considered, these would have taken much longer to implement.”
Hospitals
that serve a greater proportion of wealthier, privately insured
patients got twice as much relief as those focused on low-income
patients with Medicaid or no coverage at all, according to a study this month by the Kaiser Family Foundation.
“If
you ever hear a hospital complaining they don’t have enough money, see
if they have a venture fund,” said Niall Brennan, president of the
nonprofit Health Care Cost Institute and a former senior Medicare
official. “If you’ve got play money, you’re fine.”
In a letter this month
to the Department of Health and Human Services, two House committee
chairmen said the Trump administration appeared to be disregarding
Congress’s intent in how it was distributing the aid.
“The
level of funding appears to be completely disconnected from need,”
wrote the two Democrats, Representatives Frank Pallone Jr. of New Jersey
and Richard E. Neal of Massachusetts.
It is the latest
instance in which enormous and hastily enacted federal bailout programs
have benefited those who don’t appear to need the money. A package of
$170 billion in federal tax breaks, for example, will go overwhelmingly
to many of the country’s richest people and biggest companies. A
program to rescue small businesses initially directed hundreds of
millions of dollars in loans to publicly traded companies while many smaller firms were frozen out.
That pattern is repeating in the hospital rescue program.
For example, HCA Healthcare and Tenet Healthcare — publicly traded chains with billions of dollars in reserves and large credit lines from banks — together received more than $1.5 billion in federal funds.
For example, HCA Healthcare and Tenet Healthcare — publicly traded chains with billions of dollars in reserves and large credit lines from banks — together received more than $1.5 billion in federal funds.
An
HCA spokesman said the aid didn’t cover the expected lost revenue and
higher expenses caused by the coronavirus, while a Tenet spokeswoman
said the pandemic had suppressed the company’s profits.
The Cleveland Clinic got $199 million. Last year it had so much
money on hand — its $7 billion in cash helped generate $1.2 billion in
investment profits — that it paid investment advisers $28 million to
manage the fortune.
Angela Kiska, a Cleveland Clinic
spokeswoman, said the federal grants had “helped to partially offset the
significant losses in operating revenue due to Covid-19, while we
continue to provide care to patients in our communities.” The Cleveland
Clinic sent caregivers to hospitals in Detroit and New York as they were
flooded with coronavirus patients, she added.
The St.
Louis-based Ascension Health, which operates 150 hospitals nationwide,
has received at least $211 million from Health and Human Services. The
company, with $15.5 billion in cash, operates a venture capital fund and
an investment advisory firm that helps other companies manage their
money.
Even if Ascension stopped generating any revenue
whatsoever — a doomsday scenario — it would have enough cash to fully
operate for nearly eight months.
Nick Ragone, a spokesman for Ascension, said the federal funds
“facilitated our ability to serve our communities during this
unprecedented time.” He said Ascension had not furloughed or laid off
any workers and wouldn’t do so for “as long as possible.”
Critics
argue that hospitals with vast financial resources should not be
getting federal funds. “If you accumulated $18 billion and you are a
not-for-profit hospital system, what’s it for if other than a reserve
for an emergency?” said Dr. Robert Berenson, a physician and a health
policy analyst for the Urban Institute, a Washington research group.
Hospitals that serve poorer patients typically have thinner reserves to draw on.
Even before the coronavirus, roughly 400 hospitals in rural America were at risk of closing, said Alan Morgan, the chief executive of the National Rural Hospital Association. On average, the country’s 2,000 rural hospitals had enough cash to keep their doors open for 30 days.
Even before the coronavirus, roughly 400 hospitals in rural America were at risk of closing, said Alan Morgan, the chief executive of the National Rural Hospital Association. On average, the country’s 2,000 rural hospitals had enough cash to keep their doors open for 30 days.
Many
hospitals that primarily serve low-income people have received federal
grants that their executives say may not be enough to see them through
the current crisis.
At St. Claire HealthCare, the
largest rural hospital system in eastern Kentucky, the number of
surgeries dropped 88 percent during the pandemic — depriving the
hospital of a crucial revenue source. Looking to stanch the financial
damage, it furloughed employees and canceled some vendor contracts. The
$3 million the hospital received from the federal government in April
will cover two weeks of payroll, said Donald H. Lloyd II, the health
system’s chief executive.
“This is just a Band-Aid,” Mr. Lloyd said.
The Harris Health System, which operates two hospitals in Houston, treats mostly uninsured patients. In a good year, it has a 1 percent profit margin, said Esmaeil Porsa, its chief executive.
The Harris Health System, which operates two hospitals in Houston, treats mostly uninsured patients. In a good year, it has a 1 percent profit margin, said Esmaeil Porsa, its chief executive.
The
system has lost about $43 million in patient revenue during the
pandemic, Mr. Porsa said. So far, it has received about a quarter of
that in federal grants. It is unclear how it will make up the shortfall.
“I
know there are hospitals out there that have some God-awful amount of
money in reserve,” Mr. Porsa said. “We are not that, and we will never
be that. Whatever cash we have we’re going to pour into services.”
That
is not how things work at the Providence Health System, which in some
ways resembles a Silicon Valley powerhouse as much as a health care
company. Providence owns 51 hospitals, including Swedish Medical Center
in Seattle, and 1,100 clinics in California, Texas and others states.
Even
with the federal grants, Providence lost $179 million in April, said
Melissa Tizon, a company spokeswoman. The bailout money has helped the
company avoid laying off staff or reducing their pay.
“Remember, the pandemic isn’t over,” Ms. Tizon said. “We need to be financially stable for the next possible wave.”
But Providence’s financial stability does not appear to be in jeopardy.
The hospital network has nearly $12 billion in cash reserves. It has invested that money in hedge funds, private equity firms and real estate ventures.
The hospital network has nearly $12 billion in cash reserves. It has invested that money in hedge funds, private equity firms and real estate ventures.
It also oversees two venture capital
funds that manage about $300 million on behalf of the health care chain.
The venture funds do deals alongside some of the country’s
highest-profile investment firms, including Kleiner Perkins and Carlyle.
Last
year, Providence’s portfolio of investments generated about $1.3
billion in profits, far exceeding the profits from its hospital
operations. Like other nonprofits, Providence generally does not owe
federal taxes on its earnings.
In 2018, Providence paid its chief executive, Dr. Rod Hochman, more than $10 million.
That would be enough to finance about a month of operations at the St. Claire hospitals in Kentucky.
Kitty Bennett contributed research.
https://www.nytimes.com/2020/05/25/business/hospitals-bailout-billions.html?action=click&module=Top%20Stories&pgtype=Homepage
That would be enough to finance about a month of operations at the St. Claire hospitals in Kentucky.
Kitty Bennett contributed research.
https://www.nytimes.com/2020/05/25/business/hospitals-bailout-billions.html?action=click&module=Top%20Stories&pgtype=Homepage
The Best Way to Ensure Unemployed Workers Get Health Care? Pay for It Through Medicare
There's only one group that benefits handsomely from the COBRA proposal: The health insurance industry.
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The coronavirus pandemic should leave no doubt that employer-based health care coverage puts millions of people at risk of going without needed care when they lose their jobs. The Medicare Crisis program, a bill in Congress proposed by Representative Pramila Jayapal (D-WA), would guarantee access to care for millions of newly unemployed Americans.
A new report from economists at the University of Amherst, PERI, reveals that Ms. Jayapal’s bill, which uses federal dollars to pay for coverage through Medicare, is both a less costly and more effective way to help unemployed workers than the proposal that House Speaker Nancy Pelosi (D-CA) is promoting, which would buy them continuing health insurance coverage through COBRA.
The Medicare Crisis program offers far more generous benefits than the COBRA proposal, the Worker Health Coverage Protection Act. Still, according to the economists at PERI, the cost to the federal government of the Medicare Crisis program based on coverage for 38.7 million people is $22.3 billion less than the full cost of care under the COBRA proposal, $47.5 billion vs. $69.8 billion for three months of coverage.
"Jayapal's bill, which uses federal dollars to pay
for coverage through Medicare, is both a less costly and more effective
way to help unemployed workers than the proposal that House Speaker
Nancy Pelosi is promoting, which would buy them continuing health
insurance coverage through COBRA."
The Medicare Crisis program also covers a lot more people in need of
insurance than the COBRA proposal. The Medicare Crisis program covers
all recently unemployed workers and their families who lack health
insurance, around 57.7 million people. The Worker Health Care Protection
Act covers only recently unemployed workers and their families who
previously had health insurance through their jobs, around 38.7 million
people.Yet, it costs nearly the same amount to provide three months of care for 18.9 million more unemployed workers and their families under the Medicare Crisis program than under the COBRA proposal. And, only under the Medicare Crisis program would the unemployed workers not face financial barriers to care. Care costs $70 billion for 57.6 million people under the Medicare Crisis program. Care costs $69.8 billion for 38.7 million people under the COBRA proposal, assuming that these unemployed workers could afford to pay $10.3 billion in out-of-pocket costs.
The Medicare Crisis program removes almost all barriers to care. By relying on Medicare to cover care for unemployed workers, it gives them unrestricted access to health care providers wherever they are in the United States. Virtually all doctors and hospitals participate in Medicare.
The Medicare Crisis program covers the full cost of COVID-19 care. And, it provides unemployed workers with coverage for all other medically necessary care with a cap on out-of-pocket costs at five percent of their income. Moreover, they would not have the hassle of seeking pre-authorizations for their care. Nor would they face delays and denials of care, as people with corporate health insurance so often do.
In stark contrast, the COBRA proposal pays people’s COBRA premiums, which allows them to continue their employer coverage. But, it comes with the same out-of-pocket costs and restrictions on the health care providers they can use. They would be limited to care from network doctors and hospitals.
"If the goal is to help unemployed workers, the
COBRA proposal makes little sense. Without a job, most unemployed
workers will struggle to afford out-of-pocket costs for their care. Many
will be forced to forgo needed care. And, it offers no benefit to
unemployed workers who did not previously have health insurance through
their employer."
The Medicare Crisis program is also far more equitable than the COBRA
proposal. Everyone who has lost their jobs gets federally-financed
access to high-quality care under the Medicare Crisis program. The COBRA
proposal discriminates against people who lost their jobs but did not
have health insurance or who had poor quality health insurance. It gives
people back the health care coverage they had, spending more on people
who had better health insurance coverage and less on people with worse
coverage.If the goal is to help unemployed workers, the COBRA proposal makes little sense. Without a job, most unemployed workers will struggle to afford out-of-pocket costs for their care. Many will be forced to forgo needed care. And, it offers no benefit to unemployed workers who did not previously have health insurance through their employer.
There’s one group that benefits handsomely from the COBRA proposal: The health insurance industry. It guarantees corporate insurers billions of premium dollars they would otherwise lose. But, by most accounts, the health insurance industry is already thriving as a result of the pandemic. It is spending far less on COVID-19 care than it would have been spending on the thousands of elective procedures that have been put on hold. Focus should be on guaranteeing Americans access to care, not on subsidizing a profitable industry.
Given the respective costs and benefits of the Medicare Crisis program and the COBRA program, it could not be more clear that the Medicare Crisis program is the most cost-effective and best solution to ensure unemployed workers get the care they need. For the health and well-being of working Americans, Congress should stand strongly behind it.
https://www.commondreams.org/views/2020/05/15/best-way-ensure-unemployed-workers-get-health-care-pay-it-through-medicare
‘The next crisis’: Up to 43 million Americans could lose health insurance due to pandemic, study shows
The pandemic "exposes a lot of the inadequacies in our system."
Become a powerful force for change
Because health insurance is tied to employment for about half the country—160 million people—as many as 43 million are expected to lose their health insurance due to the pandemic, according to a new report by the Robert Wood Johnson Foundation (RWJF) and the Urban Institute.
Analysts project that 43 million Americans could lose their insurance when the unemployment rate hits 20%. According to the Department of Labor, the current unemployment rate is 14.7%. Some economists estimate that between 19% and 23.6% of Americans are actually out of a job, including those who lost their jobs in the last two weeks and those who have not filed for jobless claims.
The pandemic “exposes a lot of the inadequacies in our system,” RWJF senior policy analyst Katherine Hempstead told The Guardian, adding that healthcare is “tied to employment for no real reason.”
On social media, Indiana congressional candidate Veronikka Ziol argued that there is a reason to link people’s ability to seek medical care to their ability to hold a job which offers health benefits—”It’s to hold a bargaining chip over the working-class’s head.”
“Do what we want for the pittance we’re paying, or you’re going to lose your healthcare,” Ziol wrote.
“This is why we need Medicare for All,” she added.
Last month, the Economic Policy Institute estimated that 12.7 million people had already lost their employer-based health insurance.
Of the Americans who lose insurance due to layoffs or furloughs, RWJF and the Urban Institute, an estimated seven million will remain uninsured—unable to access healthcare through Medicaid or COBRA, the law which allows Americans to pay for the health insurance they had through their previous employer—which can cost hundreds of dollars per month for individual coverage.
With millions expected to join the more than 27 million Americans who were uninsured before the pandemic, the RWJF and the Urban Institute raised concerns that many will avoid medical attention if they begin showing symptoms of the coronavirus, raising the risk of spreading the illness in their communities and making it more difficult for the country as a whole to combat the pandemic.
“The American healthcare financing system was not built to withstand the combined impact of a pandemic and a recession,” Dr. Adam Gaffney, the president of Physicians for a National Health Program, told The Guardian. “It’s inevitable that people will die because they can’t get the care they need, because of the looming recession.”
https://www.nationofchange.org/2020/05/11/the-next-crisis-up-to-43-million-americans-could-lose-health-insurance-due-to-pandemic-study-shows/
Fundamental health reform like ‘Medicare for All’ would help the labor marketJob loss claims are misleading, and substantial boosts to job quality are often overlooked
Fundamental health reform like “Medicare for All” would be a hugely ambitious policy undertaking with profound effects on the economy and the economic security of households in America. But despite oft-repeated claims of large-scale job losses, a national program that would guarantee health insurance for every American would not profoundly affect the total number of jobs in the U.S. economy. In fact, such reform could boost wages and jobs and lead to more efficient labor markets that better match jobs and workers. Specifically, it could:
- Boost wages and salaries by allowing employers to redirect money they are spending on health care costs to their workers’ wages.
- Increase job quality by ensuring that every job now comes bundled with a guarantee of health care—with the boost to job quality even greater among women workers, who are less likely to have employer-sponsored health care.
- Lessen the stress and economic shock of losing a job or moving between jobs by eliminating the loss of health care that now accompanies job losses and transitions.
- Support self-employment and small business development—which is currently super low in the U.S. relative to other rich countries—by eliminating the daunting loss of/cost of health care from startup costs.
- Inject new dynamism and adaptability into the overall economy by reducing “job lock”—with workers going where their skills and preferences best fit the job, not just to workplaces (usually large ones) that have affordable health plans.
- Produce a net increase in jobs as public spending boosts aggregate demand, with job losses in health insurance and billing administration being outweighed by job gains in provision of health care, including the expansion of long-term care.
Background: The need for fundamental health reform
Currently, despite the significant gains in health care coverage spurred by the passage of the Affordable Care Act (ACA) in 2010, roughly 23 million Americans between the ages of 19 and 64 are uninsured, and another 64 million are underinsured (Collins, Bhupal, and Doty 2019).1 In addition to problems with access, the American health care system also suffers from excess costs.2 While excess health care cost growth has slowed notably in the last decade, it would be prudent for policymakers to try to keep this cost growth in check with significant policy reforms rather than simply hoping for the best going forward. Some highly important health-related prices have begun rising rapidly in the very recent past. Insurance premiums, for example, rose 20% in 2019.3 Overall spending on prescription drugs rose more than 9% between the fourth quarter of 2018 and the fourth quarter of 2019—the largest year-over-year change since 2015.4Bivens 2018b provides data demonstrating that health spending in the U.S. is higher than in advanced peer countries and has risen faster over time—and yet continues to buy worse health outcomes. The higher and faster-growing spending of the United States is driven by faster growth of prices, not by growth in the volume of health care goods and services consumed. Further, international evidence shows that a key component of controlling cost growth is a strong public role in setting and negotiating the prices of health care goods and services.
A fundamental reform like Medicare for All (M4A) would make coverage universal. Further, by providing a counterweight to (or outright eliminating) the substantial market power that keeps prices high and that is currently wielded by many key players in the health care sector (e.g., insurance companies, drug companies, specialty physicians, and device makers), such a reform could also have great success in containing health care cost growth. This could in turn provide relief from many of the ways that rising health costs squeeze family incomes.
An underappreciated benefit of such a reform is that it would also lead to a much better functioning labor market in many areas. Job quality would increase, job switching would become less stressful, better “matches” between workers and employers would boost productivity, and small businesses would be much easier to launch.
Despite the fact that M4A could deliver these large benefits to efficient labor market functioning, the policy often comes under fire from critics making highly exaggerated claims about the potential job loss that could occur under such a reform. The grain of truth in some of the claims is that, like any productivity improvement, the adoption of a reform like M4A would require the redeployment of workers from one sector (the health insurance and medical billing complex) to other sectors (mostly the delivery of health care). But there is little in the M4A-induced redeployment of workers that would greatly stress the American labor market over and above the uncertainty and churn that characterizes this labor market every year. Smart policy could make this redeployment eminently manageable for those workers who would be required to make the transition.
This brief highlights some labor market implications of M4A and critically examines claims that large job losses in the health insurance and billing administration sectors would make M4A an undesirable policy.
Health reform as labor market policy: Key effects for workers
Fundamental reforms like M4A could greatly aid labor market outcomes for U.S. workers. The most obvious benefits would be higher wages and salaries, increased availability of good jobs, reduced stress during spells of job loss, better “matches” between workers and employers, and greater opportunity to start small businesses.Higher cash wages and salaries
Medicare for All could increase wages and salaries for U.S. workers by reducing employers’ costs for health insurance—freeing up fiscal space to invest in wages instead. The share of total annual compensation paid to American employees in the form of health insurance premiums rather than wages and salaries rose from 1.1% in 1960 to 4.2% in 1979 to 8.4% in 2018.5 If this post-1960 increase had been only half as large—and employers had spent the health cost savings on wages and salaries—the take-home wages of American workers would have been almost $400 billion higher in 2018.6 Given that the share of total compensation spoken for by health insurance premiums is starting from a high base today, any reform that managed to slow the excess growth of health spending going forward would go a long way in making space for faster growth of cash compensation.7Increased availability of ‘good jobs’
Medicare for All could increase job quality substantially by making all jobs “good” jobs in terms of health insurance coverage and by increasing the potential for higher wages. While the definition of a “good job” is always going to be a bit imprecise, the vast majority of U.S. workers would say that a good job is one that pays decent wages and that also provides the health insurance coverage and retirement income benefits that most of today’s workers can only reliably access through employment. Nearly half of jobs fail this test on account of health care coverage alone: In 2016, 46.9% of workers held jobs in which their employer made no contributions to the workers’ health care; for workers in the middle fifth of the wage distribution, 42.9% held jobs in which the employer made no contribution to their health care (EPI 2017).By making health coverage universal and delinking from employment, M4A would make it far easier for employers to offer good jobs in this regard, as every job would now be accompanied by guaranteed health care coverage. Further, as noted above, wages and salaries would have substantial room to grow if health care costs were taken off of the backs of employers. Schmitt and Jones (2013) estimate the share of good jobs—jobs that clear a specified wage floor8 and provide health and retirement coverage—in overall employment each year between 1979 and 2011. They then look at various policy changes that would boost this share. They find that providing universal health coverage would boost the probability that any given job in the economy is a good job by almost 20%—and that’s even before any potential boost to the share of jobs that are good jobs coming from cash wage increases provided as employers shed health care costs.9 The boost to job quality from making health coverage universal would be even greater for women workers, as women are currently less likely to receive employer-sponsored health insurance benefits from their own employers.10
Less damaging spells of joblessness
Medicare for All could make job losses and transitions less stressful by delinking employment and access to health insurance, emulating the universal access to health care offered by our rich country peers. The U.S. is unique among the rich countries of the world in how much it ties crucial social benefits—like health insurance and retirement income—to specific jobs. Hacker (2002) has referred to this arrangement as the “divided welfare state,” with some Americans having relatively full access to health and retirement security while others have access to virtually none, all based on the specific jobs they have. This makes some jobs in the U.S. economy especially valuable, and hence especially damaging to lose. Manufacturing workers without a college degree, for example, likely incur enormous income and social benefits losses in the event of job loss stemming from either automation or trade. The ability of universal, public social benefits to make individual job losses less damaging has been long recognized by social scientists (see, for example, Estevez-Abe, Iversen, and Soskice 2001).Smooth job transitions contribute to economic dynamism by helping ensure that vacancies are filled quickly by appropriate workers and that unemployed workers can quickly find new jobs that make good use of their skills. Smooth job transitions will also be an important components of meeting crucial policy goals such as mitigating greenhouse gas emissions with wholesale changes in how energy is created. Policies that make job transitions easier and inspire less resistance from workers should be encouraged. Fundamental health reform that, like M4A, guarantees access to insurance regardless of one’s current job status is a key part of making such transitions easier.
Better labor market matches between workers and employers
Medicare for All could decrease inefficient “job lock” and boost small business creation and voluntary self-employment. Making health insurance universal and delinked from employment widens the range of economic options for workers and leads to better matches between workers’ skills and interests and their jobs. The boost to small business creation and self-employment would be particularly useful, as the United States is a laggard in both relative to advanced economy peers.Substantial evidence indicates that our current system of employer-sponsored insurance (ESI) creates significant “job lock”—a condition in which workers who don’t want to lose their current ESI stay in their current jobs rather than make transitions that would better meet their needs. In a comprehensive review of this literature, Baker (2015) finds:
The likely range of a job-lock effect is a reduction in turnover—the rate at which people leave jobs—of 15–25 percent among workers with EPHI [employer-provided health insurance, or ESI]. With normal turnover for prime-age workers (people ages 25–54) in the range of 15–20 percent per year, this job-lock effect implies a reduction in annual turnover of around 4 percentage points among prime-age workers with [employer-provided health insurance, or ESI].Making employment decisions based on access to ESI rather than on other criteria—such as work–life balance, cash wages, and commuting distance—can lead to employment “matches” that are less productive and that decrease overall worker welfare relative to job choices that are not constrained by the availability of health insurance.
More small-business formation
Despite policymakers’ frequent claims that they seek to support small businesses in the U.S. economy, the United States has a notably small share of small-business employment relative to our rich country peers. In 2018, for example, the U.S. was dead-last among the members of the Organisation for Economic Co-operation and Development (OECD) in its share of self-employment, at just 6.3% of employment. Countries that are frequently portrayed in U.S. business reporting as being choked by regulation—like Spain, France, and Germany—have far higher shares of self-employment, at 16.0%, 11.7%, and 9.9%, respectively (OECD 2020).Besides a low share of self-employment, the U.S. also had significantly lower shares of overall employment in small businesses, across nearly all industrial sectors. The latest OECD data show that the U.S. share of employment in enterprises with fewer than 50 employees is lower than in any other country except for Russia (OECD 2018, Figure 7). In an earlier overview of trends in employment by firm size, Schmitt and Lane (2009) highlight how health care policy plays two key roles in potentially explaining cross-country trends. First, because health care is nearly universally provided in other rich countries, workers choosing to start their own businesses in those countries do not face a cost confronting would-be entrepreneurs in the U.S.: the loss of ESI. Second, small businesses in the U.S. are at a distinct disadvantage in recruiting employees because the cost of providing health care coverage is significantly higher for small companies.11
Employment effects of fundamental health reform: gains in health care, losses in insurance and billing—with likely economywide net job gains from rising economic demand
Like all positive productivity gains, Medicare for All would be more likely to increase the total number of jobs in the U.S. economy, even as health reform leads to the redeployment of workers from some sectors and into others.Despite the many labor market benefits of fundamental health reform like M4A, many critics have claimed that such reform would lead to a loss of jobs. This claim is misleading. One small grain of truth to it is that the universal provision of health insurance would allow people who would strongly prefer not to work (or not to work full time), but who have remained in their current jobs in order to retain health insurance, to be free to quit. This type of voluntary reduction in labor supply following a health reform would be strongly welfare-improving. For example, the ACA was clearly associated with a large increase in parents with young children transitioning to part-time work (see Jørgensen and Baker 2014). To the degree this occurred because these parents no longer needed to work full time to obtain ESI, and they preferred spending more time with their children for reasons of work–life balance, it should be seen as a clear win for the policy.
Generally, people expressing concern about job loss stemming from a policy are concerned about involuntary job loss that leads to a higher level of unemployment in the economy. Unemployment is almost entirely a function of the level of aggregate demand: spending by households, businesses, and governments.12 The effect of fundamental health reform on the level of aggregate demand depends in turn on the balance of increased public spending and the means of financing this spending. All else equal, more public spending will boost aggregate demand and create jobs, while higher taxes will reduce aggregate demand and restrain job growth. Further, the progressivity of taxes used to finance fundamental health reform will also condition its effect on aggregate demand. The more progressive the taxes that finance health reform, the less they will drag on job growth. Increased public spending combined with progressive tax increases would almost certainly boost the level of aggregate demand and lead to lower unemployment, all else equal.
While the overall number of jobs and the level of unemployment in the economy is largely a macroeconomic issue determined by aggregate demand, claims that fundamental health reform like M4A will lead to job loss sometimes sound plausible because it is easy to envision the specific jobs that might be displaced: jobs in the health insurance and billing administration sectors. But these job displacements would be balanced by likely job gains in other sectors—most particularly in health care delivery. The health insurance coverage expansions of M4A will boost demand for health care goods and services, and workers will need to be hired to meet this demand.
Job losses in the health insurance and billing administration sectors
A recent analysis of the economic effects of M4A (Pollin et al. 2018) includes the projection that up to 1.8 million jobs in the health insurance and billing administration sector (the divisions of hospitals and doctors’ offices dedicated to administrative processing of bills and payments) could be made redundant. These potential 1.8 million lost jobs are frequently presented as if they constitute the net employment effect of M4A.13 This is a deeply flawed misrepresentation of Pollin and his colleagues’ work. In fact, their estimates are a gross (not net) measure of job displacement or “churn”—the regular process of workers starting and leaving jobs during the course of their work lives. Relative to the scale of other gross measures of job churn, the churn associated with M4A is not large.It is true that one source of cost savings from the introduction of M4A is the reduced demand for insurance and billing administration. In turn, this reduced demand would shift employment out of these sectors. This could certainly cause challenges and economic distress for the workers within these sectors who are directly affected. But for some perspective, it is worth noting that 21.5 million workers were laid off in 2018 (BLS 2020b). If the 1.8 million workers that Pollin et al. (2018) identify as potentially being displaced by M4A were forced to transition over the four-year phase-in commonly identified with M4A plans, this would increase the national rate of layoffs by about 2%. It is also worth noting that even within just the finance and insurance sectors, there have been 1.7 million layoffs in the past four years (BLS 2020b). And yet it’s safe to say that very few people even in the business press have made any note of this. This is not a shock: Our economy generates a huge amount of job churn every year. This churn is the hallmark of growth in productivity—getting more economic output with fewer inputs. While productivity growth can indeed put downward pressure on jobs in the sector experiencing it directly, Autor and Salomons (2018) demonstrate that productivity gains within a given sector strongly boost job growth in other sectors, as the savings to households and businesses stemming from enhanced productivity increase purchasing power that supports demand for these other sectors’ outputs.
If workers in the insurance or billing administration sectors were particularly hard-pressed for reemployment prospects because of geographic isolation or low average levels of educational credentials, their displacement might pose particular concern to policymakers. But employment in the health insurance and billing administration sectors is not particularly geographically concentrated,14 and Pollin et al. (2018) show that 56.5% of workers in these sectors have a four-year college degree or more education, a far greater share than the overall labor force (in 2018, 37.6% of workers had a four-year degree or more education, according to EPI 2020b).
Substantial likely job gains in the health care sector
While it may seem counterintuitive, fundamental health reform like M4A is almost guaranteed to substantially expand employment in the health care sector overall, even taking reduced billing administration employment into account. Often people hear that fundamental reform is aimed at cost containment and then imagine that part of this cost containment will take the form of fewer jobs providing health care, but this is not necessarily the case. As noted before, the U.S. is an outlier in terms of how much it spends on health care, but its health care workforce as a share of the total workforce is not out of line with shares in other countries. For example, in 2017 the health care workforce in the U.S. was equal to 13.4% of the overall workforce, while the share averaged 12.9% in the 20 other richest OECD countries.15 Additionally, seven of these other countries had health care workforce shares equal to or higher than the U.S.’s 13.4%.16Pollin et al. (2018) estimate that expanded access to health care could increase demand for health services by up to $300 billion annually. Given the current level of health spending and employment, this would translate into increased demand for 2.3 million full-time-equivalent workers in providing healthcare.17 Obviously all of the workers displaced from the health insurance and billing administration sectors could not necessarily transition into these jobs seamlessly, but well over 10% of workers in the health insurance sector, for example, are actually in health care occupations (e.g., they are doctors or nurses).18
Further, several M4A plans have provisions to pay for long-term care services. Reinhard et al. (2019) have estimated that in 2018, Americans provided roughly 34 billion hours in unpaid long-term care. If this care was divided up among full-time paid workers, it would require 17 million new positions. Of course, not all of this currently unpaid care would be converted into paid positions in the job market. But if even 10% of unpaid care translated into new jobs, it would create enough new demand for workers to essentially offset the displacement of workers in the health insurance and billing administration sectors.
The upshot: M4A creates a small amount of manageable churn but increases the overall demand for labor and boosts job quality
The job challenge relating to a fundamental health reform is managing a relatively small increase in job churn during an initial phase-in period. Most Medicare for All plans explicitly recognize and account for the costs of providing these workers the elements of a just transition. As noted previously, this sort of just transition is far easier when health care is universally provided.Besides this challenge, the effect of fundamental reform like M4A on the labor market would be nearly uniformly positive. The effect of a fundamental reform like M4A on aggregate demand is almost certainly positive and will therefore boost the demand for labor. The number of jobs spurred by increased demand for new health care spending (including long-term care) will certainly be larger than the number displaced by realizing efficiencies in the health insurance and billing administration sectors.
Finally, the introduction of fundamental health reform like M4A—particularly reform that substantially delinks health care provision from specific jobs—would greatly aid how the labor market functions for typical working Americans. Take-home cash pay would increase, job quality would improve, labor market transitions could be eased for employers and made less damaging to workers, and a greater range of job opportunities could be considered by workers. The increased flexibility to leave jobs should lead to more productive “matches” between workers and employers, and small businesses and self-employment could increase.
Fundamental health reform would benefit typical American families in all sorts of ways. Importantly, contrary to claims that such reform might be bad for jobs, this reform could substantially improve how labor markets function for these families.
https://www.epi.org/publication/medicare-for-all-would-help-the-labor-market/
Another Viewpoint: COVID-19 and the case for universal health care
The COVID-19 pandemic has taught us much about public health,
economics, hygiene, class, race, leadership, and the like. It has also
highlighted the fact that our government does not take responsibility
for the health care of all of its citizens.
There are many reasons for this, of course, including the country’s foundational principle of federalism; the near irrelevance of health care when the Constitution was written, and our geographical separation from the two world wars that gave battlefield governments their sense of social responsibility.
One could argue, however, that if our government had established a universal health care system similar to the one outlined in the Medicare for All Act of 2019, we would have been better prepared to deal with the crisis. Consider:
1 — The UHC agency would have been situated, along with the Centers for Disease Control and Prevention, the National Institutes of Health, and the Food and Drug Administration, in the Department of Health and Human Services. As this consummate DHHS carried out its mission “to enhance the health and well-being of all Americans,” it would have prioritized national health preparedness: Strategic National Stockpile maintenance, testing readiness, supply-chain security, stateside production capacity.
From the first suspicion of the pandemic it would not have been a hastily assembled White House Task Force calling the shots, but this DHHS, primed with a reserve fund earmarked, as Title VI of the MFA says, “to respond to the costs of treating an epidemic.” And it would not have been politics or turf, but DHHS expertise, including the UHC system’s national database and tracking capabilities, that would have continued to guide policy. Fifty different governors would not have had to reinvent the wheel of response.
2 — The UHC agency would have already had in place infrastructure to oversee testing and contact-tracing, disseminate directives, facilitate randomized clinical trials, and procure supplies through familiar price-negotiation channels. Comprehensive data would have been easily accessible, obviating the White House’s need for an HHS Protect to go looking for it.
3 — In March, Congress passed the $2 trillion Coronavirus Aid, Relief, and Economic Security Act. The dual focus of the bill – economic and health care support – meant that health-care funding was beholden to extraneous economic and ideological debates. A DHHS well-informed about the entire health-care system could have quickly prepared a package of needs for Congress’ fast-track consideration.
4 — During the pandemic, providers have responded to declining revenue with furloughs and closures. In a UHC system, cash flow to providers and suppliers could have been easily maintained or even increased, as in Medicare’s Accelerated and Advance Payment Program.
5 — Millions of workers now suddenly uninsured are facing cruel choices: maintain pricy coverage through COBRA, try to figure out possible Medicaid or Marketplace eligibility, or give up and “go bare.” In a UHC system: seamless coverage.
6 — Even many of those with employment-based insurance have no doubt avoided testing or treatment to avoid cost-sharing expenses (deductibles, co-pays). In a UHC system they, along with the uninsured, would have sought care more readily, thus reducing community spread. This may apply especially to vulnerable populations.
7 — Predicted 2021 premium increases to pay for COVID-19 expenses could cause employers and individuals to drop coverage. With MFA, equitable taxes would simply be adjusted over time.
In many ways, then, one can argue that our country could be dealing more effectively with COVID-19 if we had in place a universal health care system. Indeed, one could argue that, the pandemic passed, our country could deal more effectively with health care in general with such a system in place.
Dr. Daniel Bryant is a retired Portland internist, and a member of Maine AllCare, which advocates for universal health care.
https://portlandphoenix.me/another-viewpoint-covid-19-and-the-case-for-universal-health-care/
The public health crisis, they say, boosts their arguments for a single-payer system and the comprehensive, affordable coverage it promises — even after a presidential primary in which Democratic candidates inched away from the controversial idea of overhauling the U.S. health-care system to have it resemble the nationalized programs in other countries.
People have lost their employer-sponsored health plans at record rates as unemployment skyrockets. It took weeks to ramp up testing in a clunky and complex health-care system. Some people are still getting billed for coronavirus-related testing, despite laws requiring it to be fully covered.
“I hate to say we needed a crisis like this because it has caused so much devastation, but certainly the crisis has highlighted the human toll of our broken health-care system,” Rep. Pramila Jayapal (D-Wash.), sponsor of the House Medicare-for-all bill, told me in a recent phone interview.
Now Jayapal is playing a role advising Biden. She was appointed by Sanders to a health-care task force intended to unify the Democratic Party and provide recommendations to the nominee as the November election approaches, and she’s still making her case.
“I think this is a real opportunity for Vice President Biden to really make the case for all of the structural changes that need to be made that we are seeing having come to light during covid,” she said.
Foremost among them: what happens to people when they lose their jobs and the medical coverage that comes with it. Politicians across the political spectrum, including some Republicans, have long argued that there’s good reason to decouple coverage from the workplace.
The situation illustrates how quickly the loss of a job can upend one’s health insurance. For Jayapal, that strengthens the argument for Medicare-for-all, which would guarantee everyone a government-backed plan covering a range of services at little or no out-of-pocket cost. (Although wonks agree it would also cost the government a huge sum of money.)
“All of a sudden, the argument that health care shouldn’t be tied to employment makes a lot of sense to people because there are so many people who lost their employer,” Jayapal said.
Sanders struck a similar tone:
Those who have lost their employer coverage do have some options: Existing federal laws allow those who have lost health insurance as part of losing their job to enroll in a plan on healthcare.gov at any time during the year. And families receiving the supplemental employment benefits provided by Congress are within the income threshold to qualify for subsidies, according to the Kaiser Family Foundation.
There’s also Medicaid coverage, though in some states that haven’t expanded the program, eligibility is generally set at a particularly low threshold. People can also consider signing up for a short-term health plan expanded by the Trump administration or continuing their group coverage for a limited time under COBRA, but that’s typically pretty expensive.
Polls show a majority of Americans are skeptical about something as dramatic as Medicare-for-all, in which private coverage would be done away with. But they’re more open to letting people choose to buy into the program.
Steep job losses among older Americans could strengthen Biden’s proposal to slightly expand Medicare eligibility, KFF President Drew Altman argued in an Axios column. He noted that unemployment among 55- to 64-year-olds is up to 12.5 percent due to shutdowns. That translates into a steep loss of health coverage among this group.
“Millions of uninsured 55-65 year-olds could add new urgency to calls for a Medicare buy-in if Democrats control the White House and Congress in 2021,” Altman wrote.
And prices for medical procedures and prescription drugs are considerably higher in the United States than in any other developed nation.
That reality raises concerns about ensuring that every American is able to get a vaccine for the coronavirus once one is developed.
Congress was trying to tackle some of these problems before the pandemic. Lawmakers were forced to put multiple bills on the back burner as they rushed to respond to the crisis with multiple enormous relief bills.
But the needs presented by the virus ensure these systemic problems are front and center — even if there’s no consensus on whether the best solution is Medicare-for-all, a public option or something else.
“Our broken, for-profit system left people vulnerable to covid-19 in a way that they would not have been,” Jayapal said.
“The Washington Post obtained the 81-page document, called Covid-19 Strategic Testing Plan, from an individual on Capitol Hill who was not authorized to disclose it. Federal health officials did not release it publicly, submitting it to four congressional committees as required by law,” she writes.
The testing plan says that every state should aim to test at least 2 percent of its population in May and June. It states: “With support from the federal government to ensure states are meeting goals, the state plans for testing will advance the safe opening of America.”
The document also says that if 10 percent of tests are positive for the virus over the course of a week, that is “enough to assure broad coverage of the population.” It says that 41 states already have achieved that goal.
“The new report, prepared by the Department of Health and Human Services, elaborates on a blueprint the White House released last month for increasing the nation’s capacity for coronavirus testing,” Goldstein writes.
Memorial Day weekend drew large crowds to beaches, lakes and boardwalks. Many flouted social distancing, even as public health authorities warned that the coronavirus is not yet contained.
From Food and Drug Administration (FDA) Commissioner Stephen Hahn:
“The combination of warm weather, a long weekend, and lockdown-induced fatigue have lead to large crowds at beaches and pools, prompting officials to warn that now is not the time to let up on social distancing,” Antonia Noori Farzan writes for The Washington Post’s live blog.
“Large crowds mobbed the boardwalk in Ocean City, Md., while law enforcement in Volusia County, Fla., said it was ‘one of the busiest weekends’ in recent years. Viral videos showed partygoers in Missouri’s Lake of the Ozarks drinking and tanning while listening to Lizzo at a crowded pool bar. Thousands headed to Tybee Island, Ga., to kick off the start of summer, and beaches outside Tampa filled up so fast that police began turning people away at 11 a.m.”
Deborah Birx, the White House coronavirus task force coordinator, said in an interview on ABC’s “This Week” that Americans should maintain social distancing even if they continued with outdoor activities.
When asked by ABC News’s Martha Raddatz whether it was right to reopen beaches and parks, given the weekend crowds, Birx said: “I think it’s our job as public health officials every day to be informing the public of what puts them at risk. And we’ve made it clear that there’s asymptomatic spread.”
Birx added: “So we really want to be clear all the time that social distancing is absolutely critical. And if you can’t social distance and you’re outside, you must wear a mask.”
That’s according to an analysis of case data and interviews with public health professionals in several states. “In these areas, where 60 million Americans live, populations are poorer, older and more prone to health problems such as diabetes and obesity than those of urban areas,” they write. “They include immigrants and the undocumented — the ‘essential’ workers who have kept the country’s sprawling food industry running, but who rarely have the luxury of taking time off for illness.”
Rural counties in the United States now have some of the highest rates of coronavirus cases and deaths, even surpassing some hard-hit New York City boroughs.
The communities are not easy to reach, and their health-care systems are already resource-starved. “To epidemiologists and physicians, this checkerboard spread was all very predictable. It was never a question of whether the virus would hit rural America, but when,” they write.
“The calculation — known as Value of a Statistical Life or VSL — is the amount people are willing to spend to cut risk enough to save one life,” he writes. “The VSL at most federal agencies, developed over several decades, is about $10 million. If a new regulation is estimated to avoid one death a year, it can cost up to $10 million and still make economic sense.”
Analyzing the costs and benefits of reopening the nation using the VSL could “force policymakers to confront the reality of their decisions in a much more precise way. Without it, they are left to gut feelings, educated guesses or political arguments,” he says.
Yet some economists are working on such an analysis of stay-at-home and social distancing orders, determining how extreme measures to avoid coronavirus deaths compare with the significant economic fallout. They’ve found that the lifesaving efforts are a good trade off.
“Economists at the University of Wyoming estimated the economic benefits from lives saved by efforts to ‘flatten the curve’ outweighed the projected massive hit to the nation’s economy by a staggering $5.2 trillion,” Frankel writes. “Another study by two University of Chicago economists estimated the savings from social distancing could be so huge, ‘it is difficult to think of any intervention with such large potential benefits to American citizens.’”
The Cleveland Clinic, St. Louis-based Ascension Health, and Providence Health System in the Seattle area are among the large chains.
“With states restricting hospitals from performing elective surgery and other nonessential services, their revenue has shriveled,” they write. “The Department of Health and Human Services has disbursed $72 billion in grants since April to hospitals and other health care providers through the bailout program, which was part of the CARES Act economic stimulus package. The department plans to eventually distribute more than $100 billion more.”
Compared with hospitals with deep reserves that are getting a large portion of the funding, smaller and poorer hospitals are getting only a small fraction of federal aid. “Hospitals that serve a greater proportion of wealthier, privately insured patients got twice as much relief as those focused on low-income patients with Medicaid or no coverage at all, according to a study this month by the Kaiser Family Foundation,” they add.
When they lost their jobs, they lost their health insurance — during a pandemic
Texas had the highest uninsured rate of any state before the outbreak. It's also among a minority of states that have declined to expand Medicaid coverage to people with incomes near or below the poverty line.
By Shannon Najmabadi and Edgar Walters - The Texas Tribune - May 25, 2020
Laci Crosson’s son doesn’t have pills to manage his attention deficit disorder.
Betty Canales is worried about how she’ll pay for her diabetes medication.
Stevie Smith saw a doctor after she was furloughed — and paid more than double her usual price.
With the U.S. economy flailing as the country contends with the coronavirus pandemic, more than 1 million Texans have likely suffered the double whammy of losing their jobs and their employer-based health insurance. Some have landed in the state’s patchy health care safety net, where advocates say they could be cut off from physical and mental health services while facing the economic strain of a public health crisis.
Researchers estimate that between 25 million and 43 million people in the U.S. will lose health insurance through their employers in the coming months if the unemployment rate grows to 20%. It’s already near 15%, a record high since the Great Depression.
The situation is particularly dire in Texas, where state officials have restricted access to publicly funded health insurance programs for the poor and have led the charge to toss the Affordable Care Act in court.
Already home to more than 5 million uninsured residents — or about 18% of its population, the highest uninsured rate of any state — Texas is in the minority of states that have declined to expand Medicaid coverage to people with incomes near or below the poverty line.
Laci Crosson’s son doesn’t have pills to manage his attention deficit disorder.
Betty Canales is worried about how she’ll pay for her diabetes medication.
Stevie Smith saw a doctor after she was furloughed — and paid more than double her usual price.
With the U.S. economy flailing as the country contends with the coronavirus pandemic, more than 1 million Texans have likely suffered the double whammy of losing their jobs and their employer-based health insurance. Some have landed in the state’s patchy health care safety net, where advocates say they could be cut off from physical and mental health services while facing the economic strain of a public health crisis.
Researchers estimate that between 25 million and 43 million people in the U.S. will lose health insurance through their employers in the coming months if the unemployment rate grows to 20%. It’s already near 15%, a record high since the Great Depression.
The situation is particularly dire in Texas, where state officials have restricted access to publicly funded health insurance programs for the poor and have led the charge to toss the Affordable Care Act in court.
Already home to more than 5 million uninsured residents — or about 18% of its population, the highest uninsured rate of any state — Texas is in the minority of states that have declined to expand Medicaid coverage to people with incomes near or below the poverty line.
The result: Of 1.6 million Texans who have likely lost employer-sponsored health insurance during the pandemic, 30,000 would be eligible for Medicaid if the state expanded the program, according to recent estimates from the Kaiser Family Foundation.
Instead, they’re uninsured, and many more are expected to join them.
Texas’ approach stands in contrast to the 36 states that have expanded Medicaid to cover adults who earn less than 138% of the poverty line, about $36,000 a year for a family of four.
More than half of the newly uninsured residents in those states will qualify for Medicaid, leaving less than one quarter of unemployed workers without insurance, according to projections from the Urban Institute.
In Texas and the other states that rejected Medicaid expansion, one-third of the newly jobless are estimated to get Medicaid, with 40% becoming uninsured.
Among the affected is Crosson, 35, a stay-at-home mom whose husband was laid off in March from his job as a heavy equipment mechanic.
Crosson hustled to get her two youngest children enrolled in Medicaid. But for the adults, including her eldest son, who has ADHD and takes Adderall, there was nothing, said Crosson, who moved to Fort Worth last fall.
Her son’s been without his medication.
Crosson herself recently had a medical emergency, coming down with a bad bout of pneumonia just weeks after her husband was laid off. Bedridden for days, and with her husband worried she had the coronavirus, Crosson went to the hospital and was quickly asked, “Do you have health insurance?”
She received a flu test, strep test, chest X-ray, electrocardiogram and a bill she fears she won’t be able to pay. The family’s already lost a storage unit because they couldn’t afford the payments, and they are downsizing to a smaller house.
Her husband seemed depressed at first. “I can't blame him. I was like that for a little while myself,” Crosson said.
A lack of options
There are few choices for adults who lose their job-based health insurance.
They can pay the full premium, an expensive option called COBRA that temporarily extends their coverage. The average annual cost is about $7,200 for a single person or $21,000 for a family of four, according to the Kaiser Family Foundation.
If their annual income is above the poverty line — about $26,000 for a family of four — they can purchase a plan on the Affordable Care Act’s health insurance marketplace, which offers a subsidy to offset some of the cost.
And in limited circumstances in Texas, there’s Medicaid.
Texas has the strictest Medicaid eligibility in the country, and adults are unlikely to qualify for the public insurance program unless they are pregnant or have a disability that keeps them from working. A single parent with two kids could not make more than $300 or so a month.
The restrictive criteria have left a gaping health insurance hole for people who aren’t poor enough to qualify for Medicaid but make too little to get subsidies in the federal marketplace.
Before the pandemic, about 761,000 Texans, many of them working, fell into this coverage gap. Another 382,000 could soon join their ranks because of soaring unemployment, according to estimates from the Kaiser Family Foundation.
The impact may not be felt fully for months, when the unemployment benefits that have buoyed Texans’ incomes — in some cases allowing them to get subsidies in the marketplace — expire this year.
But already, health centers have reported hearing more and more from people asking what to do if they’ve lost their job and benefits.
At People’s Community Clinic, which treats underserved and uninsured Central Texans, there’s been an influx of calls from established patients who say they’ve lost insurance and want to talk to a financial counselor, said Chief Executive Officer Regina Rogoff.
“I think we’re beginning to capture the beginning of this unemployment wave,” said Rhonda Mundhenk, chief executive officer of Lone Star Circle of Care, which has clinics in Central Texas and Houston. “We have always existed to catch folks who fall into the uninsured category. But the scale of what the entire nation is experiencing now is what is radically different and requires different solutions, particularly if the economy doesn’t recover quickly.”
Lone Star clinics offer financial screenings to see if patients qualify for federal, state or county health programs — including one in Travis County for low-income residents. Not everyone will be eligible.
Among the newly uninsured is Canales, 52, who hasn’t had coverage since she was laid off from her job as a receptionist for a large Dallas-area restaurant company in late April. She and her partner have an 18-year-old daughter who can likely be covered by Medicaid until her 19th birthday, but Canales has not found an affordable source of coverage for herself.
She is diabetic and typically visits the doctor every three months to get bloodwork and prescriptions for the six medications she takes for various conditions: blood pressure, diabetes, cholesterol, neuropathy.
The diabetes medications alone cost more than $1,000 for a 90-day prescription, an out-of-pocket cost Canales said she can’t afford.
Her medicine cabinet is stocked for about a month.
“I worry, because where am I going to get the money to get my medicine?” she said. “People like me, [who] work and lose what they had, we need something to be able to fall back on until we can get back on our feet and regain everything.”
Effect on mental health services
Mental health professionals and advocates worry the loss of insurance will further hurt Texans already grappling with depleted incomes, home schooling and other demands brought on by the pandemic.
The cost to buy treatments and services out of pocket can be prohibitively expensive without insurance — and losing access to that medical care can be devastating, said Greg Hansch, executive director of the National Alliance on Mental Illness Texas.
Hansch spoke with one man who has a schizoaffective disorder, was furloughed and might not be able to afford a medication, Latuda, which can cost upwards of $1,300 for 30 tablets.
He “expressed extreme distress, frustration and worry. The medication that he was receiving through his health insurance plan is fundamental for his recovery,” Hansch said. “All of a sudden, the rug is swept out from under his feet, and he's not just worried about his quality of life. He's worried about his life itself — it’s a matter of life and death for him.”
Hansch is trying to help him find prescription assistance programs.
The man, a Pflugerville resident, said he has enrolled in an insurance plan on the federal marketplace that kicks in next month. In the meantime, he worries he’ll end up in a psychiatric ward. He’s already called several in Austin to see what precautions they’re taking to prevent the spread of COVID-19.
The rising unemployment rate and loss of job-based insurance could also deter Texans from seeking mental health services like therapy or counseling, said Alison Mohr Boleware, government relations director for the Texas chapter of the National Association of Social Workers.
“When people lose jobs or part of their household income, mental health treatment can be seen as a luxury that ‘can wait,’” she said.
There are free counseling services available, including through employers.
Some newly uninsured people have paid out of pocket for medical care they don’t want to postpone.
Smith, for example, spent $73.50 for a telehealth visit to keep a prescription filled, well above the price she paid while insured.
Before the pandemic, she worked in two bars and a coffee shop. When she was furloughed in March, one of her bosses gave her paperwork to help her enroll in a new health plan. But when Smith saw the options would cost between $174 and $250 a month, she thought, “I can’t pay that,” and declined.
She quickly applied for unemployment, food stamps and Medicaid, listing her income as $0. She was rejected for Medicaid.
“The fact that the better plans are only available through work, but then they’re precarious because of that, doesn’t make any sense,” Smith said.
Medicaid expansion
Texans who’ve lost health insurance this year have fewer options than their neighbors in states like Louisiana and New Mexico, said Anne Dunkelberg, a health policy expert for the left-leaning Center for Public Policy Priorities.
“Essentially everyone in the health care world sees [Medicaid expansion] as essential for a million reasons,” she said.
For adults covered by the expanded program authorized under former President Barack Obama’s signature health law, the federal government pays 90% of costs. In Texas, the federal government pays about 60% of the costs of the more limited program, which mainly covers low-income children, pregnant women and adults with disabilities.
Supporters of expanding Medicaid say the state’s share of the program would pay for itself by creating new health care jobs, boosting tax collections and reducing state spending on other safety-net health programs that many uninsured Texans rely on. And many counties in Texas already raise property taxes to fund health programs for the poor and uninsured.
But Medicaid expansion has been a tough sell for Texas Republicans since 2012, when the U.S. Supreme Court ruled that the federal government could not require states to opt into the program. With the pandemic tanking Texas sales tax collections, the state’s conservative leadership may be even less keen to spend new funds to cover 10% of the program’s costs.
Abbott has mostly remained mum on the subject since the virus reached Texas this spring. A spokesman for the governor did not respond to emailed questions for this story.
A porous safety net
Even Texans who should have qualified for Medicaid have struggled to get coverage and are buckling under the added strain of the pandemic.
Deborah Durst, a single mom with two daughters, one with a heart defect, has been out of work since September. Her unemployment benefits ran out in February. Although she was able to get both her children on Medicaid, her application for the same program has been held up for months. In the meantime, she’s struggled to find work, homeschool her kids and navigate the state’s meager safety net.
The stress began to affect her health, Durst feared. She paid out of pocket to see a cardiologist in March after she began convulsing one night, feeling tingling in her extremities and having heart palpitations.
“It’s on top of looking for work, on top of dealing with medical issues or trying to deal with insurance, on top of dealing with unemployment. It’s on top of dealing with this virus — it's so many stress factors, all at once,” Durst said. “That's what I think caused me to have a heart issue … and being a single mom being on my own. There's no partner; there's no break.”
https://apple.news/AkJ4d9S-fR5yjdJleuh5C4g
There are many reasons for this, of course, including the country’s foundational principle of federalism; the near irrelevance of health care when the Constitution was written, and our geographical separation from the two world wars that gave battlefield governments their sense of social responsibility.
One could argue, however, that if our government had established a universal health care system similar to the one outlined in the Medicare for All Act of 2019, we would have been better prepared to deal with the crisis. Consider:
1 — The UHC agency would have been situated, along with the Centers for Disease Control and Prevention, the National Institutes of Health, and the Food and Drug Administration, in the Department of Health and Human Services. As this consummate DHHS carried out its mission “to enhance the health and well-being of all Americans,” it would have prioritized national health preparedness: Strategic National Stockpile maintenance, testing readiness, supply-chain security, stateside production capacity.
From the first suspicion of the pandemic it would not have been a hastily assembled White House Task Force calling the shots, but this DHHS, primed with a reserve fund earmarked, as Title VI of the MFA says, “to respond to the costs of treating an epidemic.” And it would not have been politics or turf, but DHHS expertise, including the UHC system’s national database and tracking capabilities, that would have continued to guide policy. Fifty different governors would not have had to reinvent the wheel of response.
2 — The UHC agency would have already had in place infrastructure to oversee testing and contact-tracing, disseminate directives, facilitate randomized clinical trials, and procure supplies through familiar price-negotiation channels. Comprehensive data would have been easily accessible, obviating the White House’s need for an HHS Protect to go looking for it.
3 — In March, Congress passed the $2 trillion Coronavirus Aid, Relief, and Economic Security Act. The dual focus of the bill – economic and health care support – meant that health-care funding was beholden to extraneous economic and ideological debates. A DHHS well-informed about the entire health-care system could have quickly prepared a package of needs for Congress’ fast-track consideration.
4 — During the pandemic, providers have responded to declining revenue with furloughs and closures. In a UHC system, cash flow to providers and suppliers could have been easily maintained or even increased, as in Medicare’s Accelerated and Advance Payment Program.
5 — Millions of workers now suddenly uninsured are facing cruel choices: maintain pricy coverage through COBRA, try to figure out possible Medicaid or Marketplace eligibility, or give up and “go bare.” In a UHC system: seamless coverage.
6 — Even many of those with employment-based insurance have no doubt avoided testing or treatment to avoid cost-sharing expenses (deductibles, co-pays). In a UHC system they, along with the uninsured, would have sought care more readily, thus reducing community spread. This may apply especially to vulnerable populations.
7 — Predicted 2021 premium increases to pay for COVID-19 expenses could cause employers and individuals to drop coverage. With MFA, equitable taxes would simply be adjusted over time.
In many ways, then, one can argue that our country could be dealing more effectively with COVID-19 if we had in place a universal health care system. Indeed, one could argue that, the pandemic passed, our country could deal more effectively with health care in general with such a system in place.
Dr. Daniel Bryant is a retired Portland internist, and a member of Maine AllCare, which advocates for universal health care.
https://portlandphoenix.me/another-viewpoint-covid-19-and-the-case-for-universal-health-care/
The Health 202: Coronavirus proves U.S. needs Medicare-for-all, its advocates say
by Paige Winfield Cunningham with Paulina Firozi - The Washington Post - May 25, 2020
Medicare-for-all advocates say the coronavirus pandemic makes their case.
The public health crisis, they say, boosts their arguments for a single-payer system and the comprehensive, affordable coverage it promises — even after a presidential primary in which Democratic candidates inched away from the controversial idea of overhauling the U.S. health-care system to have it resemble the nationalized programs in other countries.
People have lost their employer-sponsored health plans at record rates as unemployment skyrockets. It took weeks to ramp up testing in a clunky and complex health-care system. Some people are still getting billed for coronavirus-related testing, despite laws requiring it to be fully covered.
“I hate to say we needed a crisis like this because it has caused so much devastation, but certainly the crisis has highlighted the human toll of our broken health-care system,” Rep. Pramila Jayapal (D-Wash.), sponsor of the House Medicare-for-all bill, told me in a recent phone interview.
Jayapal hopes Joe Biden will use the coronavirus crisis to push for more dramatic changes than he previously backed.
Medicare-for-all is politically far out of reach: Its prospects faded further when Jayapal’s preferred pick for president, Sen. Bernie Sanders (I-Vt.), conceded the primary race to the former vice president. Biden, a critic of Medicare-for-all, has argued for a government-run “public” option to be offered alongside private plans, although he recently gave a nod to progressives by proposing Medicare’s eligibility age be reduced by five years to age 60.Now Jayapal is playing a role advising Biden. She was appointed by Sanders to a health-care task force intended to unify the Democratic Party and provide recommendations to the nominee as the November election approaches, and she’s still making her case.
“I think this is a real opportunity for Vice President Biden to really make the case for all of the structural changes that need to be made that we are seeing having come to light during covid,” she said.
The pandemic has indeed ballooned the problems within the U.S. health-care system.
The nation’s tussle with the virus — which had claimed the lives of at least 97,000 people in the United States as of Memorial Day — has highlighted many of the practical problems that Biden, Sanders and the rest of the Democratic field spent the past year fiercely debating.Foremost among them: what happens to people when they lose their jobs and the medical coverage that comes with it. Politicians across the political spectrum, including some Republicans, have long argued that there’s good reason to decouple coverage from the workplace.
The threat of losing employer-sponsored coverage has now become a reality for an estimated 27 million Americans.
They’re among the more than 38 million people who have filed unemployment claims across the country.The situation illustrates how quickly the loss of a job can upend one’s health insurance. For Jayapal, that strengthens the argument for Medicare-for-all, which would guarantee everyone a government-backed plan covering a range of services at little or no out-of-pocket cost. (Although wonks agree it would also cost the government a huge sum of money.)
“All of a sudden, the argument that health care shouldn’t be tied to employment makes a lot of sense to people because there are so many people who lost their employer,” Jayapal said.
Sanders struck a similar tone:
Those who have lost their employer coverage do have some options: Existing federal laws allow those who have lost health insurance as part of losing their job to enroll in a plan on healthcare.gov at any time during the year. And families receiving the supplemental employment benefits provided by Congress are within the income threshold to qualify for subsidies, according to the Kaiser Family Foundation.
There’s also Medicaid coverage, though in some states that haven’t expanded the program, eligibility is generally set at a particularly low threshold. People can also consider signing up for a short-term health plan expanded by the Trump administration or continuing their group coverage for a limited time under COBRA, but that’s typically pretty expensive.
Polls show a majority of Americans are skeptical about something as dramatic as Medicare-for-all, in which private coverage would be done away with. But they’re more open to letting people choose to buy into the program.
Steep job losses among older Americans could strengthen Biden’s proposal to slightly expand Medicare eligibility, KFF President Drew Altman argued in an Axios column. He noted that unemployment among 55- to 64-year-olds is up to 12.5 percent due to shutdowns. That translates into a steep loss of health coverage among this group.
“Millions of uninsured 55-65 year-olds could add new urgency to calls for a Medicare buy-in if Democrats control the White House and Congress in 2021,” Altman wrote.
The coronavirus also highlights the lack of health-care affordability in the United States, even for the insured.
Even Americans with generous coverage are vulnerable to high deductibles and unexpected “surprise” medical bills after receiving out-of-network coverage through no fault of their own. In the case of testing and treatment for covid-19, the disease caused by the coronavirus, insurers aren’t always following measures signed by President Trump to protect patients from any additional costs, as Business Insider recently detailed.And prices for medical procedures and prescription drugs are considerably higher in the United States than in any other developed nation.
That reality raises concerns about ensuring that every American is able to get a vaccine for the coronavirus once one is developed.
Congress was trying to tackle some of these problems before the pandemic. Lawmakers were forced to put multiple bills on the back burner as they rushed to respond to the crisis with multiple enormous relief bills.
But the needs presented by the virus ensure these systemic problems are front and center — even if there’s no consensus on whether the best solution is Medicare-for-all, a public option or something else.
“Our broken, for-profit system left people vulnerable to covid-19 in a way that they would not have been,” Jayapal said.
Ahh, oof and ouch
AHH: The Trump administration has pledged to buy and distribute 100 million swabs to states by the end of the year.
The pledge to help with testing was made in its Covid-19 Strategic Testing Plan to Congress, which was delivered right before the legally required deadline, Amy Goldstein reports.“The Washington Post obtained the 81-page document, called Covid-19 Strategic Testing Plan, from an individual on Capitol Hill who was not authorized to disclose it. Federal health officials did not release it publicly, submitting it to four congressional committees as required by law,” she writes.
The testing plan says that every state should aim to test at least 2 percent of its population in May and June. It states: “With support from the federal government to ensure states are meeting goals, the state plans for testing will advance the safe opening of America.”
The document also says that if 10 percent of tests are positive for the virus over the course of a week, that is “enough to assure broad coverage of the population.” It says that 41 states already have achieved that goal.
“The new report, prepared by the Department of Health and Human Services, elaborates on a blueprint the White House released last month for increasing the nation’s capacity for coronavirus testing,” Goldstein writes.
OOF: Nearly 100,000 Americans have died of the coronavirus.
People in many states are slowly starting to return to normal life. Some houses of worship tentatively opened over the weekend, but with a list of social distancing guidelines, Felicia Sonmez, Meryl Kornfield and Derek Hawkins report.Memorial Day weekend drew large crowds to beaches, lakes and boardwalks. Many flouted social distancing, even as public health authorities warned that the coronavirus is not yet contained.
From Food and Drug Administration (FDA) Commissioner Stephen Hahn:
“The combination of warm weather, a long weekend, and lockdown-induced fatigue have lead to large crowds at beaches and pools, prompting officials to warn that now is not the time to let up on social distancing,” Antonia Noori Farzan writes for The Washington Post’s live blog.
“Large crowds mobbed the boardwalk in Ocean City, Md., while law enforcement in Volusia County, Fla., said it was ‘one of the busiest weekends’ in recent years. Viral videos showed partygoers in Missouri’s Lake of the Ozarks drinking and tanning while listening to Lizzo at a crowded pool bar. Thousands headed to Tybee Island, Ga., to kick off the start of summer, and beaches outside Tampa filled up so fast that police began turning people away at 11 a.m.”
Deborah Birx, the White House coronavirus task force coordinator, said in an interview on ABC’s “This Week” that Americans should maintain social distancing even if they continued with outdoor activities.
When asked by ABC News’s Martha Raddatz whether it was right to reopen beaches and parks, given the weekend crowds, Birx said: “I think it’s our job as public health officials every day to be informing the public of what puts them at risk. And we’ve made it clear that there’s asymptomatic spread.”
Birx added: “So we really want to be clear all the time that social distancing is absolutely critical. And if you can’t social distance and you’re outside, you must wear a mask.”
OUCH: The pandemic has made its way across the nation’s rural regions.
The coronavirus first struck major metropolitan areas. But now it’s affecting counties with acres of farmland and cramped meatpacking facilities. It’s hitting regions that have prisons with close living quarters but few hospital beds, Reis Thebault and Abigail Hauslohner report. That’s according to an analysis of case data and interviews with public health professionals in several states. “In these areas, where 60 million Americans live, populations are poorer, older and more prone to health problems such as diabetes and obesity than those of urban areas,” they write. “They include immigrants and the undocumented — the ‘essential’ workers who have kept the country’s sprawling food industry running, but who rarely have the luxury of taking time off for illness.”
Rural counties in the United States now have some of the highest rates of coronavirus cases and deaths, even surpassing some hard-hit New York City boroughs.
The communities are not easy to reach, and their health-care systems are already resource-starved. “To epidemiologists and physicians, this checkerboard spread was all very predictable. It was never a question of whether the virus would hit rural America, but when,” they write.
What a life is worth
Federal agencies typically estimate that the value of a human life is $10 million.
The government has spent decades studying what a life is worth – and these types of calculations are legally required for major new regulations, such as road safety laws, Todd C. Frankel reports. But this kind of approach has been missing from the debate about how to respond to the pandemic.“The calculation — known as Value of a Statistical Life or VSL — is the amount people are willing to spend to cut risk enough to save one life,” he writes. “The VSL at most federal agencies, developed over several decades, is about $10 million. If a new regulation is estimated to avoid one death a year, it can cost up to $10 million and still make economic sense.”
Analyzing the costs and benefits of reopening the nation using the VSL could “force policymakers to confront the reality of their decisions in a much more precise way. Without it, they are left to gut feelings, educated guesses or political arguments,” he says.
Yet some economists are working on such an analysis of stay-at-home and social distancing orders, determining how extreme measures to avoid coronavirus deaths compare with the significant economic fallout. They’ve found that the lifesaving efforts are a good trade off.
“Economists at the University of Wyoming estimated the economic benefits from lives saved by efforts to ‘flatten the curve’ outweighed the projected massive hit to the nation’s economy by a staggering $5.2 trillion,” Frankel writes. “Another study by two University of Chicago economists estimated the savings from social distancing could be so huge, ‘it is difficult to think of any intervention with such large potential benefits to American citizens.’”
Industry impact
Twenty large hospital chains have recently received a total of more than $5 billion in federal grants.
That’s according to an analysis of federal data by Good Jobs First, a research group, the New York Times’s Jesse Drucker, Jessica Silver-Greenberg and Sarah Kliff report. While they received government help, these rich hospital chains were already sitting on more than $108 billion in cash.The Cleveland Clinic, St. Louis-based Ascension Health, and Providence Health System in the Seattle area are among the large chains.
“With states restricting hospitals from performing elective surgery and other nonessential services, their revenue has shriveled,” they write. “The Department of Health and Human Services has disbursed $72 billion in grants since April to hospitals and other health care providers through the bailout program, which was part of the CARES Act economic stimulus package. The department plans to eventually distribute more than $100 billion more.”
Compared with hospitals with deep reserves that are getting a large portion of the funding, smaller and poorer hospitals are getting only a small fraction of federal aid. “Hospitals that serve a greater proportion of wealthier, privately insured patients got twice as much relief as those focused on low-income patients with Medicaid or no coverage at all, according to a study this month by the Kaiser Family Foundation,” they add.
Coronavirus latest
Remembering the individuals behind the grim milestone:
- The New York Times highlighted some of the names and memories of those who have died, after putting 1,000 names in the paper over the weekend.
The hardest hit:
- The “special enrollment” period for individual Affordable Care Act coverage for those who lost their health insurance due to layoffs is coming to a close at the end of the month in most states, the Associated Press’s Ricardo Alonso-Zaldivar reports.
- Workers at meatpacking facilities are still getting sick, even as the industry tries to return to normal. There have been more than 11,000 infections tied to Tyson Foods, the nation’s largest meat processor, even as it has set up on-site medical clinics and started screening employees for fevers before their shifts, Taylor Telford reports.
- The number of working black business owners across the country has plummeted more than 40 percent, more than any other racial group during the pandemic, Hannah Knowles reports.
In the states:
- A study estimates that the coronavirus may still be spreading at epidemic rates in two dozen states, specifically in the South and Midwest, Joel Achenbach, Rachel Weiner and Isaac Stanley-Becker report.
Finding treatments:
- The World Health Organization said it would temporarily drop the antimalarial drug hydroxychloroquine from its global study of covid-19 treatments due to safety concerns, Kim Bellware reports for The Post’s live blog. Trump has touted the drug as a preventive treatment for covid-19 despite a lack of evidence and warnings about its side effects.
Around the world:
- Local health authorities across Germany have been using contact tracers since they first confirmed coronavirus cases earlier this year. “Epidemiologists say the effort has been essential to the country’s ability to contain its coronavirus outbreak and avoid the larger death tolls seen elsewhere, even with a less stringent shutdown than in other countries,” Loveday Morris and Luisa Beck report.
- The city of Wuhan in China said it had tested 9 million of its 11 million people for coronavirus in 10 days, the Wall Street Journal’s Wenxin Fan reports. Most of those swab samples have already been processed.
- https://www.washingtonpost.com/news/powerpost/paloma/the-health-202/2020/05/26/the-health-202-coronavirus-proves-we-need-medicare-for-all-its-advocates-say/5eca592688e0fa6727004311/?
When they lost their jobs, they lost their health insurance — during a pandemic
Texas had the highest uninsured rate of any state before the outbreak. It's also among a minority of states that have declined to expand Medicaid coverage to people with incomes near or below the poverty line.
By Shannon Najmabadi and Edgar Walters - The Texas Tribune - May 25, 2020
Laci Crosson’s son doesn’t have pills to manage his attention deficit disorder.
Betty Canales is worried about how she’ll pay for her diabetes medication.
Stevie Smith saw a doctor after she was furloughed — and paid more than double her usual price.
With the U.S. economy flailing as the country contends with the coronavirus pandemic, more than 1 million Texans have likely suffered the double whammy of losing their jobs and their employer-based health insurance. Some have landed in the state’s patchy health care safety net, where advocates say they could be cut off from physical and mental health services while facing the economic strain of a public health crisis.
Researchers estimate that between 25 million and 43 million people in the U.S. will lose health insurance through their employers in the coming months if the unemployment rate grows to 20%. It’s already near 15%, a record high since the Great Depression.
The situation is particularly dire in Texas, where state officials have restricted access to publicly funded health insurance programs for the poor and have led the charge to toss the Affordable Care Act in court.
Already home to more than 5 million uninsured residents — or about 18% of its population, the highest uninsured rate of any state — Texas is in the minority of states that have declined to expand Medicaid coverage to people with incomes near or below the poverty line.
Laci Crosson’s son doesn’t have pills to manage his attention deficit disorder.
Betty Canales is worried about how she’ll pay for her diabetes medication.
Stevie Smith saw a doctor after she was furloughed — and paid more than double her usual price.
With the U.S. economy flailing as the country contends with the coronavirus pandemic, more than 1 million Texans have likely suffered the double whammy of losing their jobs and their employer-based health insurance. Some have landed in the state’s patchy health care safety net, where advocates say they could be cut off from physical and mental health services while facing the economic strain of a public health crisis.
Researchers estimate that between 25 million and 43 million people in the U.S. will lose health insurance through their employers in the coming months if the unemployment rate grows to 20%. It’s already near 15%, a record high since the Great Depression.
The situation is particularly dire in Texas, where state officials have restricted access to publicly funded health insurance programs for the poor and have led the charge to toss the Affordable Care Act in court.
Already home to more than 5 million uninsured residents — or about 18% of its population, the highest uninsured rate of any state — Texas is in the minority of states that have declined to expand Medicaid coverage to people with incomes near or below the poverty line.
The result: Of 1.6 million Texans who have likely lost employer-sponsored health insurance during the pandemic, 30,000 would be eligible for Medicaid if the state expanded the program, according to recent estimates from the Kaiser Family Foundation.
Instead, they’re uninsured, and many more are expected to join them.
Texas’ approach stands in contrast to the 36 states that have expanded Medicaid to cover adults who earn less than 138% of the poverty line, about $36,000 a year for a family of four.
More than half of the newly uninsured residents in those states will qualify for Medicaid, leaving less than one quarter of unemployed workers without insurance, according to projections from the Urban Institute.
In Texas and the other states that rejected Medicaid expansion, one-third of the newly jobless are estimated to get Medicaid, with 40% becoming uninsured.
Among the affected is Crosson, 35, a stay-at-home mom whose husband was laid off in March from his job as a heavy equipment mechanic.
Crosson hustled to get her two youngest children enrolled in Medicaid. But for the adults, including her eldest son, who has ADHD and takes Adderall, there was nothing, said Crosson, who moved to Fort Worth last fall.
Her son’s been without his medication.
Crosson herself recently had a medical emergency, coming down with a bad bout of pneumonia just weeks after her husband was laid off. Bedridden for days, and with her husband worried she had the coronavirus, Crosson went to the hospital and was quickly asked, “Do you have health insurance?”
She received a flu test, strep test, chest X-ray, electrocardiogram and a bill she fears she won’t be able to pay. The family’s already lost a storage unit because they couldn’t afford the payments, and they are downsizing to a smaller house.
Her husband seemed depressed at first. “I can't blame him. I was like that for a little while myself,” Crosson said.
A lack of options
There are few choices for adults who lose their job-based health insurance.
They can pay the full premium, an expensive option called COBRA that temporarily extends their coverage. The average annual cost is about $7,200 for a single person or $21,000 for a family of four, according to the Kaiser Family Foundation.
If their annual income is above the poverty line — about $26,000 for a family of four — they can purchase a plan on the Affordable Care Act’s health insurance marketplace, which offers a subsidy to offset some of the cost.
And in limited circumstances in Texas, there’s Medicaid.
Texas has the strictest Medicaid eligibility in the country, and adults are unlikely to qualify for the public insurance program unless they are pregnant or have a disability that keeps them from working. A single parent with two kids could not make more than $300 or so a month.
The restrictive criteria have left a gaping health insurance hole for people who aren’t poor enough to qualify for Medicaid but make too little to get subsidies in the federal marketplace.
Before the pandemic, about 761,000 Texans, many of them working, fell into this coverage gap. Another 382,000 could soon join their ranks because of soaring unemployment, according to estimates from the Kaiser Family Foundation.
The impact may not be felt fully for months, when the unemployment benefits that have buoyed Texans’ incomes — in some cases allowing them to get subsidies in the marketplace — expire this year.
But already, health centers have reported hearing more and more from people asking what to do if they’ve lost their job and benefits.
At People’s Community Clinic, which treats underserved and uninsured Central Texans, there’s been an influx of calls from established patients who say they’ve lost insurance and want to talk to a financial counselor, said Chief Executive Officer Regina Rogoff.
“I think we’re beginning to capture the beginning of this unemployment wave,” said Rhonda Mundhenk, chief executive officer of Lone Star Circle of Care, which has clinics in Central Texas and Houston. “We have always existed to catch folks who fall into the uninsured category. But the scale of what the entire nation is experiencing now is what is radically different and requires different solutions, particularly if the economy doesn’t recover quickly.”
Lone Star clinics offer financial screenings to see if patients qualify for federal, state or county health programs — including one in Travis County for low-income residents. Not everyone will be eligible.
Among the newly uninsured is Canales, 52, who hasn’t had coverage since she was laid off from her job as a receptionist for a large Dallas-area restaurant company in late April. She and her partner have an 18-year-old daughter who can likely be covered by Medicaid until her 19th birthday, but Canales has not found an affordable source of coverage for herself.
She is diabetic and typically visits the doctor every three months to get bloodwork and prescriptions for the six medications she takes for various conditions: blood pressure, diabetes, cholesterol, neuropathy.
The diabetes medications alone cost more than $1,000 for a 90-day prescription, an out-of-pocket cost Canales said she can’t afford.
Her medicine cabinet is stocked for about a month.
“I worry, because where am I going to get the money to get my medicine?” she said. “People like me, [who] work and lose what they had, we need something to be able to fall back on until we can get back on our feet and regain everything.”
Effect on mental health services
Mental health professionals and advocates worry the loss of insurance will further hurt Texans already grappling with depleted incomes, home schooling and other demands brought on by the pandemic.
The cost to buy treatments and services out of pocket can be prohibitively expensive without insurance — and losing access to that medical care can be devastating, said Greg Hansch, executive director of the National Alliance on Mental Illness Texas.
Hansch spoke with one man who has a schizoaffective disorder, was furloughed and might not be able to afford a medication, Latuda, which can cost upwards of $1,300 for 30 tablets.
He “expressed extreme distress, frustration and worry. The medication that he was receiving through his health insurance plan is fundamental for his recovery,” Hansch said. “All of a sudden, the rug is swept out from under his feet, and he's not just worried about his quality of life. He's worried about his life itself — it’s a matter of life and death for him.”
Hansch is trying to help him find prescription assistance programs.
The man, a Pflugerville resident, said he has enrolled in an insurance plan on the federal marketplace that kicks in next month. In the meantime, he worries he’ll end up in a psychiatric ward. He’s already called several in Austin to see what precautions they’re taking to prevent the spread of COVID-19.
The rising unemployment rate and loss of job-based insurance could also deter Texans from seeking mental health services like therapy or counseling, said Alison Mohr Boleware, government relations director for the Texas chapter of the National Association of Social Workers.
“When people lose jobs or part of their household income, mental health treatment can be seen as a luxury that ‘can wait,’” she said.
There are free counseling services available, including through employers.
Some newly uninsured people have paid out of pocket for medical care they don’t want to postpone.
Smith, for example, spent $73.50 for a telehealth visit to keep a prescription filled, well above the price she paid while insured.
Before the pandemic, she worked in two bars and a coffee shop. When she was furloughed in March, one of her bosses gave her paperwork to help her enroll in a new health plan. But when Smith saw the options would cost between $174 and $250 a month, she thought, “I can’t pay that,” and declined.
She quickly applied for unemployment, food stamps and Medicaid, listing her income as $0. She was rejected for Medicaid.
“The fact that the better plans are only available through work, but then they’re precarious because of that, doesn’t make any sense,” Smith said.
Medicaid expansion
Texans who’ve lost health insurance this year have fewer options than their neighbors in states like Louisiana and New Mexico, said Anne Dunkelberg, a health policy expert for the left-leaning Center for Public Policy Priorities.
“Essentially everyone in the health care world sees [Medicaid expansion] as essential for a million reasons,” she said.
For adults covered by the expanded program authorized under former President Barack Obama’s signature health law, the federal government pays 90% of costs. In Texas, the federal government pays about 60% of the costs of the more limited program, which mainly covers low-income children, pregnant women and adults with disabilities.
Supporters of expanding Medicaid say the state’s share of the program would pay for itself by creating new health care jobs, boosting tax collections and reducing state spending on other safety-net health programs that many uninsured Texans rely on. And many counties in Texas already raise property taxes to fund health programs for the poor and uninsured.
But Medicaid expansion has been a tough sell for Texas Republicans since 2012, when the U.S. Supreme Court ruled that the federal government could not require states to opt into the program. With the pandemic tanking Texas sales tax collections, the state’s conservative leadership may be even less keen to spend new funds to cover 10% of the program’s costs.
Abbott has mostly remained mum on the subject since the virus reached Texas this spring. A spokesman for the governor did not respond to emailed questions for this story.
A porous safety net
Even Texans who should have qualified for Medicaid have struggled to get coverage and are buckling under the added strain of the pandemic.
Deborah Durst, a single mom with two daughters, one with a heart defect, has been out of work since September. Her unemployment benefits ran out in February. Although she was able to get both her children on Medicaid, her application for the same program has been held up for months. In the meantime, she’s struggled to find work, homeschool her kids and navigate the state’s meager safety net.
The stress began to affect her health, Durst feared. She paid out of pocket to see a cardiologist in March after she began convulsing one night, feeling tingling in her extremities and having heart palpitations.
“It’s on top of looking for work, on top of dealing with medical issues or trying to deal with insurance, on top of dealing with unemployment. It’s on top of dealing with this virus — it's so many stress factors, all at once,” Durst said. “That's what I think caused me to have a heart issue … and being a single mom being on my own. There's no partner; there's no break.”
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