Health Care Reform Articles - October 24, 2020

Editor's Note - 

Here is a link to an article that should be required reading for anybody with a serious interest in understanding the dynamic politics of the American health care system and reform of it, and how we got to where we are.  

One subject the author does not adequately explore is the corrosive effect the idea of health care as a business (the commodification, commercialization, and corporatization of medicine) has had on the practice of medicine - turning the attention of healthcare workers from the welfare of patients to the bottom lines of corporate providers of healthcare goods and services.

The article is very,very long, but well worth the time and effort  it requires to slog through. There is a ton of usefult information in it.

 -SPC

 

The U.S. Health Insurance System

By Holly Rosenkrantz - CQ Researcher - October 23, 2020

Will the COVID-19 pandemic transform it?

 Introduction

COVID-19 sparked a recession and massive job cuts, which have cost millions of people their health insurance. An estimated 160 million Americans had insurance through an employer before the pandemic, and as many as 43 million may lose their coverage. The dramatic change could upend the U.S. employer-based health insurance system, as more people join government programs such as Medicaid or use tax subsidies to buy plans on Obamacare exchanges. But a contentious election campaign, in which health care has become an even more prominent issue due to the pandemic, could also alter the long-term outlook for health insurance in the United States. Democratic presidential nominee Joe Biden supports adding a public option to the Obamacare law, and liberals may push for a government-run single-payer system if the Democrats win big gains in the election. At the same time, Obamacare could face a significant threat in November when a conservative-dominated Supreme Court hears a new challenge to the law.

A trauma patient is rushed into an exam area at a hospital in Moreno Valley, Calif., in May. The entire U.S. health system is under great stress because of the COVID-19 pandemic, causing consumers and policymakers to question the effectiveness of the traditional employer-based health insurance system. (Getty Images/Los Angeles Times/Gina Ferazzi)

Go to top

Overview

At the start of the COVID-19 pandemic, April Satterfield's husband was pushed by his employer, an Atlanta-based credit card company, to take early retirement. The family had options for health insurance: They would be allowed to stay on the employer's plan for another year and a half, and their disabled son qualified for Medicaid, the government program that insures people with low income or disabilities.

But Satterfield did not want to take the deal being offered to them as the company was trying to survive the virus-induced recession. Her son TJ, age 8, has a rare medical condition called autoimmune encephalitis, and he relies on out-of-state specialists to manage his care. A government-run plan such as Medicaid, she says, would not cover out-of-state doctors and experimental treatments that have saved his life.

“I am so scared we will lose all his doctors and treatments,” she says. “My son's health is tied to my husband's job.”

A woman laid off during the COVID-19 pandemic receives unemployment benefits forms in Hialeah, Fla., in April. The massive job losses caused by the pandemic-induced recession have cost millions of Americans their health insurance. (AFP/Getty Images/Chandan Khanna)

The uniquely American situation in which a person's health care is tied to a job has been given a dramatic jolt by the pandemic. It has disrupted the country's health care system, shaking up long-held assumptions about medicine, doctors, hospitals, insurance companies and drugmakers. And it has led some experts to predict the American tradition of linking health insurance to employment will end.

This 75-year-old structure was under stress even before the pandemic due to unsustainable costs for small and large businesses and crippling out-of-pocket expenses for patients. The recession has only added to that pressure by causing millions of people to lose their health insurance along with their jobs.1

Before the pandemic hit, an estimated 160 million Americans had insurance through an employer.2 As many as 43 million people may lose their employer-based coverage as a result of the recession.3 Many will obtain insurance through the government, a development that has important political ramifications in a historic election year.

Policymakers are considering several options to bolster and preserve the employer-based system. But whether this system can, or should, be preserved remains to be seen. Some experts say evidence is scant that the system is financially sustainable in the long run. Others say that even if it is, it should not be preserved, because it is rife with racial inequities — and those inequities have been exacerbated by a virus outbreak that is hitting racial minorities particularly hard.4

“Even before the pandemic, having an insurance card didn't mean you could afford health care,” says Emily Barson, executive director of United States of Care, a Washington-based group that pushes for improved access to health care. “This is a system where people's health care is tied to their job. That is expensive for employers and exacerbates inequities. That is not a measure of a well-functioning system.”

Access to insurance is vital because health care in the United States can be very expensive. A single visit to the doctor's office can cost several hundred dollars and an average three-day stay in the hospital can run tens of thousands of dollars or more.5

Some 21 percent of all adults said they or their partner lost or were furloughed from their job due to COVID-19, including 31 percent of Hispanic Americans, as of June 2020. About four in 10 received their health insurance coverage through their employer.

Source: Sara R. Collins et al., “An Early Look at the Potential Implications of the COVID-19 Pandemic for Health Insurance Coverage,” Commonwealth Fund, June 23, 2020, https://tinyurl.com/y9o3xdhu

Data for the graphic are as follows:

Category	Percentage Who Experienced Job Loss Due to COVID-19
All	21%
Black	24%
Hispanic	31%
White	18%
Annual Income less than $50,000	27%
Annual Income of $50,000 or more	16%

Insurance Status	Percentage Who Lost Jobs Due to COVID-19
Did not have coverage through a lost or furloughed job	59%
Had coverage through a lost or furloughed job	41%

In 2020, the cost of health care for a family of four covered by a typical preferred provider plan (PPO) was $28,653, according to the Milliman Medical Index, an annual measure of health care costs done by a Seattle consulting firm. U.S. employers spend about $20,000 per household per year on health insurance for their employees and their families.6

And concerns about cost affect whether people seek and obtain medical treatment — decisions that have been complicated by the pandemic. A Gallup Poll conducted in April found that concerns about cost would discourage millions of people — almost one in 10 — from seeking care for suspected COVID-19.7

“We have a health insurance system that is essentially pretty good for healthy people who are economically in good shape,” says David Himmelstein, a primary care physician and a professor at the School of Urban Public Health at City University of New York's Hunter College. “And then as the economy goes down, and you get sick or your job goes away, you are in trouble.”

The reason the U.S. health insurance system is so unique is that many other developed countries provide much of their medical care through the government. Every modern industrialized country other than the United States has achieved near-universal coverage, and done so at a lower cost.8

Most insured Americans — 67.3 percent — receive coverage through a private insurer, while about one-third get it from a government-provided plan, such as Medicare (the federal health insurance plan for people ages 65 and over), Medicaid (for lower-income people), or special government health care plans for military veterans.9

And among those insured through a private plan, 55.1 percent are employment-based, while 10.8 percent comes from a direct purchase from the insurer. (Another 2.6 percent comes from TRICARE, an insurance plan for active and retired military.)10

Much of that employer-based coverage comes from bigger companies; smaller businesses are typically least able to afford health benefits for their workers. While nearly all large companies offer insurance to their employees, only 56 percent of businesses with fewer than 200 employees provide coverage.11

Given the cost of health insurance, millions of Americans historically have lacked coverage. Many of them rely on emergency room visits when they need care, or do not seek care for nonemergency situations.

The number of people without health insurance has been dropping, though, since the passage of the landmark Affordable Care Act (ACA), also known as Obamacare, in 2010. The ACA has increased insurance coverage by providing subsidies in the form of tax credits for households whose incomes are too high to qualify for Medicaid but too low to be able to buy insurance at the market price, which is often several thousand dollars a month for a family. At the start of the pandemic, about 90 percent of Americans had health insurance, up from 82 percent in 2010.12

Three Miami residents discuss health plans available through the Affordable Care Act (ACA) with insurance agents in 2015. Before the pandemic hit, the ACA had helped boost the coverage rate among Americans to 90 percent. (Getty Images/Joe Raedle)

The ACA also provided significant federal assistance for states to raise their income limits for Medicaid, which is a joint federal-state program. This expansion added many people to the Medicaid rolls who work but still cannot afford insurance. The ACA provision expanding Medicaid suffered a big blow in one of the first legal challenges to the act: The U.S. Supreme Court in 2012 limited the federal government's power to compel states to expand their Medicaid programs.13

But as the COVID-19 recession extended through the summer, some 29 million people became unemployed.14 Layoffs, furloughs and cuts in insurance expenses by struggling small businesses led to more than 3 million adults losing employer-sponsored health insurance, and 2 million becoming uninsured, according to a study based on census data done by the Urban Institute, a Washington think tank.15 A report by the Economic Policy Institute, a liberal think tank, relying on U.S. Bureau of Labor Statistics data, puts the number of people who have lost their employer-sponsored insurance due to the pandemic even higher — at roughly 6.2 million.16 And an analysis from Avalere Health, a Washington consulting firm, predicts about 12 million people will lose health care by the end of the year.17

(Estimates vary because projections rely on different methodologies. More definitive data will become available next year.18)

Whatever the precise numbers, these insurance losses have important policy implications. More than half of the newly jobless will obtain Medicaid coverage in states that expanded the program under the ACA — but only about one-third will do so in the states that have not expanded Medicaid, according to the Urban Institute.19

The share of nonelderly adults without health insurance is highest in some Southern states and tends to be higher in states that have not expanded eligibility for Medicaid. In Texas, 29 percent are uninsured, the highest rate in the nation.

Source: “The Covid-19 Pandemic and Resulting Economic Crash Have Caused the Greatest Health Insurance Losses In American History,” Families USA, July 13, 2020, https://tinyurl.com/y9rtc57n; “Status of State Medicaid Expansion Decisions: Interactive Map,” Kaiser Family Foundation, Oct. 1, 2020, https://tinyurl.com/y9gseqv5

Data for the graphic are as follows:

State	Percentage of Adults Currently Uninsured	Medicaid Expansion Status
Alabama	15 to 19%	Did not expand
Alaska	15 to 19%	Expanded
Arizona	15 to 19%	Expanded
Arkansas	15 to 19%	Expanded
California	13 to 14%	Expanded
Colorado	13 to 14%	Expanded
Connecticut	10 to 12%	Expanded
Delaware	10 to 12%	Expanded
District of Columbia	Less than 10%	Expanded
Florida	20% or more	Did not expand
Georgia	20% or more	Did not expand
Hawaii	10 to 12%	Expanded
Idaho	15 to 19%	Expanded
Illinois	13 to 14%	Expanded
Indiana	13 to 14%	Expanded
Iowa	Less than 10%	Expanded
Kansas	15 to 19%	Did not expand
Kentucky	10 to 12%	Expanded
Louisiana	13 to 14%	Expanded
Maine	13 to 14%	Expanded
Maryland	10 to 12%	Expanded
Massachusetts	Less than 10%	Expanded
Michigan	10 to 12%	Expanded
Minnesota	Less than 10%	Expanded
Mississippi	20% or more	Did not expand
Missouri	15 to 19%	Expanded
Montana	13 to 14%	Expanded
Nebraska	10 to 12%	Expanded
Nevada	20% or more	Expanded
New Hampshire	10 to 12%	Expanded
New Jersey	13 to 14%	Expanded
New Mexico	15 to 19%	Expanded
New York	10 to 12%	Expanded
North Carolina	20% or more	Did not expand
North Dakota	10 to 12%	Expanded
Ohio	10 to 12%	Expanded
Oklahoma	20% or more	Expanded
Oregon	13 to 14%	Expanded
Pennsylvania	10 to 12%	Expanded
Rhode Island	Less than 10%	Expanded
South Carolina	20% or more	Did not expand
South Dakota	15 to 19%	Did not expand
Tennessee	15 to 19%	Did not expand
Texas	20% or more	Did not expand
Utah	13 to 14%	Expanded
Vermont	Less than 10%	Expanded
Virginia	13 to 14%	Expanded
Washington	10 to 12%	Expanded
West Virginia	10 to 12%	Expanded
Wisconsin	10 to 12%	Did not expand
Wyoming	15 to 19%	Did not expand

Many businesses have tried to keep their workers insured during the pandemic. Companies have relied on federal government aid, such as the Paycheck Protection Program, to pay insurance premiums. Government funding has “prevented the economic crisis from becoming a coverage crisis right away,” said Leemore S. Dafny, a professor at the Harvard Business School.20 A report that Dafny co-wrote found that nearly a third of small businesses surveyed in late June said they were not sure they could keep paying health care premiums beyond August.21

Another option for people who lose their jobs is a program known as COBRA, which stands for the Consolidated Omnibus Reconciliation Act. COBRA is a form of health insurance coverage provided by a company to a former employee for about 18 months. But COBRA can be very expensive, because the former employee also has to pay the employer portion of the plan.22

Health policy experts have suggested several options to address the burden of this massive loss of insurance due to COVID-19-prompted layoffs. These include temporarily allowing more federal support for Medicaid in nonexpansion states, expanding the income range for premium subsidies in the insurance marketplaces created by the Affordable Care Act, providing subsidies for COBRA insurance and increasing the federal share of Medicaid funding.23

But a cloud of uncertainty hangs over all these proposed solutions. Congress and the Trump administration have had trouble agreeing to a broader economic recovery package; health insurance support is just an element of that. “For the most part, there has not been tangible results to help people get coverage if they have lost it,” says Andrew Schwab, policy director at United States of Care.

Perhaps more ominously, the ACA's fate may hang in the balance. The Supreme Court is scheduled in November to hear a challenge to the law's legality. With the possibility that a sixth conservative justice, Amy Coney Barrett, may be sitting on the court by the time the case is heard, an important backstop in the health insurance market could be disrupted.24

All this chaos and change could bolster support for more ambitious and sweeping changes to U.S. health insurance, such as a single-payer system referred to by its proponents as Medicare for All. But while much of the political debate in health care has centered on the future and potential expansion of government programs, employer-sponsored insurance continues to provide the greatest portion of health spending in the nation.25

As policymakers, experts, health care providers and consumers consider the options, here are some of the questions they are debating:

Can the employer-based health insurance system survive the COVID-19 pandemic?

Even with millions of people losing their employer-based health care, the insurance companies that power the system do not seem to be suffering financially. Some of the largest, such as Humana, UnitedHealth Group and Anthem, reported second-quarter earnings in August that are double what they were a year ago, largely because in the short term their claims payouts have fallen.26

And wealthier people are by and large not the ones feeling the impact of massive health insurance losses due to pandemic-prompted layoffs. “People in white-collar jobs with generous employer sponsored benefits have been largely unscathed,” says Arielle Kane, director of health care at the Progressive Policy Institute, a centrist-Democratic think tank. The people most affected are those in the service and hospitality industries, she says.27

“COVID-19 has had a disparate effect across industries,” Kane says. “This unequal impact means that the same entrenched groups will seek to extend the status quo without considering the impacts it has on more vulnerable groups.”

“For better or worse,” she says, “the employer-based health insurance system is entrenched.”

With more vulnerable groups more likely to have lost their health insurance, the system may naturally move away from being dominated by employer-sponsored health insurance, says Anuj Gangopadhyaya, a research associate in the Health Policy Center at the Urban Institute. Supports are in place for people to obtain insurance during the pandemic through an expanded Medicaid program in some states and through relaxed enrollment opportunities on ACA health plans, which allow unemployed and self-employed people to buy insurance through state marketplace exchanges. People who cannot afford these plans can get tax subsidies, although critics say the subsidies are not enough to make these marketplace plans affordable.

“The system is evolving to the point that employer-sponsored insurance is not the end-all-be-all for coverage” he says. “There are other protections and options, and so even if employer-based coverage falls during a recession, the health insurance system remains resilient.”

One reason for this resilience is because the system is propped up by a lot of government support. Employers have an incentive to provide insurance coverage because they can take a tax deduction for their expenditures for the coverage. In addition, their employees are for the most part not taxed on the value of the benefit. This is the single largest federal tax break, valued at an estimated $242 billion in 2019, according to the Treasury Department. This tax break for employer-sponsored insurance costs the U.S. government more in revenue than the mortgage-interest deduction.28

Some 72 percent of Americans say the part of the Affordable Care Act that prohibits insurers from denying coverage to people with pre-existing conditions is “very important.” More than 60 percent also believe other provisions of the law, also known as Obamacare, are very important, according to recent polling by the Kaiser Family Foundation. But fewer people — 55 percent — have a favorable opinion of the overall law, with a stark division along partisan lines.

Sources: “KFF Health Tracking Poll: The Public's Views on the ACA,” Kaiser Family Foundation, Oct. 16, 2020, https://tinyurl.com/y4pyl7a4; “5 Charts About Public Opinion on the Affordable Care Act and the Supreme Court,” Kaiser Family Foundation, Oct. 16, 2020, https://tinyurl.com/yyvmn73h

Data for the graphic are as follows:

Political Affiliation	Favorable Opinion of ACA
All Adults	55%
Democrats	85%
Republicans	18%
Independents	59%

Provision	Believe Provision is Very Important
Prohibits health insurance companies from denying coverage for people with pre-existing conditions	72%
Prohibits health insurance companies from denying coverage to pregnant women	71%
Prohibits health insurance companies from charging sick people more	64%
Requires health insurance companies to cover the costs for most preventative services	62%
Prohibits health insurance companies from setting a lifetime limit	62%

Some in the industry argue that more support should be given to keep the system intact. “This crisis will be over — not soon enough — but it will be over, and we need to fundamentally keep that highway back to jobs, and job-provided health care open,” says Ilyse Schuman, senior vice president of health policy for the American Benefits Council, which represents major employers. “That's what Congress needs to do now, and employer-sponsored insurance plays a big role in that.”

In addition, even with a recession and mass job losses, the pandemic may be causing people to reconsider their individual health needs. “In the wake of the SARS epidemic, for example, we saw a temporary spike in critical illness policy sales in Asia,” said Laura J. Hay, global head of insurance at the KPMG International consulting firm, referring to a disease outbreak that began in China in 2003. “We may see a similar phenomenon post-coronavirus, with rising sales of health insurance.”29

One reason big insurers are doing so well is because their payments for medical claims have fallen by billions of dollars in recent months as many patients have postponed costly elective surgeries. Some people have avoided doctors' offices and emergency rooms for fear of risking exposure to COVID-19.30

Insurers warn, however, that even though they have enjoyed strong profits, the cost of the pandemic could become overwhelming, and employers and workers may not be able to keep paying for coverage.

Insurance companies and employers are pushing Congress to consider helping them pay for the crisis by setting up a reinsurance program that would cover the most expensive medical claims. The government would fund the program to lower the amount being paid by employers and insurers.31

Some experts think the big insurance industry profits could shine a spotlight on the inequities in the system that make it unviable. While insurance companies are seeing a windfall, other players in the health care industry are not, the experts say. Many small medical practices and rural hospitals are struggling to stay open.32 (See Short Feature.)

And analysts say this insurance windfall may not last. “The cost of providing increased COVID-19 coverage to policyholders, coupled with the overall higher frequency and severity of claims to treat the virus and exacerbated by policy cancellations, is expected to have a profound impact on the profitability of the insurance industry,” said Christopher Jackson, a partner at Marcum Accountants & Advisors. “COVID-19 has the potential of increasing future health insurance premiums significantly.”33

Some insurers have warned that rates for consumers could increase by as much as 40 percent due to the pandemic.34 “These increased costs could mean that many … Americans in the commercial market may lose their coverage and go without needed care,” said Peter Lee, the executive director of Covered California, the state insurance marketplace created under the ACA.35

Employers are reporting premium rate increases of 3 percent to 4.5 percent for 2021 by major insurers.36

In addition, many businesses will face increasing pressure to cut costs — and some of that cost-cutting could come from health care expenses. Some conservative policymakers have been pressing for companies to move away from providing health insurance, and instead offer health reimbursement arrangements, or HRAs, in which employers set aside a fixed amount each year for their employees to use for health expenses or insurance.

“Employers are going to look to HRAs as a potential way to get more certainty over their costs,” said Brian Blase, a former Trump administration health care adviser. “There's no love for traditional employer coverage.”37

Has the COVID-19 pandemic increased support for a single-payer system such as Medicare for All?

The decades-long debate in the United States over health care access has often centered on the unique way in which the country relies on employer-sponsored plans. Policymakers have long considered whether a single-payer, government-funded system, which is used in many European countries, would be a better way to provide access.

The issue was a hot topic in the 2020 Democratic presidential primaries, before the pandemic hit. Liberal candidates such as Sens. Bernie Sanders, I-Vt., and Elizabeth Warren, D-Mass., argued that the country should move away from the employer-sponsored system and embrace a single-payer system, which they called Medicare for All. Republicans seized on this proposal as an indication that Democrats wanted to move the country toward socialism.

 Sen. Bernie Sanders, I-Vt., pitches his Medicare for All health care plan in a speech in Washington in 2019. While support for a single-payer plan has grown, the idea has not been a major focus in the final stages of the presidential campaign. (Getty Images/NurPhoto/Cheriss May)

So far, it is unclear whether the pandemic will create a fresh groundswell of support for a single-payer system. In March, in the early stages of the pandemic, support for Medicare for All hit a nine-month high, according to a Morning Consult/Politico survey. In this poll, 55 percent of voters said they supported Medicare for All, the highest level since June 2019.38

And in a survey of swing-state voters taken this spring, Republican pollster Whit Ayres asked how the government should help workers who have recently lost insurance coverage. The poll found that 47 percent supported a major government expansion of health care, 31 percent believed the best option for laid-off workers was to go on Medicaid and 16 percent preferred federal subsidies for Obamacare plans.39

But the health care debate during the pandemic has not focused on a single-payer system. Former Vice President Joe Biden, who won the Democratic presidential nomination, has opposed Medicare for All. Biden and many congressional Democrats instead favor creating a so-called public option under Obamacare that would compete with private insurers.40

Supporters of Medicare for All have attempted to bring it back to the forefront of the national conversation. Sanders and Rep. Pramila Jayapal, D-Wash., introduced a bill in May to expand Medicare to cover all Americans who lack health insurance, but the measure has received little attention.

Some analysts predict demand for a single-payer option will rise after the election. “This is health care moonshot time,” says Irwin Redlener, founding director of the National Center for Disaster Preparedness at Columbia University, who served on the Biden campaign's public health task force earlier this year. “If Joe Biden is elected president, there most certainly will be significant changes proposed in the U.S. health care system,” starting with the public option, he says.

But Kristi Martin, a former senior health adviser to the Obama administration, says that polling data do not reveal widespread support for policy options such as Medicare for All. Polling during the pandemic has not shown “huge movement” in support for a single-payer system, even though “people do want a safety net,” she says.

Indeed, the Kaiser Family Foundation, a nonpartisan health research organization that for years has tracked public opinion on the idea of a national health plan, says polling shows that people support “incremental changes to expand the public health insurance program.”41

There has been a shift “toward more receptivity to bigger solutions to both of our biggest problems: coverage and affordability,” said Ezekiel Emanuel, the chair of the Department of Medical Ethics and Health Policy at the University of Pennsylvania and a member of Biden's public health advisory committee. “But people's thinking hasn't caught up with the dire situation we're in.”42

Don Berwick, who ran the Centers for Medicare and Medicaid Services during the Obama administration, agrees. He says Congress is applying “a whole series of Band-Aids and special measures” to address the problems of those who have lost their insurance during the pandemic. “What if, instead, we just had universal health insurance?” he asks.

Jayapal said attitudes may change if Democrats win control of the White House and the Senate in November. “It's entirely possible that everything shifts on health care, within weeks or months after the election,” she said.43

Does employer-based insurance produce better health outcomes?

Proponents of the employer-based system point to situations like that of the Satterfields, the Atlanta couple, in which people are afraid to move to government insurance, as evidence of the superiority of private plans.

“You might want to check out the death rate in France before you think the form of health system [there] is the answer,” Neera Tanden, president of the Center for American Progress, a left-leaning advocacy group, wrote on Twitter as she was debating the merits of a single-payer system.44

In truth, the answer is more complicated, experts say.

Dr. Aaron E. Carroll, a professor of pediatrics at Indiana University's School of Medicine, said that coverage provided by Obamacare plans sold through state health care marketplaces is likely not as good as what an employer provides. He also believes Medicare coverage is inferior to the kind of care available from a job-based plan.45

But Medicaid, the federal-state program for lower-income people, provides benefits. This program comes with no out-of-pocket charges for most services, and it covers traditional health care needs.

The Urban Institute's Gangopadhyaya says there are “pros and cons” to government health care, as well as private health care obtained through an employer. There is a range in quality among employer plans, and the ultimate answer depends on the network of doctors and the types of treatment covered by an employer plan, he says: “The truth is ambiguous, and there are no solid answers.”

Caryn Solomon is an elementary school teacher in Maryland who lost her health insurance when she lost her job due to the pandemic. She qualified for Medicaid, but she feels the insurance is not great, because she has to stay within a specific hospital network, and she needs a referral for all her specialists.

Ge Bai, a health policy professor at Johns Hopkins University who studies health markets, says a review of medical literature shows that private insurance plans lead to better health outcomes.

For example, a 2015 study concluded that the quality of care delivered to patients within the same hospital varies by insurance type. “We found that privately insured patients had lower risk-adjusted mortality rates than did Medicare enrollees,” the study concluded. “Medicare patients appeared particularly vulnerable to receiving inferior care.”46

More specifically, various studies have found that cancer care is superior with private insurance compared to government insurance. For example, a 2017 report published in the Journal of the American Medical Association concluded that “Medicaid patients were significantly more likely to experience delays in surgery compared with privately insured patients.”47

Jean-Pierre Unger, a Belgian public health physician and market researcher, co-wrote a 2019 paper that found a correlation between the high cost of health care and the state of a country's commercial insurance market.48

In the study, Unger compared health programs in the United States, Switzerland and the Netherlands. Each of those countries has expanded commercial health insurance since the 1990s. The United States' program has expanded the most and the Netherlands' the least. The United States pays the most for health care and delivers the poorest outcomes among the three countries, while the Netherlands pays the least and delivers the best, the study found.49

Each of the three countries' health costs has risen and the quality of care has declined as they have further expanded their commercial insurance markets, according to the study.50

Unger says he believes the United States must eventually move toward a public health care program. Competition among private insurers naturally creates secrecy, he says, which makes coordinating a national strategy across a country as large as America even more challenging.

One European country that has excelled in its response to the pandemic, he says, is Germany, which has an active insurance market through a hybrid model; because its public health system is well funded, the government was able to quickly relay information to a large network of primary care physicians.

By comparison, projections indicate that by 2032 the United States will have a “real and significant” shortage of primary care physicians, he says.51

It is indisputable that health status is usually better for people with employer-based insurance, but that is “a reflection of income and other social determinants” and not necessarily the nature of their coverage, the Progressive Policy Institute's Kane says.

Moreover, the COVID-19 pandemic has spotlighted that “the systemic racism permeating health care is apparent in the health insurance system,” Martin, the former Obama administration adviser, says. Native Americans, Hispanics and African Americans have the highest rates of being uninsured.52

The federal Centers for Disease Control and Prevention reported in July that “people from some racial and ethnic minority groups are more likely to be uninsured than non-Hispanic whites.”53

And a 2016 study in the academic journal Population Research and Policy Review found that “health insurance coverage varies substantially between racial and ethnic groups in the United States.”54

Christen Linke Young, a health policy fellow at the Brookings Institution think tank in Washington, said that “there are significant racial disparities in access to health coverage and health outcomes” in the United States. People of color are “far more likely to be uninsured in America,” she said.55

But when it comes to treatments for COVID-19, the differences between employer-sponsored and government insurance may not matter that much. Some states are offering COVID-19 testing free of charge. The Families First Coronavirus Response Act, enacted in March, created a state option to extend Medicaid eligibility to the uninsured for COVID-19 testing.56

Background

Evolution of Employer-Based Insurance

It might seem like the American system of providing health insurance through a job is rooted in the capitalist fabric of the country.

But the system came about during World War II, as a result of wartime wage freezes and tax policies. And “the very idea of health insurance” that began flourishing at that time is “in some ways the original sin” in health care, Elisabeth Rosenthal, a physician and the editor-in-chief of Kaiser Health News, wrote in An American Sickness, her 2017 book examining the system.57

Before World War II, there was not a need for health insurance, because there was not much health care to purchase. Americans mainly paid their own way when it came to medical needs. People who worked in dangerous industries had access to company doctors, often in union-run clinics. Until the early 20th century, most Americans did not rely on hospitals for medical treatment.58

But with advances in medicine, and antibiotics in particular, medical schools and hospitals grew more sophisticated and medical care became more expensive and more available.

“Hospitals had a financial problem from the very beginning of scientific medicine,” economic historian John Steele Gordon wrote in A Short History of American Medical Insurance. “By their nature they are extremely labor intensive and expensive to operate. Moreover, their costs are relatively fixed and not dependent on the number of patients being served.”59

To combat that expense, employers and workers came up with novel ways to manage costs. In 1929, the Dallas school system established sickness insurance to protect teachers against impoverishment.60 That plan allowed teachers to pay 50 cents a month in exchange for Baylor University Hospital in Dallas picking up the tab on hospital visits.61 That Dallas plan eventually came to be called Blue Cross. A group of doctors in California later created their own plan in 1939, called Blue Shield. Eventually, people were purchasing Blue Cross for hospital services and Blue Shield for doctors' services.62 (The two companies merged in 1982.)

So for the first half of the 20th century, most health insurance was bought privately, and it was not a particularly popular product. World War II changed that.63

In 1942, with a booming economy and 12 million working-age men in the military, the country was facing a major labor shortage. Economists worried businesses would keep raising salaries to compete for workers and prices would spiral out of control.64 President Franklin D. Roosevelt signed an executive order that established the Office of Economic Stabilization. The result was a freeze on wages, and therefore businesses were not allowed to use pay increases to attract workers. Health insurance emerged as an alternate incentive.

When the government “froze salaries during and after World War II, companies facing severe labor shortages discovered that they could attract workers by offering health insurance instead,” Rosenthal wrote. “To encourage the trend, the federal government ruled that money paid for employees' health benefits would not be taxed. This strategy was a win-win in the short term, but in the long term has had some very losing implications.”65

Industrialist Henry J. Kaiser, pictured here testifying before a Senate committee in 1950, helped develop an employer-based health coverage plan that attracted some 300,000 enrollees. (Getty Images/Corbis/Hulton-Deutsch Collection)

Indeed, the decision by the IRS in 1943 to exempt employer-based health insurance from taxation made it cheaper to get health insurance through a job than by any other means. A 1954 statute made the tax advantages more appealing by codifying them in law. Participation in health plans grew from 9 percent of the population in 1940 to 63 percent in 1953. By the 1960s, a voluntary health plan covered 70 percent of the population.66

During this time, the types of health plans that were available broadened. For example, in 1945, physician Sidney R. Garfield and industrialist Henry J. Kaiser expanded on the concept of prepaid medical care for workers in dangerous industries by introducing their Permanente Health Plan. Within about a decade, the plan's enrollment topped 300,000, due in large part to the support of two labor groups, the International Longshore and Warehouse Union and the Retail Clerks Union.67

In 1948, the National Labor Relations Board ruled that health benefits were subject to collective bargaining between labor and management. Companies had no choice but to negotiate with unions about insurance plans, and unions fought hard to get generous plans.68 Eventually, employees saw health insurance as a basic element of their compensation package. By the mid-1960s, Americans viewed the system in which people with good jobs got health care through work and almost everyone else looked to government as the natural order of things, according to economic historian Melissa Thomasson.69 And over the years, a phenomenon known as job lock — in which an employee feels unable to voluntarily leave a job that is tied to benefits — took hold in the labor market.70

Government Plans

Even with the rise of employer-based plans, some policymakers were looking to create a national health care system. They viewed the company-provided plans as inadequate because so many Americans still lacked coverage.

In 1945, Democratic President Harry S. Truman called for such a system. “In a nation as rich as ours, it is a shocking fact that tens of millions lack adequate medical care,” Truman said in his 1949 State of the Union address. The idea was popular, but the leading business lobbying group, the U.S. Chamber of Commerce, opposed it, as did the American Hospital Association and the American Medical Association. So did many labor unions, which had waged hard fights to win insurance benefits for their members. With opposition coming from many directions, national health insurance suffered the first of its many historical failures.71

But Truman's idea persisted. One reason for this was the fact that as employer-sponsored plans became the cornerstone of the health care system, health costs steadily rose and retirees could not afford private coverage.

In homage to his predecessor, Democratic President Lyndon B. Johnson chose Truman's hometown of Independence, Mo., for a 1965 signing ceremony for the most sweeping U.S. health legislation of the 20th century. While smaller in scope than Truman's vision, the law created Medicare for people ages 65 and older and Medicaid for those living in or near poverty.

One reason that the scope for these programs was not larger was because the same forces that fought Truman in 1945 sought to stymie the creation of Medicare and Medicaid, labeling the programs “socialized medicine.” Some of that opposition faded when the programs provided a windfall to the health care industry.

In the mid-20th century, other developed countries with democratic foundations chose to cover their entire populations through government plans. In 1948, the United Kingdom created the National Health Service, which provided care based on need rather than ability to pay. Canada's federal government in 1966 moved to provide publicly funded medical care insurance plans.72

But for a number of reasons, national insurance failed to gain a foothold in the United States. In addition to the opposition from business and medical groups, criticism of a social insurance system dated back to World War II, as a backlash to a method of financing social programs that had originated in Germany.

Over the ensuing decades, presidents from Republicans Richard Nixon and Ronald Reagan to Bill Clinton (a Democrat) tried, with mixed success, to improve the nation's health insurance system. Nixon in 1974 proposed creation of a comprehensive health insurance system, but it failed to win congressional approval. Reagan expanded the role of health maintenance organizations (HMOs) in Medicare. In 1993, Clinton proposed a broad overhaul of the health insurance system, in which most Americans would get their coverage through large regional purchasing groups with employers paying 80 percent of the premiums, but it also failed to pass in Congress.73

While none of these presidents achieved their ultimate goals, they scored a few victories. Clinton, for example, signed a law in 1997 that created the state-federal Children's Health Insurance Program (CHIP). The program was intended to secure medical care for children in families with too much income to qualify for Medicaid but too little to afford private insurance. (As of July 2020, 6.7 million children were enrolled in CHIP.)74

The Rise of Insurance Companies

After World War II, Blue Cross and Blue Shield were the only major insurers.75 They operated as nonprofits and accepted everyone who signed up. However, rising demand for insurance and more expensive medical care led to a proliferation of insurance products.

“For-profit insurance companies moved in, unencumbered by the Blues' charitable mission,” Rosenthal wrote. “They accepted only younger, healthier patients on whom they could make a profit. They charged different rates, depending on factors like age, as they had long done with life insurance. And they produced different types of policies, for different amounts of money, which provided different levels of protection.” Eventually, the Blue Cross Blue Shield structure could not compete, and they became for-profit insurers. “This was the final nail in the coffin of old-fashioned noble-minded health insurance,” Rosenthal said.76

The biggest change to the system since the creation of Medicare and Medicaid came in 2010 when President Barack Obama signed the Affordable Care Act.

President Barack Obama signs the Affordable Care Act into law in 2010, surrounded by Democratic lawmakers. Vice President Joe Biden, now the Democratic presidential nominee, is second from the left. (Getty Images/Win McNamee)

Among its many changes, the law mandated that insurance marketplaces begin operating in every state. The system allowed people who could not get employer-sponsored coverage to shop for coverage in so-called state exchanges. The law also provided many people with subsidies that helped pay for coverage. In addition, it made it easier to obtain health insurance through Medicaid. After the ACA went into effect, the number of uninsured people dropped by 20 million between 2010 to 2016.77

But the system contained many quirks and flaws. The shortcomings, along with fervent Republican opposition, kept the law from achieving its vision of helping to make sure all Americans have health insurance.

A chronic problem with the marketplace system was that consumers complained the coverage offered through it was not affordable, with or without subsidies.

The law has been under attack since its inception. For example, not all states supported the expansion of their Medicaid programs, some for ideological reasons and some because they feared they would eventually be saddled with higher costs. While the expansion was meant to be national, a 2012 Supreme Court ruling made it optional for states. Before the pandemic, 14 states had not expanded their programs.78

And Republicans have sought for years to eliminate the law through legislative and judicial action. Their goal, they said, is to “repeal and replace” the ACA with a plan that will be more affordable and cover more people, although they have yet to offer a concrete alternative. Their biggest legislative victory came in the early months of Trump's presidency when the Republican-controlled House narrowly approved a bill to repeal and replace the law.79 But the legislation failed to pass in the Senate.

Other steps Republicans have taken to undermine Obamacare include regulatory changes and delays, funding cuts, elimination of low-income subsidies and a parade of lawsuits.

Most significantly, Republican officials in 20 states filed a suit in 2018, with the backing of the Trump administration, seeking to have the entire law struck down.80

That lawsuit has made its way through the judicial system and is scheduled to be heard by the Supreme Court a week after the Nov. 3 presidential election. The case will mark the third time that the Supreme Court takes up a significant dispute over the Affordable Care Act.

Go to top

Current Situation

Threatened Coverage

The pandemic is changing the politics and pressures related to the nation's employer-sponsored health insurance system.

Attorney General William Barr, a Trump loyalist, had urged the administration a few months into the pandemic to modify its position on the ACA case before the Supreme Court. Barr argued that, in light of COVID-19, the administration should not argue that the entire law be struck down.81 But the administration is still moving forward, having joined a case out of Texas that seeks to invalidate the law.

Amid this uncertainty, lawmakers and regulators are considering a variety of steps to bolster people's health insurance coverage.

Many states have extended their special enrollment periods in which people can join Obamacare plans that are sold on state marketplaces. Typically, these plans are open for enrollment only in the final months of the year.

Regulations have also been changed to make it easier for people to obtain health insurance. A new federal rule in July gave people significantly more time to decide whether to hold onto their employer-sponsored health insurance through COBRA after they have been laid off or furloughed from a job.82

Separately, a group of unions, big insurers, hospitals and a consumer advocacy group have joined together to lobby Congress to subsidize COBRA premiums through a new economic stimulus package. House Speaker Nancy Pelosi, D-Calif., has supported COBRA subsidies as part of a pandemic relief package. But critics of this approach say COBRA plans tend to help middle- and higher-income people, not the retail and service industry workers who are most affected by pandemic-prompted job losses.

“Almost no matter the employment outlook or time horizon, COBRA subsidies are unlikely to be the most cost-effective way of expanding coverage or relieving financial hardship,” said Matt Fiedler, former chief economist of the White House Council of Economic Advisers during the Obama administration. “They're just not targeted on the right people.”83

Other ideas for health insurance support that have been proposed in Congress include a measure to subsidize employer premiums for laid-off or furloughed workers. The Trump administration, for its part, prefers to address health insurance losses by covering treatments for uninsured coronavirus patients through hospital bailout funds as part of a pandemic relief package.84

In addition, many major insurers, including Anthem, have waived copays and given members money back through premium rebates.85

Anthem, whose headquarters in Woodland Hills, Calif., is seen here, and other major health insurers have given some subscribers premium rebates and waived some copays on doctor visits during the COVID-19 pandemic. (Getty Images/Dadid McNew)

And in some states, voters are taking matters into their own hands.

Voters in the Republican-leaning states of Missouri and Oklahoma this summer approved ballot initiatives to open Medicaid eligibility to some healthy adults.86

The successful ballot initiatives on Medicaid expansion have been part of a grassroots campaign by liberal activists. The initiatives have extended Medicaid eligibility to about 1 million low-income Americans living in states where governors or legislatures oppose expanding the program.87

But in some states, the pandemic has disrupted plans to widen Medicaid. Kansas shelved a plan to expand Medicaid coverage to about 150,000 people in the state, and in California, Democratic Gov. Gavin Newsom scrapped a proposal to extend coverage to 27,000 elderly undocumented immigrants due to a $54 billion shortfall in the state budget because of the pandemic.88

Other states have tried to create a public option that would help insure more people, but the pandemic has stalled those efforts as well. The Colorado Legislature scrapped votes on a bill to create such a public option (as well as a paid family-leave bill) because consumers, health care providers and others would not be able to participate in the process due to the pandemic.89 Washington state also scaled back the launch of a high-profile public option for the fall, saying it was not the time to do so when the coronavirus is overwhelming hospitals and health insurance companies.90

2020 Politics

The inability of some pioneering states to launch a public option due to the pandemic comes as Democratic nominee Biden has made a federal public option a centerpiece of his health care plan. He is proposing that the 2 million people who cannot get health care coverage because their states have not expanded Medicaid be automatically enrolled in the new public option plan at no cost.91

Under Biden's proposal, some 12 million people who get insurance through their jobs could find the public option to be a cheaper alternative, according to Kaiser Family Foundation estimates.92

Other steps Biden has proposed include expanding premium tax subsidies so people could pay for a more generous plan and more people would qualify for the subsidies. People who are currently ineligible for government assistance could see their monthly premiums drop by half under this proposal.93 Biden estimates that 97 percent of Americans would have health insurance if his plan is adopted.94

Trump, for his part, has announced his intention to protect people with pre-existing conditions, though he has offered no details. That vow contradicts regulatory changes he has made throughout his presidency that make it easier for insurance companies to sell plans that exclude patients with pre-existing conditions.95

Supreme Court Challenge

The Supreme Court is scheduled to hear arguments on Nov. 10 in a suit that seeks to invalidate the Affordable Care Act. California v. Texas could end the law completely if the court rules in favor of 20 Republican-led states and the Trump administration.

The death in September of Justice Ruth Bader Ginsburg means the Supreme Court will have a smaller liberal wing when it hears this challenge to the law.96 Trump's nominee to replace Ginsburg, appeals court Judge Amy Coney Barrett, has criticized the high court's 2012 decision to uphold the ACA.97

As the Senate considers the nomination of Judge Amy Coney Barrett to the Supreme Court, Democratic senators display photos of people who they say would be harmed by the disappearance of the ACA. The Supreme Court is due to hear arguments in November on a suit that seeks to eliminate the act. (Getty Images/Drew Angerer)

Democrats face long odds of blocking Barrett's confirmation but hope the threat of invalidating the law will motivate voters in the upcoming election. A vow to protect Obamacare helped Democrats recapture control of the House of Representatives in 2018, after Republicans in Congress had moved closer to repealing it.

Despite the pandemic's impact, health care was not, until recently, a top concern for voters in the 2020 elections. A poll in early September by the Kaiser Family Foundation found that only 10 percent of registered voters viewed health care as the most important issue in determining their vote for president. An NBC/Wall Street Journal poll conducted before Ginsburg's death found that 24 percent of voters viewed health care as a top issue, compared with 40 percent who selected the economy.98

Go to top

Outlook

Telemedicine Growth

Even as steps are taken to preserve the employer-based system and ensure people have health insurance during the pandemic, some industry experts believe changes made to the system — some necessitated by COVID-19 — may make health insurance less vital in coming years.

During the pandemic, medical care has moved away from the traditional in-the-office-with-a-doctor model. Chris Jennings, a former health care adviser to Presidents Clinton and Obama, said that because of COVID-19, telemedicine “has probably been accelerated by a decade.”99

Insurers have helped support that trend by waiving telehealth fees and deductibles. Seven months in, though, some companies moved to end that waiver if the appointments are not related to COVID-19.100 And Medicare coverage for many telehealth services is scheduled to end after the pandemic.101

But telehealth has proven popular, and Congress could pass legislation to make Medicare support for it permanent. “Reversing course would be a mistake,” said Seema Verma, who oversees Medicare as administrator of the Centers for Medicare and Medicaid Services.102

Some industry analysts are pressing for other changes to the system to make health insurance less vital. Unger, the Belgian professor, says nurses could be providing more treatment to fill gaps in availability, especially in rural regions and the Southeast, where lawmakers have generally declined to expand Medicaid to the working poor. The American Medical Association (AMA) has tried to block laws that would allow nurses to fill more gaps in the delivery of medical care.

To Unger, a key flaw in the U.S. health insurance system is its reliance on competition. The AMA's effort to thwart nurses from meeting the demand for basic health care is one aspect of how antithetical competition is to good health care, he says.

Perhaps if premiums rise, companies will be more likely to support a single-payer system, Unger says. To pay those high premiums, companies have to raise the prices they charge their customers, lowering their competitive advantage in the global marketplace.

Johns Hopkins' Bai predicts that instead of investing in a full-blown public option, the nation will be better served by having the free market fill in primary health care via telehealth, or through one-stop-shopping clinics in pharmacies.

Indeed, CVS, Walmart and Walgreens are developing competing visions for making basic health care cheaper and more accessible. Those visions could involve cutting out insurance completely, using a combination of a direct primary care model, which is subscription-based and involves a doctor or a nurse, and technology for routine and well-studied ailments such as strep throat.

The government must force price transparency for the free market to work, Bai says, and provide subsidies to financially disadvantaged populations. And it must invest more in public health, where the free market will fail.

“If we don't make meaningful improvements in our private sector using market forces, then a tipping point will come, and we will be in crisis and people will pursue a government-controlled system,” Bai says. “By that time, we will have enough political will.”

Pro/Con

Pro Ilyse Schuman Senior Vice President, Health Policy, American Benefits Council. Written for CQ Researcher, October 2020 The past six months have wrought the perfect storm of a public health and economic crisis, brought upon by the COVID-19 pandemic. Some see this storm as a reason to dismantle employer-sponsored health coverage and replace it with Medicare for All. Concern about the intersection of a public health crisis with widespread unemployment is certainly understandable, but we cannot let the tempest obscure the fact that employer-sponsored coverage is now more important than ever. Skeptics of employer-sponsored coverage are aiming their criticism in the wrong direction. The Affordable Care Act was built on the foundation of employer coverage, supplemented by Medicare, Medicaid and a robust individual market. But state budgets are buckling under the financial pressures of the pandemic, and the federal government has not taken the necessary steps to shore up the individual market. The short-term solution is to provide temporary COBRA subsidies so laid-off or furloughed workers can afford to stay on their employer plans. The long-term solution is to strengthen the individual market. At the heart of this debate is the notion of “value.” Because employers excel at creating value through innovation and market pressure, job-based health coverage has become synonymous with the high-quality coverage that people want to keep. Employers, already at the forefront of strategies to lower costs and improve quality before the pandemic, will be even more important in the drive for value afterward. Policymakers should promote this innovation by improving transparency, addressing market failures and realigning incentives to reward providers based on the value of care rather than volume. Employer sponsorship also delivers value for the government and taxpayers. For every dollar attributable to the government's tax incentives for employer coverage, employers spend $4.45 on health benefits. It would cost the federal government much more to pay for the same level of health care directly through Medicare for All. In a nationwide poll during the 2018 election, voters said they trusted employers more than any other source for high-quality health care coverage. This storm shall pass. When it does, we will look back at the critical role employer-sponsored health coverage played in helping us navigate the crisis and how it can continue providing lower-cost and higher-quality health care, protecting working families in the next crisis.

Con Emily Barson Executive Director, United States of Care. Written for CQ Researcher, October 2020 Our antiquated health insurance system — in which most people receive health coverage from their job — increasingly fails to meet people's needs. It is also very costly for both private- and public-sector employers. We believe our country needs to rethink how we do this. COVID-19 has heightened awareness of the flaws in our existing system, and people want to take this opportunity to improve it. What we hear in our conversations with people is that the challenges of COVID-19, combined with the alarming racial disparities it has laid bare, have refreshed the imperative to strengthen our health care system. People are worried that they cannot depend on their insurance when they need coverage, especially given the historically high number of people who have simultaneously lost both their jobs and health security. Our country's 75-year-old paradigm connecting our jobs to our health insurance is tremendously precarious. Even before the pandemic, the employer health insurance tax deduction was expensive and regressive. For at least the past two decades, the system has been extremely costly for both businesses and employees, leaving about a quarter of people with insurance potentially unable to cover costs. These shortcomings stifle innovation and entrepreneurship via “job-lock,” and there is also evidence that loss of job-connected health insurance widens racial disparities. What the pandemic is showing us is, when a disease ravages both people's health and the economy, millions are left exposed to inadequate care at a time when the health of one person is linked to the health of us all. Insurance is about financial security. Decoupling health coverage from one's job would prevent the loss of health coverage at the same time one loses a livelihood. It would also free employers — most of whom are not health care benefits experts — from the expensive and time-intensive efforts of administering health coverage. That is why employers are a crucial part of how we will bridge the interconnectivity of work, economic downturns, pandemic response and health. To explore this, United States of Care (USofCare) released a paper examining approaches utilized by states and leading private companies to control the costs straining the system. In the coming months, USofCare will convene policy experts, employers, innovators and people experiencing our health care system to understand what works and what alternatives could look like. We hope you will join us in this effort.

Go to top

Chronology
1900–1954	Health insurance emerges in the United States.
Early 1900s	With advances in medicine, hospitals transform from a place to die to a place to get treated and cured. The cost of treating patients grows along with the increase in hospitals.
1929	Texas schoolteachers arrange for Dallas' Baylor Hospital to provide room, board and specified services at a predetermined monthly cost — a forerunner of modern health insurance.
1940s	Enrollment campaigns seek to boost participation in a new kind of insurance, Blue Cross plans, which involve prepayment for medical care.
1942	President Roosevelt establishes a National War Labor Board that grants him the power to freeze wages, which helps foster the growth of health insurance plans as employers seek ways to attract scarce workers.
1943	The IRS rules that health insurance provided by employers is not taxable income.
1945	President Harry S. Truman, a Democrat, makes an unsuccessful bid to enact a national government health insurance program.
1948	The British government creates the National Health Service, which provides free universal medical care.
1954	Congress codifies the tax exemption for employer-sponsored insurance after the IRS in 1953 revisited its previous decision on the tax break.
1965–1997	Government's role in health insurance expands.
1965	Democratic President Lyndon B. Johnson signs legislation that creates Medicare, which provides health insurance for the elderly, and Medicaid, an insurance program for low-income adults.
1966	Canada's federal government moves to provide publicly funded medical insurance plans, splitting costs with the nation's provinces and territories.
1974	Republican President Richard Nixon proposes comprehensive health insurance, including federal and state assistance for those unable to afford such coverage. Congress takes no significant action toward establishing such a plan during his administration.
1985	Congress passes the Consolidated Omnibus Budget Reconciliation Act (COBRA), which provides for continuing group health insurance for employees after a job loss.
1993	Newly elected Democratic President Bill Clinton offers a plan to overhaul the U.S. health care system. The proposal calls for universal coverage and government control of costs and premiums, with insurers competing to provide coverage. The following year, it dies in Congress due to lack of support.
1997	Congress approves the Children's Health Insurance Program, providing coverage for children in families who earn too much to qualify for Medicaid but too little to afford private insurance.
2010–Present	Obamacare opens new era for U.S. health insurance.
2010	Democratic President Barack Obama signs the Affordable Care Act (ACA), soon dubbed Obamacare, which mandates all Americans to have health insurance, creates government-run insurance marketplaces, offers subsidies to some consumers, bars insurers from denying coverage to people with pre-existing medical conditions and offers money to states to raise income limits for Medicaid.
2012	The U.S. Supreme Court finds the ACA's insurance mandate to be constitutional, but rules against the law's provision for mandatory Medicaid expansion by the states.
2017	At the urging of Republican President Trump, congressional Republicans try to repeal the ACA but are unsuccessful. Congress does eliminate the ACA's financial penalty on those who fail to buy insurance.
2018	Republican state attorneys general and governors challenge the ACA's legality, arguing the ending of the financial penalty invalidates the entire law. U.S. District Judge Reed O'Connor declares the ACA invalid, setting up the potential for another Supreme Court decision on the law.
2019	Several Democratic presidential candidates call for Medicare's expansion; some favor creation of a single-payer health system with almost no private insurance…. COVID-19 emerges in China late in the year and soon spreads across the globe, infecting millions, killing hundreds of thousands, shutting down businesses and schools and sparking an economic recession.
2020	Authorities confirm the first U.S. case of COVID-19, in Washington state (January)…. As COVID-19 spreads, states implement lockdowns and restrictions, leading to the worst U.S. recession since the 1930s, with more than 30 million unemployed (March)…. States that run Obamacare marketplaces alter their open enrollment periods to allow more people to purchase plans (March-September)…. Voters in the Republican-dominated states of Missouri and Oklahoma approve Medicaid expansions (July-August)…. Supreme Court Justice Ruth Bader Ginsburg dies, and President Trump nominates federal appeals court Judge Amy Coney Barrett to fill the vacancy. A Republican majority in the Senate all but guarantees that she will be confirmed, putting the outlook for the Affordable Care Act in question when the Supreme Court takes it up (September).

Go to top

Short Features

John Henderson spent 16 years running the small rural hospital in his hometown of Childress, Texas. Now a lobbyist for rural community hospitals, he has been taken to unexpected places by the pandemic. Rather than hosting webinars or meeting state lawmakers, Henderson is driving across the border to Mexico to get more hand sanitizer and facemasks for the hospitals in his network.

“What we're seeing is a really uneven and unpredictable display of COVID cases in rural counties and hot spots across the state,” he said. His goal is “to do whatever it takes to help these little rural hospitals survive.”1

Rural hospitals are facing unique financial pressures due to COVID-19. They have long operated on thin margins, with high-profit procedures such as elective surgeries keeping them in business.2 But to deal with the pandemic, they have had to add more beds in case of a surge in patients and buy more ventilators and personal protective equipment — investments that many can ill afford.

“Rural hospitals are designed for primary care and elective surgery,” says Alan Morgan, chief executive officer of the National Rural Health Association. “They simply are not financially positioned to face a global pandemic.”

Rural hospitals tend to have lower amounts of cash on hand and are more likely to be spending more than they are making on a monthly basis, said Lisa Davis, director of the Pennsylvania Office of Rural Health. “So they've been struggling traditionally,” she said. “Then, a pandemic like COVID-19 comes along and they need to essentially pivot on a dime and close down service lines that tend to bring in revenues such as surgery, outpatient services, emergency departments. They don't have the economies of scale to be able to rely on other sources of revenue.”3

Since 2010, 132 rural hospitals have closed, according to Morgan. Fifteen of those closures occurred this year. At least 450 more, amounting to 21 percent of all rural hospitals, are at risk, according to the Chartis Center for Rural Health, a private analytics firm.4

Paul Nusbaum, former president of the Rural Community Hospitals of America, speaks during a rally by the National Rural Health Association at the U.S. Capitol in 2015. Some 132 rural hospitals have closed in the past decade and another 450 are at risk. (Getty Images/CQ Roll Call/Al Drago)

Twenty percent of the U.S. population lives in rural areas, and residents of these places tend to be older individuals with more chronic conditions, says Dr. Joanna Hart, an assistant professor at the University of Pennsylvania's Perelman School of Medicine. They are also more likely to be underinsured — or uninsured.

The finances of rural hospitals differ from the bigger research institutions that dominate urban centers. The rural facilities serve a smaller share of patients with employer-provided insurance and higher numbers of patients who are uninsured or covered by Medicaid or Medicare. These programs offer much lower reimbursement rates than private insurance.5

In addition, people in rural areas are also more likely than their urban counterparts to bounce back and forth between Medicaid eligibility and commercial insurance coverage based on their fluctuating income. This frequent switching often leaves coverage gaps.6 And almost 14 percent of people under age 65 living in rural areas had no insurance at all in 2017, the most recent year for which data are available, according to the U.S. Centers for Disease Control and Prevention.7

For that reason, many policymakers are pushing for expanded Medicare and Medicaid reimbursement for hospitals. Sen. Amy Klobuchar, a Minnesota Democrat and an advocate for policies that benefit rural areas, wants to allow rural hospitals to eliminate inpatient care without losing their Medicare eligibility.

Morgan, of the National Rural Health Association, says the coronavirus relief measure passed by Congress in March directly allocated funding to rural hospitals. That money was meant to be a bridge at a time when there were hopes that the virus would retreat during the summer months. When that did not happen, “rural hospitals never had the respite they needed,” he says. “The balance sheet for many looks terrible now going into the fall.”

Some rural hospitals have received loans from Medicare to help sustain them during the pandemic, but people in the industry say those loans are now falling due at a time the hospitals really need more help. More than 65 percent of the rural hospitals took Medicare loans when they were available at the start of the pandemic.8

For instance, David Usher, chief financial officer for a 12-bed hospital in rural Kansas, said COVID-19 cases have been increasing in his area at a time that he is expected to repay a $1.7 million loan meant to help deal with the pandemic. He wants to use the money to outfit some rooms with negative air pressure to keep contagious patients away from the rest of the hospital, but he is due to repay the loan, which falls due 120 days after it is made.9

“It's great having” the funds, he said. “But if I don't know how much I get to keep, I don't get to spend the money.”

— Holly Rosenkrantz

http://library.cqpress.com/cqresearcher/document.php?id=cqresrre2020102300 

Where Have All the Hospital Patients Gone?

Except in areas where Covid is surging, there are still no lines of patients in the hospital halls.

by Pauline Chen - NYT - October 22, 2020

Weathered, wiry and in his early 60s, the man stumbled into clinic, trailing cigarette smoke and clutching his chest. Over the previous week, he had had fleeting episodes of chest pressure but stayed away from the hospital.

“I didn’t want to get the coronavirus,” he gasped as the nurses unbuttoned his shirt to get an EKG. Only when his pain had become relentless did he feel he had no choice but to come in.

In pre-pandemic times, patients like him were routine at my Boston-area hospital; we saw them almost every day. But for much of the spring and summer, the halls and parking lots were eerily empty. I wondered if people were staying home and getting sicker, and I imagined that in a few months’ time these patients, once they became too ill to manage on their own, might flood the emergency rooms, wards and I.C.U.s, in a non-Covid wave.

But more than seven months into the pandemic, there are still no lines of patients in the halls. While my colleagues and I are busier than we were in March, there has been no pent-up overflow of people with crushing chest pain, debilitating shortness of breath or fevers and wet, rattling coughs.

“It’s so weird,” a colleague remarked recently. “It’s like those people have vanished.”

I remembered my colleague’s observation when I read a recent study that suggested why those patients have never returned.

Researchers from Sound Physicians, a national medical group of almost 4,000 doctors specializing in hospital medicine, critical care and emergency medicine, and the Dartmouth Institute for Health Policy and Clinical Practice gathered admissions data from more than 200 hospitals in 36 states and compared differences in patient characteristics, diagnoses and mortality rates between February and July of this year with the same time period last year. The researchers found that by mid-April, non-Covid admissions to hospitals had dropped by almost half.

But surprisingly, even months later, as coronavirus infection rates began falling and hospitals were again offering elective surgery and in-person visits to doctor’s offices, hospital admissions remained almost 20 percent lower than normal.

“We found it staggering that such a high number of patients who might have been hospitalized for serious issues just kind of disappeared,” said Dr. John D. Birkmeyer, lead author of the study, chief clinical officer of Sound Physicians, and adjunct professor of health policy and clinical practice at the Dartmouth Institute for Health Policy and Clinical Practice. “You have to wonder, ‘Where did they all go?’”

Some experts have pointed to patients’ overwhelming fear of contagion as a reason for the drop in the numbers seeking hospital care. But the patients in the study who had the greatest persistent drop in hospitalization were those with acutely worsening asthma or emphysema, pneumonias, sepsis, strokes and even heart attacks, all illnesses where hospitalization is generally not optional.

And those who were hospitalized were not necessarily Covid-19 holdouts, so fearful of contagion that they came only when they were at death’s door. Analyzing hospital mortality rates, Dr. Birkmeyer and his colleagues found that apart from a small bump during the early weeks of the pandemic, hospitalized patients without Covid-19 were not dying more than they were before.

Coronavirus Schools Briefing: It’s back to school — or is it?

Moreover, as the pandemic wore on, fears of getting infected at the hospital may have begun to dissipate. By June, patients were going back to their doctors’ offices, with some specialists like dermatologists experiencing more demand for in-person visits than previously. “If dermatology visits are higher than pre-Covid levels,” said Jonathan Skinner, senior author of the study and a professor of economics at Dartmouth College, “I can’t imagine people not showing up at a hospital if they are having a stroke.”

The most likely explanation for persistent lower hospitalization rates “may simply be that fewer patients are getting sick in the first place,” Dr. Birkmeyer posited. Statewide stay-at-home orders aimed at curbing the coronavirus resulted in a dramatic drop in human activity and a concomitant improvement in air quality across the country. Poor air quality is linked not only to respiratory diseases like asthma and emphysema but also to other illnesses like strokes and heart attacks. Recent reports from around the world have noted decreases in hospitalizations for heart attacks and non-Covid viral respiratory illnesses like influenza during regional lockdowns and quarantines.

Research over the years has also shown that during recessions and periods of higher unemployment, people may at least temporarily adopt healthier behaviors. Individuals may smoke and drink less, get more exercise, improve their diet, lose weight and have less stress related to work or commuting.

Recent public health efforts to promote wearing masks and frequent hand-washing have also probably lowered the transmission rate of other viruses and bacteria that can be responsible for colds, pneumonias and the life-threatening infections or exacerbations of asthma and emphysema. “People keep saying, ‘Hey, I don’t remember the last time I had a cold,’” Mr. Skinner noted. “It’s because no one is hugging or shaking hands, and everyone is washing their hands.”

The published study followed hospitalization trends only through July, but the researchers have continued to gather data which shows that depressed hospital admission rates are persisting into the fall. While both Dr. Birkmeyer and Mr. Skinner concede that more work needs to be done, their study makes clear that the pandemic has had significant public health and public policy implications beyond those directly related to Covid-19.

“All of the things we are doing to reduce Covid shouldn’t necessarily disappear once we have a vaccine,” Mr. Skinner reflected.

He added: “Someday, when Covid is an answer on ‘Jeopardy!’, I hope that we won’t have forgotten the important beneficial effects of reducing pollution and stress on our health in general.”

https://www.nytimes.com/2020/10/20/well/where-have-all-the-hospital-patients-gone.html?

 

What if Beating Trump Is the Easy Part?

If Biden holds on, keeping the Democratic coalition intact will take an unusual level of political skill.

by Thomas Edsall - NYT - October 22, 2020

In the short term, should Joe Biden win the election and move into the White House, he would take office with a Democratic Party unified in its opposition to all things Trump. The question is how long would that last before leaders of every liberal interest group circling the new administration begin to get restless.

In answer to this question, Carter Eskew, a top strategist on Al Gore’s 2000 campaign, wrote by email that

Biden became a unity candidate in response to an overwhelming, almost feral desire to limit Trump’s damage to one term. When Trump leaves, Democratic unity, I fear, may be close behind. Unlike Republicans who have essential agreement around economic and social policy, our Party has fissures on many fundamental issues.

Danger signs for a Biden presidency are already emerging. Different factions within the Democratic coalition will have competing demands: Last week, Black lawmakers — led by Representative Bennie Thompson of Mississippi — called on Biden, if victorious, to appoint an African-American as secretary of the Treasury, “complicating,” as Axios put it, “prospects for establishment women — like Lael Brainard, Janet Yellen and Sarah Bloom Raskin — to become the first female Treasury secretary.”

Another source of potential division: corporate elites and the donor class versus the reform left: Raúl Grijalva, Alexandria Ocasio-Cortez, Ayanna Pressley and Katie Porter, along with organizations like the Communications Workers of America, Our Revolution, Indivisible and the Progressive Change Campaign, called on the Senate on Oct. 16 to reject “any nominee to an executive branch position who is currently or has been a lobbyist for any corporate client or c-suite officer for a private corporation,” putting them in conflict with much of the affluent Democratic establishment.

Biden will take office under immediate pressure to address internal Democratic battles over a broad range of topics, including, to name just a few, mass incarceration, immigration reform, denial of asylum seekers’ rights, constraints on evictions, the politics of utility shut-offs, defunding law enforcement and the logistics of mandatory vaccination.

Julie Wronski, a political scientist at the University of Mississippi, was explicit in warning about future schisms within the Democratic Party:

A Biden victory may not be a referendum on a progressive policy agenda. If anything, a Biden presidency may amplify the fractures within the Democratic Party as they try to push forward a post-Trump platform. A coalition may be in agreement on outing Trump and pulling the country out of its pandemic-induced economic tailspin. But when it comes to racial justice, income equality, or environmental regulation initiatives, differences within the party can manifest as opposing ideological forces that can bring legislative compromises to an impasse.

Difficulties in managing the Democratic Party are inevitable, given the scope of what Wronski described as the

“Never Trump” coalition that spans multiple ethnic/racial groups, socio-economic classes, issue preferences, and ideologies. On the left-right ideological spectrum, general election Biden supporters range from far-left Sanders primary voters to establishment Republicans such as the Lincoln Project.

Winning control of the Senate is critically important, of course, and will shape what happens as much as anything else an election can decide.

FiveThirtyEight estimates the odds of a Democratic takeover of the Senate at 74-26, or three to one.

Ray La Raja, a political scientist at the University of Massachusetts-Amherst, voiced the consensus view of the strategists and scholars I contacted: “A Senate win is critical. Otherwise, we are back to a standoff between a Democratic President and Mitch McConnell.”

David Card, an economist at Berkeley, posed the question, “How crucial for the success of a Biden presidency is a Democratic Senate?” and answered the question himself:

100 percent. Obama came in after 2009 with a lot of troubles but Biden is taking over with nearly impossible deficit, pandemic and completely gutted federal government.

Without a Democratic senate majority, Biden stands no chance of winning approval of the very ambitious progressive agenda he has set for his administration.

It includes a major overhaul of tax and spending policies to shift benefits from the rich to the working class and the poor, a modified green new deal combined with $2 trillion for infrastructure, the investment of billions of dollars in business loans, subsidies and other benefits to Black and Latino communities.

These are just the tip of an iceberg that includes separate “Biden plans” or “Biden Agendas” for rural Americans, for the Latino community, for older Americans, for the Indian-American Community, the Jewish Community, the Muslim-American Community, for students, for the Catholic Community, for Asian-American and Pacific Islander Community and more.

Not only does Biden need a Senate majority, the size of the majority will also be crucial.

If he only has a cushion of one or two votes, Gary Burtless, an economist at Brookings, argues,

it would greatly reduce the chances Democrats could enact sweeping political and regulatory reforms, including major climate change legislation and rationalization of the Affordable Care Act.

But, Burtless continued,

Even a bare majority would allow Democrats to enact sensible fiscal policies, provide adequate relief to the unemployed, confirm centrist and liberal federal judges, and give the Democratic President greater leeway to reverse Trump-era regulations/deregulations.

Jim Kessler, executive vice president of Third Way, a centrist Democratic organization, put it this way:

A Democratic majority in the Senate is crucial, because controlling the floor and setting the legislative calendar is a must. A larger majority is better for Biden, but the difference between 49 and 50 is night and day. The difference between 50 and 53 are shades of gray.

The fact that Biden, a Democratic moderate, is campaigning on what may well be the most liberal platform since Franklin Roosevelt’s New Deal may help him fend off challenges from his left.

“The Biden agenda is very ambitious,” Kessler noted in his email:

The center and mainstream left are not far apart on climate and infrastructure and I expect a major package will get done. Covid relief and an economic recovery package will get done. Medicare for All is off the table, so there’s a good shot at some Obamacare expansions and of capping out-of-pocket health care costs. There will be tax reform.

La Raja, in turn, pointed out that

unlike Tea Party Republicans who wanted nothing to happen, people on the Democratic Left actually want some policies and will be willing to compromise even if these fall short of the ideal. There is room for leadership to negotiate and maneuver.

Despite this, La Raja warned,

the prospect of intraparty divisions is real, with a restive left-wing of the party and understandable calls for aggressive, even radical change.

What are the most likely sources of intraparty contention, I asked. La Raja replied:

Policies related to race will remain fraught, particularly if internal debates appear to focus on issues that do not poll well with the broader electorate, e.g., defunding the police.

Another source of internal party conflict, La Raja continued, would be an outcry from Democratic campaign contributors faced with the prospect of higher taxes to cover the costs of administration initiatives:

Then there is the Democratic donor class. The next few years will require significant sacrifices from the upper-fifth — and especially the upper one percent — to agree to policies that require massive investments, that address looming debt problems and create shared prosperity. These battles will be waged with the people who donate the vast majority of money to political campaigns and assess the viability of candidates. There will be major arguments over how to regulate Wall Street, Big Tech, and other industries, which are sources of great wealth for Democratic donors.

Jacob Hacker, a political scientist at Yale, warned in an email that Biden will have to avoid stepping on any land mines:

The big issue here is staying away from raw nerves that could activate affluent localist resistance, which in turn could split the broad metro coalition that Democrats enjoy. Raising taxes on the superrich won’t do that.

Hacker cautioned, however, against placing new burdens on the top 20 percent, among whom Democratic support is growing.

On race specifically, Hacker continued, Biden should pursue

what Theda Skocpol once called “targeting within universalism” — broad policies that, by design and in effect, are most beneficial to disadvantaged minority Americans.

How about immigration?

Honestly, comprehensive immigration reform is likely quicksand. Biden should focus first on rolling back Trump policies, protecting Dreamers and setting up the next debate on the most favorable terms.

Can Biden, backed by a Democratic Senate, use the power of governing to strengthen and expand the Democratic coalition, to build an alliance of voters that improves the party’s prospects in the future?

Frances Lee, a political scientist at Princeton, thinks not:

Presidents presiding over unified government typically face huge backlash at their midterm elections. This has been true regardless of how well they hold together on their party’s priorities. Democrats lost their congressional majority in 1994 after they had failed spectacularly to deliver on health care reform with unified government under President Clinton. Democrats then lost their congressional majority again in 2010 after they succeeded in passing health care reform with unified government under President Obama. No matter whether they succeeded or failed on their major agenda priority, the midterm election result was the same.

The reality:

Neither party has been able to command enduring trust from American voters since 1980. In that sense, both parties are fundamentally minority parties. When given unified government, neither party has been able govern in such a way as to substantially expand its support and avoid the midterm backlash.

Henry J. Aaron, a senior fellow in economic studies at Brookings, was not optimistic about the prospects of a successful Biden presidency. “There are so many ways for things to go wrong,” he wrote in response to my inquiry:

The Republicans will rediscover the horrors of budget deficits; and there are too many Democrats who share this (currently) irrational fear. The hard left may demand more than the moderate Democrats can swallow on any number of issues. Biden appears entirely genuinely to want to pursue bipartisanship, which might require trimming so much from what the left wants that they desert him.

I asked Aaron whether Biden should try to bring some Republicans on board. He replied:

I have believed for many years that the demise of the Republican Party as a responsible governing party is the most serious political problem that the nation faces. The current Republican Party is a threat to the continuation of our democratic republic.

Despite that, Aaron continued,

Biden is right to seek rapprochement with Republicans where possible and to continually reach out to them in the most public way. I think that his efforts will likely fail. I worry much less that he will make the effort than that he will persist too long.

Aaron makes the point that given the probability of Republican intransigence, Biden

has to be prepared to play rough if his efforts are rebuffed. That includes trying to expand the Supreme Court (and end lifetime tenure, so that appointments come up at predictable intervals), ending the filibuster, aggressive use of reconciliation to enact his program, and use of executive orders where legally possible.

At the end of his email, Aaron summed up his views:

All in all, it seems to me that there are so many ways that a Biden administration can fizzle and so few ways it can fail to disappoint.

Burtless shared Aaron’s doubts about the likelihood that Biden could cultivate a productive relationship with any individual Republicans that could lead to bipartisan support for parts of his agenda.

Obama tried, Burtless noted, without any success, but

in trying to attract that support, the Obama administration put compromise provisions in the Senate bill [on Obamacare] that were foolish or contradicted some of the main goals of the bill. Unfortunately, some of those provisions remained in the law that was ultimately adopted, reducing the law’s effectiveness.

Burtless said he would advise a Biden administration “to leave the compromise language in a bill only if your opponents sign onto the final package.”

Finally, given the likelihood of continued Republican opposition to all things Democratic, should a Biden presidency — and a Democratic senate majority — get rid of the filibuster to gut the ability of Mitch McConnell to block enactment of legislation?

This is a more complex issue than it appears to be on the surface.

La Raja wrote that he would not be surprised to see Democrats kill the legislative filibuster, but pointed out that

removing it raises the stakes even more for future control of the Senate, reduces any remaining incentives for bipartisanship and introduces additional instability.

Congress, he pointed out,

has had unstable majorities since the 1990s. This situation encourages bare majorities to wield power aggressively to push through legislation while they can. It leads to overreach on policies lacking broad support, and opens the door to the rival party taking back Congress. Removing the filibuster will only heighten this dynamic.

In other words, if Democrats are given a free hand, they risk going too far to the left, threatening their prospects of remaining in the majority.

Frances Lee, the Princeton political scientist, pointed out that at one level, Democrats may not want to get rid of the filibuster because it now provides an excuse to avoid issues that tear the party apart:

If the Senate were to move to simple majority rule, majority parties would not be able to paper over their internal differences by holding together on symbolic votes, knowing that the opposing party will block them. Majority rule in the Senate would put the majority party more on the hook to deliver on its promises to base voters, and they could not blame the opposing party for blocking them. But this does not necessarily mean that they will be more successful in advancing legislation on controversial issues. Freed from the filibuster, parties will struggle more with their own internal divides.

Sarah Binder, a senior fellow in governance studies at Brookings and a professor of political science at George Washington University, raised similar arguments, although she is generally in favor of ending the filibuster.

With two exceptions, if Democrats win just a small Senate majority, that won’t be sufficient to secure major Biden/Democratic policy gains. First, the new Republican minority will likely move to the right — presumably losing Collins, Gardner, Alexander, McSally. The more conservative the G.O.P., the harder it will be to construct deals to secure the necessary 60 votes to block filibusters. And any sense of Democrats’ vulnerability in 2022 will discourage the Senate G.O.P. from cooperating with Democrats.

If Democrats are determined “to do anything remotely big — electoral/voting reform, changing the court, e.g.— they’ll need to get rid of the filibuster,” Binder argued.

Without ending the filibuster, Democrats would “retain the ability to use budget reconciliation to secure some major policy changes (at least related to taxes and entitlement programs, such as Medicare/Medicaid),” according to Binder. In addition, Democrats could

use the Congressional Review Act, to move in a more piecemeal like fashion to undo late Trump-era regulations. Both of those tools empower slim Senate majorities. But they’re no match for the potential legislative gains secured by banning the filibuster.

Getting rid of the filibuster does not guarantee success, Binder stressed, given the ideological differences within the party:

The larger the Democratic majority, the more diverse. Just think about picking up Senate seats in Colorado, Montana, Maine, Kansas, Iowa (thinking big here for Democrats). That would add a centrist flank to the progressives that anchor the current Senate Democrat Caucus. And would potentially widen the policy gulf between a Democratic House and Senate. We know historically that such bicameral differences can limit legislative gains even during periods of unified control.

If Biden wins, all of the complexities that flow from a Democratic victory on Nov. 3 will require exceptional political and legislative skill to manage. He would also have to inspire and maintain popular support as the memory of an Election Day victory fades. These are burdens Biden has never had to carry. Politically speaking, holding on to the Democratic coalition may well prove to be the hardest part of his job, more so than fighting Republicans or the Trumpist remnants — or Trump himself.

https://www.nytimes.com/2020/10/21/opinion/biden-2020-democratic-party.html?

 

The Collapse of Long-Term Care Insurance

Attempts to have the private market manage support and services for the elderly or people with disabilities have utterly failed.

by Alexander Sammon - The American Prospect - October 20. 2020

The first announced American death from coronavirus came in February from a nursing home in Kirkland, Washington. Within weeks, an astounding two-thirds of inhabitants and staff had contracted the virus, with 37 deaths among just 108 residents. It was the beginning of a painful record of long-term care facilities like nursing homes as the most deadly theater of the coronavirus pandemic. By May, one-third of all coronavirus deaths were nursing home residents or workers. By September, some 46,400 deaths had been confirmed, even with states providing spotty and partial data. Roughly 1 in 10 people who were in long-term care facilities when the pandemic started in New Jersey were dead by May.

It’s a chilling reminder of the importance of quality care for a needy and rapidly growing segment of the population. But the coronavirus descended upon a long-term care landscape in America already beset by crisis. For years, private long-term care insurers have been fleeing the market, while a public option doesn’t exist. The issue was perhaps too niche to garner any interest during the last Democratic primary, amid the hot-burning Medicare for All debate. But there is perhaps no component of health insurance where the private sector has failed more profoundly than long-term care, making this one of the worst and most rapidly faltering aspects of our impossibly expensive, wildly inefficient, and poorly performing health care system.

The problem begins at a very basic level: Many Americans don’t even know what long-term care is. It refers to a broad sweep of services and supports that elderly patients and people with disabilities need in their daily, basic activities. Non-medical help in things like bathing, dressing, and eating are all part of long-term care, as well as medical support for patients battling diseases like Alzheimer’s, dementia, and other chronic conditions. It can take place in nursing homes, in assisted-living facilities, or at home.

Common estimates say that about 50 percent of older adults will need long-term care at some point in their lives; for adults over 65, the odds shoot up to 70 percent. But, like much of our health care system, just because there’s demand doesn’t mean there’s supply. Though long-term care can be exorbitantly expensive, the percentage of Americans currently in possession of insurance coverage is just a small fraction of those who are likely to need it. Right now, fewer than 1 in 30 Americans own a long-term care (LTC) insurance policy, and only about 7 percent of adults over 50. The raw figure of 7.5 million insured has barely budged since 2008, despite an increasing aging population.

More from Alexander Sammon

Private insurers began offering LTC insurance in the 1970s, and sales ticked steadily upward into the 2000s. At its peak in 2002, about 750,000 individuals successfully purchased LTC insurance in a single year. By 2018, that number had plummeted to 57,000, a more than tenfold contraction, even as the percentage of the American population in the prime purchasing demographic, ages 60 to 69, expanded rapidly, from 9.5 percent in 2010 to 11.4 percent in 2018, according to a study from the Treasury Department.

Your donation keeps this site free and open for all to read. Give what you can...

SUPPORT THE PROSPECT

Part of that trend is explained by a wild mispricing error by the insurance industry, which severely underestimated the cost of such plans. As the industry paid out huge sums for relatively cheap plans year after year, they scrambled to make up the difference by surging premiums and trying to minimize outlay. In 2005, a buyer between the ages of 55 and 64 paid an average annual premium of about $1,900. By 2015, LTC premiums had ballooned almost 40 percent, to more than $2,600, in spite of the fact that policyholders were receiving far less coverage for their buck. In 2005, the average policy topped out at $270,000 in benefits; by 2015, it had sagged to $235,000. In 2018, LTC insurance covered only about $10 billion in costs, while individuals paid $55 billion out of pocket.

Meanwhile, insurers have strained to deny policies to as many people as possible. According to recent estimates from the American Association for Long-Term Care Insurance, the industry’s top trade group, somewhere between 44 percent and 51.5 percent of people over 70 who apply for a long-term care policy are now declined. Almost one-third of those between 60 and 65, a less risky demographic, are turned down. Even 21 percent of people in their fifties, more than one in five, can expect to have their applications rejected. Any combination of two or more chronic conditions is grounds for near-automatic disqualification, as are diseases like AIDS and multiple sclerosis, a history of strokes, or diabetes requiring insulin shots.

Yet despite rates rocketing up, and plans being increasingly difficult to even qualify for, claim losses have still managed to exceed expectations since 2008, as insurers have found it impossible to structure a long-term care program in a profitable way. Some insurers have simply abandoned the LTC insurance market altogether; there were over 100 policy providers in 2000 and fewer than a dozen today.

There is perhaps no component of health insurance where the private sector has failed more profoundly than long-term care.

Confusion about long-term care helps the industry avoid even worse losses, though it will lead millions of Americans into financial catastrophe. A significant percentage of people wrongly believe that they’re covered for long-term care via their employer-provided health insurance; others believe that some combination of Medicare, Medicaid, or the Affordable Care Act will handle their needs. A study by the Nationwide Financial Retirement Institute found that only 28 percent of Americans age 50 and older with an income of over $150,000 know that the ACA does not cover long-term care costs, while 70 percent of baby boomers falsely believe that Obamacare covers long-term care.

They’re not entirely off-base in thinking that. The Affordable Care Act did initially include a provision for a national, public long-term care insurance system, called the Community Living Assistance Services and Supports (CLASS) Act. A pet program of the late Sen. Edward Kennedy, CLASS would have allowed all working adults to apply for insurance that would provide up to $50 a day in cash benefits, money that could be used to help with in-home assistance or nursing home care.

CLASS was derided as an accounting feint rather than a serious attempt to manage the long-term care problem. Because the program collected premiums for the first decade before paying out any benefits, it was scored as saving $70 billion inside the ten-year budget window. Former Republican Rep. Denny Rehberg of Montana, the former chair of the House Labor, Health and Human Services appropriations subcommittee, slammed it as “a budget gimmick to make the cost of Obamacare look better and cheaper.”

There were some savings with CLASS, particularly on the crushing long-term care costs absorbed by families across the country. But by 2011, it became clear that the Obama administration had no intention of actually pursuing it. Because the insurance was voluntary, and wasn’t supplemented with federal subsidies, the $50-a-day benefit would cost as much as $391 per month, and without a huge participation rate it still would not have remained financially solvent. So the White House announced they wouldn’t move forward on it.

CLASS was formally repealed in the American Taxpayer Relief Act of 2012, replaced by a Federal Commission on Long-Term Care. The commission went on to complete its study, replete with some of the data seen in this article and a handful of suggestions for limiting costs. And that was that.

THE END RESULT has been a powerful combination of denial, wishful thinking, and severe financial shock. Most older Americans have not looked into long-term care options at all, while just 8 percent consider it “very likely” that they will ever experience a long-term care need (again, something like 70 percent will). Medicare only covers short-term use of nursing home and home health care services, up to 100 days, strictly curtailed and narrowly defined.

Medicaid, meanwhile, currently the single-largest source of funding for long-term services, only kicks in at a point of financial ruin. Most states require long-term care recipients to draw down their financial resources to the very last $2,000 before Medicaid kicks in, even requiring them to empty out IRAs and 401(k)s and assets like real estate. Of course, financial ruin is not some far-off possibility; Americans making the median wage have a 1-in-6 chance of needing long-term care that entirely eclipses their financial resources.

But forcing people into penury to get assistance to feed and bathe themselves robs the elderly of dignity. Many are forced into nursing homes because they can no longer afford living on their own. The only other option is uncompensated long-term caregiving by family and friends, which “costs” nothing, except health stress and financial insecurity.

There’s no reason to believe any of these trends will reverse on their own. The cost of policies will continue to skyrocket, the amount those policies pay out will continue to drop, the number of people in need will continue to grow, and the number of applicants rejected will continue to increase in lockstep. According to the Congressional Budget Office, the cost of long-term care in the U.S. went from $30 billion in 2000 to $225 billion in 2015, compounding annually at nearly 15 percent. And yet the United States remains one of only a handful of developed nations whose government does not provide at least some universal long-term care benefits funded by taxes.

Long-term care is a market-breaker; there’s no meaningful way for it to conform to market principles, or to keep it from losing money. Private firms don’t want to compete for business despite a glut of demand, and a public solution holding itself to similar market-based principles failed before it even got started. But the need for long-term care is an absolute certainty, and herding a huge percentage of our fast-aging population into the corral of bankruptcy is not a solution either.

Some policymakers are finally coming around to this reality. Washington state passed a long-term care social-insurance program last year, which reimburses at $100 per day for in-home care up to a fixed lifetime maximum that translates to one year of daily support. It’s funded by a small payroll tax on all wages. The tax begins in 2022 and payouts in 2025. This mirrors numerous successful efforts abroad, and allows elderly people and those with disabilities the ability to live within their communities with some measure of dignity. But as with any expensive and necessary public-health program, piecemeal solutions at the state level are not likely to be sufficient. Which side of state lines you find yourself on shouldn’t determine the level of dignity and care you’re afforded in old age, and the federal power of the purse is most ably equipped to fund such a program. The Evergreen State has shown that this, like so many other crises we face, is solvable. It will take federal commitment to get it done.

https://prospect.org/familycare/the-collapse-of-long-term-care-insurance/