In the United States, one of the most important factors in receiving COVID-19 testing or treatment is access to insurance. But insurance—like other health innovations—is grossly and unevenly distributed. In particular, because of the way income and employment are distributed in the U.S.—and the country’s long-standing connection between income, employment, and insurance—Black Americans and other people of color remain vastly uninsured or underinsured, problems likely to be exacerbated by the COVID-19 pandemic. In this post, we look at how insurance policy—itself, a form of health innovation policy—has a racially disparate effect in the pandemic, with a particular focus on Medicaid.
Who is covered by Medicaid during the pandemic?
Medicaid is a classic cooperative federalism program, with the states and the federal government jointly in charge of its administration. When first created in 1965, Medicaid was conceived of as providing health insurance and health care to specific low-income populations, including children, pregnant women, the elderly, and disabled individuals. In 2010, the Affordable Care Act sought to expand Medicaid to all Americans earning below 138% of the federal poverty level (in 2020, $17,608 for an individual, and $36,156 for a family of four). The Supreme Court, however, held in 2012 that this expansion was optional for states. At present, 37 states (including DC) have chosen to adopt the expansion. Medicaid enrollment in expansion states has grown by 12.4 million since the expansion began, but millions of otherwise eligible Americans remain uninsured, particularly as populous states like Florida and Texas have declined to opt in to the expansion.
States’ decisions not to expand Medicaid disproportionately disadvantage minorities, and particularly Black Americans. The Kaiser Family Foundation (KFF) has calculated that uninsured Black adults “are more than twice as likely as White and Hispanic uninsured adults” to lack insurance due to a failure to expand Medicaid. These disparities are likely to grow as a result of the COVID-19 pandemic, in which the unemployment rate for Black Americans continues to rise even as the unemployment rate for whites falls. Because health insurance in America is typically tied to employment status, the disparity in unemployment rates will likely exacerbate disparities in health insurance status and access to care.
What COVID-19 costs does Medicaid cover?
Given the financial situation of most Medicaid enrollees, cost-sharing obligations for beneficiaries (in terms of premiums, deductibles, copayments, etc.) are tightly constrained by law and are prohibited in many cases. The March 18 Families First Coronavirus Response Act (FFCRA) went further, requiring Medicaid (among other insurers, including Medicare) to cover the costs of COVID-19 testing and associated services with no cost-sharing to beneficiaries. Beneficiaries thus can expect that any COVID-19 testing and treatment costs would be covered fully by Medicaid, as essential benefits under the program.
But in other ways, the federal government’s decisions about Medicaid funding during the pandemic have continued to disadvantage minority populations, particularly Black Americans. In the March 25 Coronavirus Aid, Relief, and Economic Security (CARES) Act and April 24 Paycheck Protection Program and Health Care Enhancement Act (PPPHCEA), Congress appropriated a combined $175 billion to be disbursed to healthcare providers, who faced precipitous revenue drops due to pauses in non-emergency services. The federal government, which has sole oversight over the Medicare program, quickly disbursed $50 billion of this pool to providers serving a large number of Medicare beneficiaries. But it took the federal government ten weeks to award any funds to entities serving large numbers of Medicaid beneficiaries, only doing so after bipartisan pressure from legislators. This delay in disbursing funding has specifically exacerbated racial health disparities: as of early May, nearly 2,000 community health centers, which disproportionately serve low-income communities and people of color, have closed, at least temporarily, due to COVID-19.
The consequences of these payment delays were foreseen and avoidable. In early April, the National Association of Medicaid Directors asked the Centers for Medicare and Medicaid Services (CMS) to allow states to make emergency retainer payments to essential Medicaid providers. CMS did not permit states to do so, stating that it could not disburse funding to the states under the terms of the law. As the Washington Post reports, this decision was not universally agreed upon, and CMS’s broad statutory authority to allow states to experiment with the financing of the Medicaid program would seem to allow states to distribute funding themselves.
Who remains uninsured in America?
Even taking into account employer-sponsored insurance plans and the ACA’s expansion of Medicaid, a startling number of Americans still lack health insurance: approximately 30 million Americans in 2019. Among working-age adults, the uninsured are disproportionately low-income, Latinx, and under age 35; and the main concern cited for not obtaining insurance was affordability. As of May 2, KFF estimated that around 27 million more Americans could lose employer-sponsored health insurance due to COVID-19-related job loss, leaving them struggling to determine whether they are eligible for publicly subsidized coverage.
Policymakers have a number of options for helping more Americans gain healthcare coverage. State legislators could choose to expand Medicaid eligibility in the 14 states that have failed to do so, and the federal government could reopen the Affordable Care Act’s insurance exchanges to permit new signups by those who have lost their coverage. Sadly, neither option, at least as of this writing, seems to be a legislative priority. In the shorter term, the federal government has stepped in to limit out-of-pocket costs for uninsured patients during the pandemic. But how long and how significant this temporary relief will last is unclear.
What COVID-19 tests and treatments is the government covering for the uninsured?
In contrast to expanding insurance programs to insure lower-income COVID-19 patients, the federal government has been active in expanding insurance coverage to include a greater number of COVID-19 tests and treatments. The FFCRA requires insurers to cover COVID-19 testing costs with no patient contribution, allocating $1 billion to reimburse providers for COVID-19 testing of uninsured patients. And in April, Health and Human Services Secretary Alex Azar stated that HHS would use some of the $175 billion allocated under the CARES Act and the and PPPHCEA to compensate providers of uninsured COVID-19 patients “at the Medicare reimbursement rates,” and that they would be “not allowed to bill that uninsured individual anything.” To implement this commitment, HHS launched a COVID-19 Uninsured Program Portal on April 27 for providers to file reimbursement claims for COVID-19 testing or treatment for uninsured patients, including undocumented immigrants. The program also includes coverage of an FDA-approved vaccine, when available.
This program is an important step toward improving access to COVID-19 care for some of the most vulnerable Americans, but it is not a substitute for more systemic reform for at least three reasons. First, due to administrative difficulties, take-up of this benefit has been slow and limited so far. As of June 12, only $130 million has been paid through this program, and it is unclear how many uninsured patients have been billed for their care—often at undiscounted prices—because providers were unaware of this program or chose not to participate. Second, even if take-up improves, reimbursement for uninsured COVID-19 patients is “subject to available funding,” and as KFF reported Tuesday, it is unclear how much funding will be available. $112 billion of the original $175 billion has been allocated already for other purposes, and none of the remaining $63 billion has been specifically earmarked for uninsured patients. HHS has not indicated how it will balance competing needs when distributing these limited funds. Finally, reimbursement for treatment requires a primary COVID-19 diagnosis; it will not aid the uninsured who need care for other conditions, even if they also have COVID-19.
What about low-income but insured patients?
Even when patients have insurance, and even though federal law mandates that most insurers cover costs relating to testing and treatment for COVID-19, many costs fall through the cracks such that patients still may face substantial financial burdens. Much like the rest of the American health-care system, reimbursement is often a fragmented mess. The various payments patients still have to make, even when insured, are numerous—deductibles, co-pays, and co-insurance—and each has its own rules and limits.
On the testing side, insured patients may still face large out-of-pocket costs for at least three reasons. First, the FFRCA’s free COVID-19 testing coverage requirement only kicks in if a COVID-19 test is actually ordered. Because tests were extremely hard to come by in the initial stages of the pandemic—and are still challenging to get in some locations—this may still pose a problem. Some patients who have complained of COVID-19 symptoms have had their provider order other tests, for flu or other ailments to rule those out, especially if COVID-19 tests are scarce. But these tests aren’t directly covered under the FFRCA, meaning patients have been billed for them.
Second, in 2018, the Trump administration eased restrictions on short-term insurance policies, which are generally cheaper to insureds but provide less coverage than regular insurance policies. Currently, those policies are not covered under the FFRCA, and are therefore not required to cover COVID-19 testing cost-free. One last restriction has to do with timing; cost-free testing or treatment only applies for tests or treatment on or after March 18, 2020. But by that time, over 6,000 people had already tested positive for SARS-CoV-2.
Finally, there is still uncertainty about who is going to cover some tests, especially tests for workers who need testing to go back to work. Employees of nursing homes in New York must be tested weekly, but it’s still uncertain—six months after the first coronavirus case was reported in the United States—as to whether the nursing home, the employee’s insurer, or the state is picking up the tab. Shockingly, some insurers have refused to cover the test as a non-reimbursable workplace expense. Given that nursing home workers are disproportionately women of color, this morass places an even greater burden on them, even when they are insured.
The treatment side is even more complex. There’s no uniform federal policy on reimbursement for COVID-19 treatment, so it’s been left up to insurers and the states. Most major plans have waived patient contributions, but not all. Some states have said relatively little; other states have been generous, requiring insurers to cover treatment costs without patient contributions (though those ERISA buffs among you will correctly note that self-insured plans aren’t covered by these rules). In states without such strictures, patients may still be responsible for co-pays, deductibles, co-insurance, and potentially balance billing from providers who say the patient’s insurance didn’t cover the full cost. Given the lack of authorized COVID-19 treatments aside from remdesivir, patients receiving experimental treatment may also find their insurers balking at coverage. (Remdesivir itself is still free, for now, as available supplies have been donated by Gilead.)
Finally, the complex systems of insurance reimbursement leave plenty of room for mistakes. Even though federal law requires that insurers cover bills sent directly to patients from out-of-network providers for testing, insurers don’t always catch that, and patients can see bills as a result. Despite concerted federal action and fragmented state action, those with insurance can find themselves facing the unexpected bill for hundreds of thousands of dollars—even if they did everything right.
The most straightforward action that government could take in response to these coverage gaps would be to follow the lead of some states, and require COVID-19 treatments to be covered by insurers without patient contributions. COVID-19-related testing should also be covered, whether or not an actual COVID-19 test is performed, if a patient presents with COVID-19 symptoms. The reasoning is simple: it’s bad policy to have symptomatic patients with scant insurance avoid getting testing in the fear that their provider will test them for other ailments. This should be easier as more tests become more available—a different innovation policy lever. The goal of these policies is not only to decrease the financial burdens of care and the resulting inequitable hardship for Black Americans and other vulnerable communities—even though that would be a significant and important salutary effect. Such policies should also reduce the financial fears of the underinsured more broadly, making it easier for all Americans to get tested and treated—a key policy goal for tamping down the pandemic.
This post is part of a weekly series on COVID-19 innovation law and policy. Author order is rotated each week.
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