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Viewpoints from Craig Hasday
Two things are very clear as a result of the coronavirus (COVID-19) crisis: Americans are more aware of the need for health insurance than ever and healthcare has changed, forever. It was heartbreaking to read an article that described a desperate patient, about to be intubated, who asked the attending physician “how am I going to pay for this?” Healthcare was an election issue before COVID-19 and now it will likely be the election issue. With the swelling of the unemployed to 15% or more of the population, the number of Americans who are about to feel the real costs of health insurance is alarming. Many of these newly uninsured will be eligible for subsidies under the exchange program established by the Affordable Care Act (ACA), but coverage will cost more than their employer had charged. While in the past, many temporarily uninsured decide to go without coverage, I don’t expect this will be true due to fear of coronavirus complications. And even with exchange-based insurance, deductibles and other cost-sharing are tough to afford for many people. Those $1,200 government payouts will be sucked up by two or more months of health insurance and healthcare costs.
So those Americans who were happy with their healthcare and wanted to keep it are likely to be less fervent in their resolve. They want healthcare and they don’t want to worry about being able to afford ventilation. Additionally, the recession that many economists assert we are in will put even greater pressure on employer costs. Let’s put aside the Supreme Court agreeing to hear Texas v. Azar, a lawsuit that may very well strike down the ACA in its entirety – healthcare must change.
If the Democrats take office, the “Public Option” is the likely path that will be taken. To cut through the rhetoric, this will move many Americans into a Medicaid-like coverage with reduced provider choice and very strict coverage rules. If the Republicans manage to hang on, healthcare responsibility is going to be pushed more to the individuals as signaled by the Individual Coverage Health Reimbursement Arrangement (ICHRA) regulations, which allow employers to shift healthcare to a defined-contribution benefit. No longer will employers be forced to absorb cost increases, which have become even less budget-able with this pandemic. These regulations are complex and force individuals onto the generally undesirable benefits available on individual exchanges, but for some employers and some segments of the population, this option will be appealing.
Although our actuarial team continues to believe that the 2020 cost of COVID-19 will not be overly impactful on large employer plans in the current year, there is some concern that the shifting of discretionary care and the delay in receiving this care, which may increase costs, will be detrimental to 2021 costs. Insurance carriers are indicating that the insured market, which is absorbing significant first-dollar costs without cost-sharing by the individual, will face significant increases in 2021.
There is uncertainty, and in times of uncertainty, change is easier to achieve. The status quo will lose its compelling grasp.
President, National Employee Benefits Practice