Blase Policy Strategies | How The Uninsured Can Gain Financial Protection From The Virus
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How The Uninsured Can Gain Financial Protection From The Virus

April 3, 2020

By Brian Blase

At Wednesday’s news conference, President Trump and Vice-President Pence were asked about their plan to best protect the uninsured from financial ruin as a result of the coronavirus pandemic. They should have started their answer: “with short-term health insurance plans.”

One company that offers short-term plans, Pivot Health, saw a 165% increase in enrollment between February and March of this year. According to its survey, nearly 90% of new members were previously uninsured. Almost all short-term plans provide protection for coronavirus, covering both the cost of testing and treatment. This includes the cost of a virtual provider visit. To keep them affordable, short-term plans are underwritten, meaning that people would generally need to obtain coverage in advance of requiring care.

The President can largely take credit for the availability of this coverage. In 2018, his administration reversed restrictions placed on these plans late in 2016, restoring the contract period to 364 days and even permitting renewals for up to 3 years.

Short-term plans are affordable and flexible since they are not subject to Affordable Care Act requirements. They provide value for a lot of people who expect a short coverage gap—maybe a few months—because of job loss. COBRA allows many people to remain on their employer plan for up to 18 months. But because workers typically bear its entire cost, averaging more than $7,000 a year for individuals and $20,000 for families, most cannot afford it.Today In: Policy

According to an analysis by Chris Pope of the Manhattan Institute, short-term plans often provide better value than ACA plans. For equivalent insurance protection, short-term plan premiums are much lower—in some cases about half the cost. Moreover, short-term plans generally cover far more providers. States that have limited short-term plans should consider adopting the federal rules, so their residents have more coverage options.

Prior to the ACA, short-term plans weren’t generally needed because people could buy coverage anytime on the individual market—where people who don’t receive coverage through their workplace or a family member’s workplace shop. The coverage often could start right away.

But the ACA restricted most people to purchasing coverage only during a 6-week window in the fall. The ACA limits the enrollment period because its core provisions otherwise permit people to wait until they are sick to purchase coverage, which raises premiums for everyone else. Understandably, some are calling for a special enrollment period specifically for coronavirus, but such calls really highlight the flaws of the ACA.

People who lose their workplace coverage, however, are eligible for a special enrollment period for ACA plans. Because of their high cost, these plans have proved to be attractive mostly to people who qualify for large subsidies. In legislation enacted last week, Congress made unemployment benefits extremely high (roughly $1,000 a week for four months), and this will disqualify many people from large subsidies. Therefore, short-term plans are probably more attractive to many who lose their jobs, even though they have the option of enrolling in an ACA plan. Medicaid, where eligibility is determined on a monthly basis and the unemployment insurance increase is not considered income for the purpose of eligibility, may also be able to fill a short-term gap for people who lose their job and associated coverage.

In a crisis like this, Americans need every choice possible, which is why the Trump Administration’s expansion of short-term plans is so important. There will still be gaps, however.

Last week, Congress appropriated more than $100 billion to compensate providers and hospitals for the cost of providing care during the epidemic. Part of this funding could support coronavirus care for the uninsured in exchange for providers and hospitals limiting what they charge patients for treatment. This would reasonably assure that patients get the care they need and be financially protected. Further, using part of this enormous allocation to cover care for the uninsured now would eliminate near-certain future cries from insurance companies for a bailout because of costs they would incur in covering people enrolling in coverage during the proposed special enrollment period.

Short-term plans, existing government programs, and using the new virus response funding to compensate providers and hospitals are better options than creating conditions for yet another taxpayer bailout.

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