Blase Policy Strategies | Cover Coronavirus Treatments, Don’t Expand Medicaid
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Cover Coronavirus Treatments, Don’t Expand Medicaid

March 23, 2020

By Brian Blase

We need to be smart about how we use public resources to respond to the coronavirus outbreak. Two major crises are facing the country right now: 1) the negative health impact and associated deaths from the virus, and 2) the enormous economic impact of large numbers of businesses and schools shutting down.

Congress needs to wisely allocate public resources to address both and not be distracted by long-held ideological pursuits. Many people are providing advice on how to best help businesses and workers weather the storm. For health care, it is crucial to recognize that this is a public health crisis and not an issue of longer-term health financing or coverage.

The federal government should focus resources on direct assistance to those fighting to combat the virus as well as on mitigation efforts. The first and most important need by far is improving and ramping up tests (ones that detect the virus and ones that detect antibodies to the virus) and getting needed medical equipment and supplies to hospitals and health care professionals.

The second need is to ensure that health care professionals and entrepreneurs don’t confront red tape in best responding to the situation, including failures at the Centers for Disease Control and Prevention that caused early delays in testing and unreliable tests. One commonsense set of ideas is for Congress to preempt inefficient and counterproductive state laws that keep health care professionals, entrepreneurs, and innovators from best using their skills to meet the needs of patients in this crisis. 

What would not be helpful are proposals from some that Congress further expand Medicaid eligibility, including requiring or coercing states to adopt the Affordable Care Act’s Medicaid expansion. While it’s understandable to want more people covered, this is not what is needed, could have negative consequences, and would represent an inefficient use of public dollars. These dollars are needed for more urgent, crisis-related needs, including direct support for hard hit hospitals, doctors, nurses, and other health care professionals as well as medical supplies.

Crucially, Medicaid expansion would likely divert resources from those who are far more at risk from this virus, including low-income seniors and individuals with disabilities. Resources need to be targeted to help families, businesses, and health care providers most impacted by the crisis. Moreover, Medicaid expansion crowds out private coverage to some degree and could stress hospital finances further since Medicaid often pays less than the costs of delivering care.

Several studies, including research from BrookingsHarvard, and the New England Journal of Medicine, show that Medicaid expansion is associated with a flood of unnecessary emergency department (ED) visits. Now more than ever we need people to avoid the emergency room unless they are experiencing a true emergency. This reduces the risk of the virus spreading and preserves ED resources, most importantly doctor and nurse time for those who most need it.

In addition, Medicaid expansion is run through insurance companies and involves insurance companies taking a cut of the payment. The Medicaid expansion produced windfall profits for health insurance companies. This is not what we need right now as we need to preserve resources for those who most need them.

A far better and more efficient approach would be for the government to pay directly for the treatment of people who are uninsured. Congress has already provided resources to cover testing for the uninsured. The payment rate should be what Medicare pays, which is likely higher than the rate that Medicaid programs would pay. This would send the money directly to the hospitals and doctors on the front line and not run the money through insurers.

Another problem to consider is that when people lose their jobs, they risk losing their health insurance since it is tied to work for most. Job loss will trigger a special enrollment period where people can enroll in ACA plans. Many of those who are uninsured will be able to enroll in plans that have minimal out-of-pocket premiums because they will qualify for a tax credit. It is not necessary, as some are proposing, to create a new open enrollment period.

Congress should consider extending tax credits for purchasing COBRA coverage (the same plans that people had when they were employed) or to enroll in a short-term, limited-duration plan if an ACA plan is not affordable for them. In fact, short-term plans, expanded by the Trump administration in 2018, are ideal for dealing with this current situation because of the low premiums and valuable financial protection they offer, and because a far larger number of hospitals and providers accept short-term plans than ACA plans.  

Rather than using this crisis to fulfill longstanding aims to expand government permanently—and doing so in ways that likely divert resources from those most directly impacted by the crisis—Congress should ensure the necessary equipment and supplies are delivered to medical facilities, directly pay health care professionals for the testing and treatments they provide during the outbreak, and knock down counterproductive barriers that limit the health care community and entrepreneurs from most effectively responding. These actions would help the most people in the most efficient way.

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