Officials seek federal relief on health insurance risk

The full impact of the novel coronavirus pandemic has yet to be fully understood, but there are plenty of indicators of the difficulties that will come in the months – and even years – ahead. Beyond the long-term health effects of millions of people coming down with the virus itself, there are issues around the effect that those illnesses will have on the health insurance industry, particularly as it relates to coverage purchased through state insurance exchanges.

In early June, the executive directors of more than a dozen state marketplaces sent a pair of letters to Congressional officials and the Department of the Treasury requesting help when it comes to insulating their exchanges from severe risk, according to the National Academy for State Health Policy. With tens of millions of people potentially in a position to lose their employer-sponsored health insurance, and no end in sight for the fallout, it it possible that enrollment in these state-run exchanges could surge – and put them in a difficult position.

The current situation
There were already some 31 million people without health insurance across the country before the outbreak began, and more than 40 million have filed for unemployment in the last few months, the letters noted. Altogether, the 19 exchanges run either entirely by states or as a partnership with the federal government insured just 4 million people nationwide, typically at a lower cost than what's available on the federally run Healthcare.gov. And while those state-run exchanges have largely been successful in helping people sign up for their coverage since the pandemic began, issues may be looming.

The cost of health insurance could be affected by the pandemic – in numerous ways.

Chief among them is how the outbreak will affect people's relationship to their health insurers, and how that will impact the risk those underwriters face. For that reason, the NASHP has asked for federal help in establishing an overarching national reinsurance program that will help states keep premiums as low as possible, to supersede the 12 individual programs that have been set up already with federal assistance. The reason help is needed now is simple: state revenues are falling – and will likely continue to do so – and thus their ability to properly fund those individual reinsurance programs is hindered. With a federal program in place, all involved would get more certainty.

A plan for testing?
At the same time, the NASHP also noted that there are still no clear federal standards for testing and tracing for coronavirus, which is a major hurdle in its own right. For instance, federal guidance issued in late June did not dictate how health insurers are supposed to help keep costs down for any out-of-network coronavirus tests Americans undergo, which can be a major problem for those individuals (and insurers) because of the cost of such tests – as much as $2,300 each – and also vague rules about when or how such testing qualifies as “medically appropriate.”

Where the federal government may most need to provide some clarity on these fronts is in the form of Congress issuing more funds to subsidize testing and spelling out “an evidence-based testing protocol,” the organization said. If this came in addition to national contact tracing protocols, that would be all the better for states struggling to contain the outbreak.

Another consideration
Meanwhile, even as many Americans are filing for unemployment assistance and signing up for coverage through the exchanges, states also have to warn claimants about the potential interplay between those two situations, according to NJ Advance Media. Technically, unemployment benefits are considered taxable income, and with those benefits potentially exceeding people's previous incomes thanks to stimulus efforts, some filers could be pushed into higher tax brackets. That, in turn, could have a negative impact on their eligibility for maximum subsidies, potentially leaving them with a larger insurance bill next year.

In the meantime
With so much uncertainty about how these issues are going to evolve in both the immediate and long-term future, it should come as no surprise that more states are trying to take matters into their own hands. Politico noted the “fragmented” nature of federal response often put states, counties and cities on their own course to dealing with the pandemic, either stepping up or scaling back their reopening plans on a case-by-case basis, to varying results. Some have had early success in containing the virus, which prompted broader reopening plans to go into effect, leading to a surge in cases. Others have been more cautious in following a return to relative normalcy, helping keep the curve on a downward trajectory.

Certainly, this remains an evolving situation and leaders at the state and federal levels will likely have to continue fine-tuning their response to the pandemic as time goes on, in an effort to ensure all appropriate measures are taken to both stem its transmission and confirm people are properly insulated from health and financial risk going forward.