27 million Americans could lose health insurance as Congress proposes industry 'bailout'

Legislation proposes subsidising COBRA costs for newly unemployed Americans. Critics say it's an expensive lifeline for insurance companies that lost their customers

Roughly 27 million Americans and their families may have lost their health insurance after sweeping layoffs and business closures during the coronavirus crisis.

While nearly 80 per cent of Americans who lost or will lose their employer-backed health plans could be eligible for coverage from state-administered Medicaid plans and other plans through the Affordable Care Act, millions of others — including dependents who relied on plans from another member of their family — are ineligible, leaving them without any insurance options during the pandemic, according to a report from the Kaiser Family Foundation.

Roughly 6 million people who lose their employed-provided insurance won't be eligible for subsidised coverage, including nearly 4 million others whose family's income falls above eligibility limits and thousands of others who don't meet citizenship or immigration requirements, the report says.

Few Americans will fall into the so-called "coverage gap" after losing their job because of wages earned before they were laid off combined with unemployment benefits and a temporary $600-a-week boost from supplemental relief, which could push the annual income for many newly unemployed Americans into a threshold making them ineligible for Obamacare marketplace subsidies in states that didn't expand them.

By January 2021, as unemployment benefits shrink, that coverage gap could grow by 80 per cent, with nearly 2 million Americans enrolling in Medicaid or other subsidised plans.

But many states facing shrinking tax revenues are bracing for deep cuts to Medicaid, leaving the programme's future for many Americans in jeopardy.

More than 33 million Americans have filed for unemployment insurance within the last two months, according to the Bureau of Labour Statistics. Analysts predict nationwide unemployment reaching 20 per cent or higher, not seen since the Great Depression.

In their latest relief bill, Congressional Democrats have proposed subsidising the cost of COBRA benefits, which allow people to continue their employer-backed health coverage after they leave a job, but the beneficiary is responsible for picking up both their share and former employer's share of the premium costs, in addition to all out-of-pocket costs.

COBRA is, historically, prohibitively expensive for most Americans, with fewer than 10 per cent of workers using the plan. Employer premiums average $7,188 for a single person and $20,576 for a family of four, plus a 2 per cent administrative fee. It's meant as a temporary stop-gap between jobs.

The HEROES Act proposes that the government absorb those costs while Americans are out of work.

Critics have called the plan a "bailout" for the health insurance industry, which is losing customers at the same rate of jobless claims. Health insurance companies would reap the benefits of federally subsidised costs, while the legislation would also retain current disparities in coverage — laid-off workers with more-expensive plans could continue their coverage, for example.

Before the pandemic, more than 26 million people already were uninsured, and millions others were considered "underinsured" with costly plans that leave them with little if any room to cover out-of-pocket expenses.

Progressive lawmakers have instead supported a plan that would open federal Medicare coverage to people who lost their plans for the duration of the Covid-19 crisis.

Adam Gaffney, a critical care doctor and president of Physicians for a National Health Program, said that "subsidising the insurers is not going to cut it. ... We need emergency Medicare expansion for the uninsured, and coverage of out-of-pocket costs for the insured, now."

Wendell Potter, a former health insurance executive and Medicare for All advocate, told The Independent that "it is mind boggling that [Congress] would be willing to spend more money, more taxpayers' dollars, to make sure people have access to care they need" under the COBRA plan rather than existing Medicare programme.

"It is maddening to think our elected officials would think that's the preferred choice," he said.