The threat of coronavirus medical bankruptcy

With three relief bills passed, Congress addressed the most immediate health and economic threats from COVID-19. Yet, it has neglected a secondary threat that follows just behind. Many Americans will face unmanageable medical bills for coronavirus care. 

The relief legislation that Congress passed over the past two weeks addressed only a small sliver of the costs of COVID-19 medical care, primarily to remove financial barriers to testing. The second and third relief bills required health plans to cover COVID-19 testing and medical visits related to that testing without any cost to patients. It also did the same for future preventive care or a vaccine, if either becomes available. These are laudable steps, but not enough.

Congress must address the debt that many Americans will face for medical care when they become infected with COVID-19. More than 180,000 Americans have tested positive, and the number of new cases grows exponentially. Early estimates of the cost of intensive inpatient COVID-19 care range from $20,000 to over $70,000. Many people will be left with a sizable part of that bill, or all of it, possibly at the same time that they lose their jobs (3.3 million people already have filed for unemployment). Unless Congress acts, the costs of coronavirus medical care will cripple many American families. 

People in the U.S. are financially vulnerable to coronavirus because of four deeper problems with how we pay for health care. 

The first is cost sharing. People in the U.S. face higher cost sharing than in most of our peer nations, which means that even after paying premiums, they are still responsible for more of the costs of their care. This problem is especially acute for someone who does not have insurance through work. For someone who buys a health plan directly, such as through an Affordable Care Act (ACA) exchange, the average annual deductible, or the amount of money she must pay for health care on her own before the insurance plan starts to pay, can be upwards of $4,000 for single coverage and more than twice that for family plans. 

For those with insurance through an employer, over fifty percent have deductibles of $1,000 for single coverage and the average deductible for family coverage is nearly $5,000.  Even once a deductible is exhausted, people are often still responsible for a share of the costs of their care. The ACA caps total out-of-pocket spending on health care, but this out-of-pocket maximum ($8,150 for an individual and $16,300 for a family in 2020) does not apply to all spending. For example, it largely does not apply to bills for out-of-network care. Aetna was the first insurer to voluntarily waive cost sharing for coronavirus care, but only for some of its plans and only in-network care. Humana and Cigna followed. These private, voluntary efforts are meaningful but will reach only some insured.

Second, overall prices for medical care in the U.S. are high compared to peer nations. This means a high baseline on which cost sharing is calculated. 

The third is the especially high price tag for out-of-network medical care. Insurers negotiate prices with in-network providers. Otherwise, the sticker price, or “chargemaster” price applies, and it can be many times higher than already high negotiated rates (see point two). Some uninsured face chargemaster rates subject to ACA limitations, and even people with insurance might be subject to them for out-of-network care. 

Even in normal times, someone might use out-of-network care without intending to do so. He or she might go to an in-network hospital but receive treatment from an out-of-network doctor or be transported by an out-of-network ambulance to the hospital. This care can result in extremely high surprise medical bills. By one estimate, 18 percent of in-network admissions for pneumonia with major complications led to an out-of-network bill. Even more, as hospitals reach capacity, someone might not have the choice of an in-network hospital. Congressional efforts to stop surprise medical bills have stalled out. 

The fourth is lack of insurance. Even 10 years after the ACA was passed, 10 percent of the population under age 65 remains uninsured, many of whom cannot afford insurance and are the least able to pay for unanticipated medical care. 

These problems will be counterbalanced if intensive care is more common among older Medicare beneficiaries, who are the best insured population. But even they face cost sharing in some cases, and most are retirees with fixed incomes.

With the third relief bill, the Coronavirus Aid, Relief, and Economic Security Act (CARES), Congress provided needed aid to families through cash and unemployment support. But this support is temporary and for most families will pay for basic needs like food and housing. Many families lack reserves for unplanned medical care expenses. 

The legislation that House Democrats proposed as an alternative to CARES, Take Responsibility for Workers and Families Act, addresses these gaps to some degree. It eliminated cost-sharing for coronavirus care and complications, providing federal funds to reimburse private insurers these costs. It also attempted to increase the number of insured Americans. It gave states the option to cover COVID-19 care for the uninsured through Medicaid, provided premium assistance for people who lose a job to keep their health plan under COBRA, and created special enrollment periods to sign up for an ACA plan or, for Medicare enrollees, to sign up for supplemental insurance coverage. 

Even this proposed bill, a significant step forward overall, left gaps. For example, it recognized but did not fix surprise medical billing, and it left some Americans uninsured. But it offers a starting place for round four of relief legislation. Congress cannot devise a quick fix to these four large structural problems, but it can and must act now to head off avoidable coronavirus bankruptcies and financial stress. 

Allison Hoffman teaches health law and health law reform at the University of Pennsylvania Law School, where she is also a senior fellow of the Leonard Davis Institute of Health Economics. She is co-editor of the Oxford Handbook of U.S. Health Law, which offers the most comprehensive review of U.S. health law in the post-ACA era.