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Industry News: COVID-19 Impact on Employer Health Plans

The impact of the pandemic hasn’t been a ripple effect, it’s been more like a shockwave to the healthcare industry, insurers and employer health plans (just to name a few in the payer space). It’s safe to say no matter who you are, there is an immediate visceral reaction to the impact “Coronavirus” or, “COVID-19” is having on lives, every day. Specifically, the impact on employer sponsored health insurance plans revolves around massive job losses and, although the immediate affect has been staggering, as we enter the second half of 2020, there appears to be some up-ticks in positive notes about the still, very challenging road ahead.

In early April the report from the Economic Policy Institute stated that “3.5 million workers were at high risk of losing their employer-provided health insurance.” This was directly attributed to the “8.7 million (non-seasonally-adjusted) new claims over a two-week period, which are about 5.9% of total employment over the last year and 2.5 times as large as any previous two-week period on record.”

Workers’ Loss of Employer Health Plans

According to the Robert Wood Johnson Foundation, “The sharp reduction in U.S. economic activity associated with public health efforts to slow the spread of the COVID-19 virus is likely to result in millions of people in America losing their jobs and livelihoods, at least temporarily.”

In July, the foundation estimated that of the 10 million people expected to lose their employer-sponsored health plans in 2020, 32% would get coverage from a family member’s plan, 28% would enroll in Medicaid, and 6% would end up in the individual health insurance market. The other half, according to Robert Wood Johnson Foundation, would be eligible for Medicaid or coverage through the ACA marketplace, but would not use it.


Medicaid Expansion

Because of this, Medicaid coverage is expected to rapidly increase in the coming months and year, especially in states that support Medicaid expansion.

Between March and April, out of every state, Kentucky saw the largest increase in enrollment, at nearly 7%. The trend has continued and Kentucky Medicaid enrollment is up to 1.5 million, likely due in part to the state’s aggressive outreach strategy of reaching out to new unemployment applicants in addition to a simpler form for Medicaid applications.

Still, Less People Lost their Health Plans than Expected

In May, it was predicted that the loss of employer-sponsored health coverage would be drastic — and that wasn’t surprising, seeing as 3.5 million Americans submitted unemployment insurance claims in the last half of March. However, the decrease in employer-sponsored plans has been less drastic than expected, and 10.1 million people are estimated to have lost their insurance. This may be because a large portion of those that are now unemployed didn’t have or couldn’t afford employer-sponsored health plans — many, perhaps, were on their parents’ plans. This is backed up by the fact that job loss is hitting those with low incomes the hardest.

Primary Care Clinics are at Risk, Too

While healthcare is the last business one would expect to be in danger during a pandemic, primary care clinics are not nearly as busy as they were before COVID-19 — let alone as busy as a hospital or intensive care clinic. While COVID patients are being seen and treated at hospitals and intensive care clinics, most people are trying to stay out of medical facilities as much as possible this year. Patients generally aren’t willingly to come in for a routine checkup for fear of exposing themselves at their doctor’s office — leaving primary care clinics significantly less busy than before. Even utilizing telehealth, there aren’t as many patients to see.

This, in addition to a lack of reimbursements from payers, has caused many providers to consider new pricing models. One possible alternative pricing method is advanced primary care, or APC, which would focus on quality of care rather than the number of patients. Pre-payment is another option, where payers would pay providers in advance for services they would provide over time, rather than having to wait to treat patients in order to receive payment. This would give providers roadway between treating patients if there aren’t many walking through the door.

It Took a Pandemic to Highlight These Issues

While the pandemic is impacting the health coverage of millions of Americans, and the security net for primary care clinics, it’s also bringing to light issues that existed before COVID.

A majority of those losing health coverage couldn’t afford their offered health coverage beforehand. Most who have been or will become eligible for Medicaid won’t opt into the program, whether they’re aware of it or not. And the pandemic has not only caused millions to lose their healthcare coverage, but the families of those workers, too.

If primary care clinics are relying on patients to stay afloat, we’ve seen this year that a pandemic, ironically, could be the thing to stop people from coming to the doctor.

Everyone deserves quality health care — but if systems aren’t in place to make sure that care is attainable, these problems will only grow.