The coronavirus pandemic should leave no doubt that employer-based health care coverage puts millions of people at risk of going without needed care when they lose their jobs. The Medicare Crisis program, a bill in Congress proposed by Representative Pramila Jayapal (D-WA), would guarantee access to care for millions of newly unemployed Americans.
A new report from economists at the University of Amherst, PERI, reveals that Ms. Jayapal’s bill, which uses federal dollars to pay for coverage through Medicare, is both a less costly and more effective way to help unemployed workers than the proposal that House Speaker Nancy Pelosi (D-CA) is promoting, which would buy them continuing health insurance coverage through COBRA.
The Medicare Crisis program offers far more generous benefits than the COBRA proposal, the Worker Health Coverage Protection Act. Still, according to the economists at PERI, the cost to the federal government of the Medicare Crisis program based on coverage for 38.7 million people is $22.3 billion less than the full cost of care under the COBRA proposal, $47.5 billion vs. $69.8 billion for three months of coverage.
"Jayapal's bill, which uses federal dollars to pay for coverage through Medicare, is both a less costly and more effective way to help unemployed workers than the proposal that House Speaker Nancy Pelosi is promoting, which would buy them continuing health insurance coverage through COBRA."
The Medicare Crisis program also covers a lot more people in need of insurance than the COBRA proposal. The Medicare Crisis program covers all recently unemployed workers and their families who lack health insurance, around 57.7 million people. The Worker Health Care Protection Act covers only recently unemployed workers and their families who previously had health insurance through their jobs, around 38.7 million people.
Yet, it costs nearly the same amount to provide three months of care for 18.9 million more unemployed workers and their families under the Medicare Crisis program than under the COBRA proposal. And, only under the Medicare Crisis program would the unemployed workers not face financial barriers to care. Care costs $70 billion for 57.6 million people under the Medicare Crisis program. Care costs $69.8 billion for 38.7 million people under the COBRA proposal, assuming that these unemployed workers could afford to pay $10.3 billion in out-of-pocket costs.
The Medicare Crisis program removes almost all barriers to care. By relying on Medicare to cover care for unemployed workers, it gives them unrestricted access to health care providers wherever they are in the United States. Virtually all doctors and hospitals participate in Medicare.
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The Medicare Crisis program covers the full cost of COVID-19 care. And, it provides unemployed workers with coverage for all other medically necessary care with a cap on out-of-pocket costs at five percent of their income. Moreover, they would not have the hassle of seeking pre-authorizations for their care. Nor would they face delays and denials of care, as people with corporate health insurance so often do.
In stark contrast, the COBRA proposal pays people’s COBRA premiums, which allows them to continue their employer coverage. But, it comes with the same out-of-pocket costs and restrictions on the health care providers they can use. They would be limited to care from network doctors and hospitals.
"If the goal is to help unemployed workers, the COBRA proposal makes little sense. Without a job, most unemployed workers will struggle to afford out-of-pocket costs for their care. Many will be forced to forgo needed care. And, it offers no benefit to unemployed workers who did not previously have health insurance through their employer."
The Medicare Crisis program is also far more equitable than the COBRA proposal. Everyone who has lost their jobs gets federally-financed access to high-quality care under the Medicare Crisis program. The COBRA proposal discriminates against people who lost their jobs but did not have health insurance or who had poor quality health insurance. It gives people back the health care coverage they had, spending more on people who had better health insurance coverage and less on people with worse coverage.
If the goal is to help unemployed workers, the COBRA proposal makes little sense. Without a job, most unemployed workers will struggle to afford out-of-pocket costs for their care. Many will be forced to forgo needed care. And, it offers no benefit to unemployed workers who did not previously have health insurance through their employer.
There’s one group that benefits handsomely from the COBRA proposal: The health insurance industry. It guarantees corporate insurers billions of premium dollars they would otherwise lose. But, by most accounts, the health insurance industry is already thriving as a result of the pandemic. It is spending far less on COVID-19 care than it would have been spending on the thousands of elective procedures that have been put on hold. Focus should be on guaranteeing Americans access to care, not on subsidizing a profitable industry.
Given the respective costs and benefits of the Medicare Crisis program and the COBRA program, it could not be more clear that the Medicare Crisis program is the most cost-effective and best solution to ensure unemployed workers get the care they need. For the health and well-being of working Americans, Congress should stand strongly behind it.