The US Health Insurance Status Quo, Medicare and Otherwise
People 65+ years old account for 80 percent of Americans who experience severe covid symptoms. As I outlined in a recent post, Medicare would ordinarily cover most but not all covid-related healthcare expenses for Americans aged 65 and above.
But these aren’t ordinary circumstances. Hasn’t Medicare coverage been expanded to pay for covid-related healthcare in full, waiving copays and deductibles? Not necessarily. According to the thoroughly reliable Kaiser Family Foundation, the usual rules still apply for those enrolled in what’s known as “original Medicare”:
Beneficiaries who are admitted to a hospital for treatment would be subject to the Medicare Part A deductible of $1,408 per benefit period in 2020. Part A also requires daily copayments for extended inpatient hospital and SNF stays. For extended hospital stays, beneficiaries would pay a $352 copayment per day (days 61-90) and $704 per day for lifetime reserve days. If a patient is required to be quarantined in the hospital, even if they no longer meet the need for acute inpatient care and would otherwise by discharged, they would not be required to pay an additional deductible for quarantine in a hospital. Traditional Medicare beneficiaries who need post-acute care following a hospitalization would face copayments of $176 per day for extended days in a SNF (days 21-100). For COVID-19 treatment-related outpatient services covered under Part B, there is a $198 deductible in 2020 and 20 percent coinsurance that applies to most services, including physician visits and emergency ambulance transportation.
I’m enrolled in what’s known as Medicare Advantage, where the government pays a private insurer a fixed amount per beneficiary to manage the paperwork, and to cover the costs, for those who select that particular program. My Advantage program is underwritten by Aetna — here’s their position on covid care:
Aetna will waive member cost-sharing for inpatient admissions for treatment of COVID-19 or health complications associated with COVID-19. This policy applies to all Aetna-insured commercial and Medicare Advantage plans and is effective immediately for any such admission through September 30, 2020.
In short: if I contract the virus and need inpatient treatment, then my costs under the Aetna-insured Medicare Plus policy would be lower than under the government-insured Original Medicare. My savings would be at least $1,400, but it could add up to far more than that if my condition went from bad to worse. Many other Medicare beneficiaries buy “wraparound” or “Medigap” policies, sold by private insurers to extend coverage and reduce out-of-pocket costs of Medicare: these policies would likely cover covid care in full, though monthly premiums would be quite a bit higher.
What about other health insurance programs? Employer-sponsored group programs, employer self-insured programs, individually purchased policies, Obamacare, Medicaid — Americans are covered by a hodgepodge of programs, each carrying its own basket of coverages and exceptions and out-of-pocket charges. Many of these programs deal with covid the way Original Medicare does, making no special exceptions for covid medical and hospital care. Many of the larger health insurance companies, like Aetna in my case, specifically waive member cost-sharing requirements for covid-related treatment. So too with many employer self-insured programs, which cover maybe half of US employees. Obamacare, like Medicare Choice, is underwritten by private insurers, each of which has established its own covid-specific coverage scheme.
What about the uninsured? While the federal government will reimburse hospitals for the uninsured’s inpatient covid care, to my knowledge the reimbursement does not extend to doctors, medical devices, medications, and so on. What about those tens of millions who have lost their jobs, and their employer-sponsored health insurance, due to the covid shutdown? They can get continuation of their current private insurance under COBRA, or they can enroll in Obamacare, but either way they have to pay the premiums themselves. During the epidemic eligibility has been expanded for Medicaid, which provides coverage for 60 million of the lowest-income Americans. Medicaid is administered by individual state governments, which have established their own rules for covid-specific cost-sharing waivers.
Potential Impact of Currently Existing Medicare for All
Suppose everyone were on Medicare — would they get more comprehensive covid care, with lower out-of-pocket costs, than they do now? For most, yes. Medicare charges $1,400 in annual premiums. In contrast, employees enrolled in employer-sponsored programs pay an average of $6,000 in annual premiums, while families that buy their own health insurance pay an average of $20,000 per year in premiums. More than half the people enrolled in Obamacare pay more than they would under Medicare. Medicare would increase monthly premiums for up to a quarter of the population — those on the lower end of the Obamacare sliding scale, as well as Medicaid recipients.
In general, the extent of coverage and the out-of-pocket cost-sharing under Medicare is comparable to most private health insurance programs. However, even Medicare doesn’t work the same for everyone. Some pay more for expanded coverage; some enroll in Medicare programs underwritten by private insurers whose covid-specific rules vary.
Would universal enrollment in Medicare eliminate individuals’ financial uncertainties about seeking covid-related care? No. When it comes to sorting out specific coverages and exceptions and precertifications and cost-sharings, Medicare is just as confusing as private health insurance.
Another major source of uncertainty in seeking care during the pandemic is the heightened risk of contagion presented by doctors’ offices, hospitals, and emergency rooms. As a consequence and ironically, overall use of medical care in this country has decreased substantially during the covid crisis. Medicare coverage has no effect on the health risks entailed in seeking healthcare.
Medicare For All Under Sanders’s Proposal
Bernie Sanders’s plan would make Medicare coverage mandatory and comprehensive, eliminating all deductibles, copays, coinsurance, and other out-of-pocket costs. That would eliminate any financial uncertainties and disincentives for seeking covid-related care.
Would Sanders’s version of Medicare cost people less in premiums? Not necessarily. Various proposals have been put forward, including one in which each household pays 4 percent of its annual income. Average household income in the US is $60,000; 4% of that is $2,400 — that’s a lot less than the average $6,000 per household in premiums for employer-sponsored insurance.
On the other hand, current Medicare recipients pay only $1,400 in annual premiums. The median household income for those 65 and older is about $48,000: 4% of that is $1,920. In other words, more than half of current Medicare recipients — those at highest risk of coronavirus — would pay more under Sanders’s version of Medicare than they do under currently existing Medicare. However, they wouldn’t have to buy wraparound or Medicap policies, which tend to be quite expensive, in order to increase coverage and decrease out-of-pocket expenses. Overall, Sanders’s program would likely decrease medical costs for most current Medicare recipients.