The Pandemic Could Overwhelm the Insurance Industry. We Must Expand Tricare for Everybody Who Needs It

Our status quo health insurance system simply can’t survive a pandemic. The choice is a bailout — or a one-page piece of legislation that expands Tricare to everybody.

Photo illustration: Soohee Cho/The Intercept, Getty Images

We know that our hospitals aren’t ready, nor is much of our health care industry, if the spread of Covid-19 continues on its current trajectory.

Deepening the problem, however, is that our private health insurance system is also woefully unprepared and threatens to buckle under the weight of the coronavirus pandemic, leaving major corporations pleading for a bailout and people with symptoms resisting treatment for fear of the cost. The status quo simply can’t survive a pandemic.

An insurance industry bailout would be bad policy, leaving corporations whole, while patients still faced massive bills. But it would also be dreadful politics. A political system that hopes to avoid such a brutal vote needs to act now. Fortunately, there is an option that Congress could make available with a one-page piece of legislation. It’s called Tricare, and it’s the least known of the three major public health care plans, after Medicare and Medicaid. It is designed for the families of service members, as well as retirees, and currently covers nearly 10 million people. President Donald Trump and congressional leaders have spoken of putting America on a “wartime footing” to take on the novel coronavirus. Tricare — and, specifically, Tricare Select — is the match for the moment.

First, let’s explain why our system of health insurance isn’t built to withstand or mitigate a pandemic, then run through the other options available to policymakers, none of which are sufficient. Then let’s map the benefits of Tricare against the problem we’re up against.

If and when things go really bad, the United States is going to need an off-the-shelf solution it can deploy at a huge scale. The potential size of the problem and its ability to crush our private insurance system is unprecedented. It could cause both a huge surge in costs as more people use hospitals and a huge drop in revenue as companies hit by quarantine measures engage in massive layoffs of workers with employer-provided insurance. That’s not to mention the added cost caused by less critical treatments being delayed, allowing those issues to worsen as all bed space is reserved for Covid-19 patients. Very rough calculations would indicate that in a pessimistic scenario we could potentially see a 20 percent increase in the average claims and more than a doubling of average hospital day usage in the individual/employer insurance market.

Our Current System Is Not Designed to Handle This Double Shock

Many employer plans are self-insured. That means the insurance company on your insurance card is just the administrator, while your company is the one directly paying all your medical bills. That encourages companies to engage in mass layoffs to mitigate the risk of getting hammered with high health care costs and makes other options, like cutting hours but keeping benefits, less attractive than they were in past downturns. The measures currently in place for people who lose their job — such as COBRA, which allows people to continue their employer insurance by paying large premiums, or the Affordable Care Act exchanges — are problematic at the best of times and totally inadequate for a pandemic. COBRA is meant to be a temporary bridge for those between jobs, but with no idea of how long whole sectors will be out of work due to quarantine measures, that is now a bad choice for individuals and a unique problem for businesses.

The ACA exchanges are a very poor solution as well. Beyond the numerous current problems with the system, it was simply not built for the massive churn and the special needs we will see in the worst-case pandemic. It normally takes weeks between signing up and being covered. Due both to the law’s design and to the Trump administration’s decision to end the Cost Sharing Reduction, choosing the best plan has become a very complicated mess depending on your income. The problem for people laid off during this economic downturn is that they are going to have no idea when they will get back to work. Consequently, they have no idea where their yearly income will end up. Medicaid, by comparison, uses your monthly income, so depending on whether your income is low enough, that is a good option for some period of time, if you don’t live in a red state that refused to expand Medicaid.

Furthermore, the ACA exchange policies are very poorly designed for a pandemic. For many people who are normally reasonably healthy, they are meant to be merely catastrophic insurance. The most common plans tend to have very high cost-sharing compared to employer insurance (in-network, out-of-pocket costs are capped at $8,150 for individuals and $16,300 for families) and very narrow networks. Many exchange plans have even higher caps or no cap at all on out-of-network costs. That is the last thing you want in a pandemic, where in an emergency, you will be sent to whichever hospital has open beds, regardless of your network status.

For many who lose their jobs right now, their exchange options will effectively be financial Russian roulette, with plans designed to discourage them from getting treatment. Individuals who lose their jobs could face both serious illness and crippling costs due to high out-of-pocket limits and/or surprise billing. Fixing the flaws of the ACA would require multiple massive changes, since high cost-sharing to discourage people from getting too much care is at the core of the entire design.

Creating a New Plan Would Take Too Long

Something like Sen. Bernie Sanders’s Medicare for All likely couldn’t be set up in time. Any new system would require months, if not years, to work out the specific new rules and regulations. The same issue exists for ideas like a “coronavirus crisis insurance program” based on Medicare to cover those with the virus. Meanwhile, a narrow program would do little for those who lost their jobs due to Covid-19 quarantine measures. The same goes for those suffering because treatment for conditions that would have been relatively cheap to treat were delayed, or those who depend on hydroxychloroquine but can’t get their prescription filled due to the crisis. And what about people who were treated for Covid-19, but it turns out they merely had regular pneumonia? You want a program that is fully formed — and all you need to do is change one line of a bill to add millions of people to it.

Of the Existing Government Insurance Programs, Tricare Is the Best Choice

Dramatically expanding Medicaid to cover more people would be a good option but is legally not viable. Thanks to the Supreme Court case National Federation of Independent Business v. Sebelius, the federal government can’t force states to expand Medicaid, which is why 14 red states still haven’t taken part in the ACA’s Medicaid expansion.

Existing Medicare is both not really designed for younger people and has some needless complexity that makes quick expansion in a pandemic a problem. Medicare doesn’t have an out-of-pocket cap, something you want during this pandemic. The gap is normally addressed with seniors buying Medigap coverage or choosing a Medicare Advantage plan. All new rules would be needed for providing these for younger people. Traditional Medicare also doesn’t cover drugs, requiring people to select a Medicare Part D plan.

This is why Tricare, particularly Tricare Select, makes the most sense. Tricare currently covers 9.4 million Americans and could relatively easily be scaled up by just changing a few lines of legislation about who qualifies. Tricare Select is the PPO military insurance plan designed for people under 65 who aren’t in the military. It’s the broad network plan for military family members and those retired from the military. It offers full coverage, including drugs. Its provider reimbursement rates are already based off Medicare. It also has very modest cost sharing, which would make sure that people who think they might need care seek it out, exactly what you want from a public health perspective when confronting a highly contagious disease. Co-pays are small: the deductible is only $156 for an individual, with a much more reasonable catastrophic cap plus existing rules that prevent large surprise bills from unscrupulous hospitals and physician companies trying to take advantage of this crisis. It is exactly the kind of insurance we want people to have during this crisis, and, most importantly, it already exists.

We Need an Anti-Bailout Position Ready to Go

The reality of the pandemic, the economic conditions, and the political climate is changing on a daily basis. Ideas that were unthinkable a few weeks ago now have majority support. Private insurers are also asking for their own indirect bailout by infusing them with more money. If things get worse, expect them and every other industry to come back again for another round. We can’t have a solution that makes companies whole but leaves people with thousands of dollars of medical debt just because they were “covered” by high-deductible exchange plans. Or one that only directly pays for Covid-19 treatment but is full of holes, leaving people with huge bills because they went in for treatment but ultimately just had the flu. Or one that does nothing for the millions of people who merely lost their job and their quality coverage due to necessary quarantine measures. Or does nothing for the people who will suffer longterm health consequences even after surviving the virus.

The alternative out there needs to be comprehensive, and most importantly, ready to be immediately deployed. We need a solution that can be used even faster than any industry bailout or targeted reinsurance program that has the government take on the insurers’ cost for covering Covid-19 patients. The best answer is a massive expansion of Tricare Select. Expand it to all the people who have lost coverage due to the pandemic, all those “contractors” providing critical delivery right now, everyone keeping our supply chains moving, to everyone who needs it, to as many people as possible. You can even rename it to whatever self-flattering name gets a president to sign it.

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