Nearly 13 Million Americans Have Lost Employer-Provided Health Insurance. Now What?

House Democrats are backing a proposal that would fully cover the costs of COBRA, a program that allows workers who leave or lose a job to retain their former employer’s insurance plan. 

The coronavirus pandemic is showing no signs of slowing down, and with each passing day, more and more Americans are losing their health insurance, creating a coverage crisis that threatens to exacerbate the nation’s already devastating public health crisis. 

Nearly 13 million Americans have already lost their employer-provided health insurance during the novel coronavirus pandemic, according to estimates released Thursday by the nonpartisan Economic Policy Institute. In total, as many as 35 million Americans could lose their employer-provided health insurance because of the coronavirus, according to an April study from research and consulting firm Health Management Associates (HMA).

The scope of the devastation raises a key question: What is the federal government doing to address the possibility that tens of millions of Americans could be newly uninsured in the middle of a pandemic? 

So far, the answer to that question is very little, even as a new poll from Public Policy Polling found that an overwhelming majority (72%) of Americans say that it’s either the “most important or a very important thing” that the next coronavirus relief package includes major new steps on health care.

RELATED: 35 Million Americans Could Lose Employer-Sponsored Health Insurance, Report Finds

Pressure has begun to build in recent weeks, however, and one proposal that has gained traction is covering the costs of the Consolidated Omnibus Budget Reconciliation Act—better known as COBRA—which allows workers who leave or lose a job to retain their former employer’s insurance plan. 

House Democrats introduced the Worker Health Coverage Protection Act in mid-April, as the nation’s unemployment numbers soared past 20 million. The bill would fully fund the cost of COBRA, which currently requires workers to pay for their full premium, including their employer’s share. Republicans have also expressed a willingness to consider the proposal and insurance companies and industry groups, such as the American Hospital Association and the U.S. Chamber of Commerce, have also come out in support of the COBRA subsidies. 

This emerging consensus may prove surprising to some observers, but it’s decidedly less so when factoring in the alternative option being promoted by progressives—Medicare for All. 

In an op-ed in Politico, Sen. Bernie Sanders of Vermont called last week for expanding Medicare to “pay all of the health care costs for the uninsured, as well as all out-of-pocket expenses for those with existing public or private insurance, for as long as this pandemic continues.” 

Sanders also criticized the proposal to subsidize COBRA as an “expensive and ineffective” idea.

“Not only would health insurance corporations make massive profits off the plan—profits that come at the cost of the American taxpayer—but it would still leave tens of millions uninsured or underinsured,” Sanders said. “And during this pandemic, a lack of insurance means more Covid-19 transmissions and more deaths.”

Sanders’ critique is not an exaggeration. While the push to subsidize COBRA would provide relief to many Americans—the program costs an average of $20,000 per year for families—it would be of no help to tens of millions of other newly unemployed workers who didn’t receive coverage through their employer. The legislation would also fail to cover workers whose former employers go out of business, and with millions of small businesses on the brink of collapse, that could drastically limit the bill’s effectiveness. 

Wendell Potter, a Medicare for All advocate and former insurance company executive, also opposes COBRA subsidies.

“Bernie Sanders is right. Subsidizing COBRA would lead to massive profits for insurers while leaving tens of millions uninsured or underinsured,” he tweeted last week.

Potter also pointed out that COBRA is only available to people who worked at companies that had 20 or more employees, which dramatically limits who is eligible for its benefits.

“A sizable percentage of the unemployed worked for small businesses that didn’t meet that threshold, and COBRA is not available to federal government employees or employees of churches and certain church-related organizations,” Potter told COURIER. 

He also referenced research from the University of Massachusetts Amherst estimating that it would cost taxpayers up to $275 billion to cover the newly unemployed through COBRA, but only $195 billion to cover them through Medicare. 

“Why in the world would we want to waste $80 billion by subsidizing inefficient and undeserving health insurance companies, which already are positioned to post record profits during the pandemic?” Potter asked.

Instead, Potter, like Sanders, has called for an expansion of Medicare to cover the millions of newly unemployed Americans without health insurance. 

“Providing coverage to the newly unemployed and uninsured by subsidizing private insurers through the COBRA program would cost taxpayers tens of billions of dollars more than simply enrolling them in Medicare. Medicare has dramatically lower administrative costs and uses its bargaining leverage more efficiently to negotiate lower prices than those paid by private insurers,” Potter explained. “Far more of the newly uninsured would be covered by expanding the Medicare program during the COVID-19 crisis.”

It’s not just progressives like Sanders and Potter who are skeptical of the COBRA subsidy proposal. Casey Mulligan, Brian Blase, and Doug Badger, former economic advisers in the Trump administration, blasted the proposal as something of a slush fund for insurance companies. 

“A COBRA subsidy represents corporate welfare since the premium payments would go directly to health insurance companies,” the trio wrote last week. “This seems particularly ill-timed since insurance companies already are benefiting financially from the mass cancellation of elective health procedures.”

While subsidizing COBRA would make it easier for newly laid-off people to retain health insurance coverage without going through the red tape of applying for Medicaid or the ACA, the proposal would also be incredibly expensive, costing hundreds of billions of dollars. 

“The advantage of COBRA is it would be seamless and automatic,” Larry Levitt, a health policy expert at the Kaiser Family Foundation, told The Hill. “The disadvantage of COBRA is it could be quite expensive.”

It might also not be particularly effective, if history is any indication. In response to the 2008 Great Recession, Congress enacted a similar COBRA subsidy which paid for 65% of COBRA premiums, leaving laid-off workers to cover the rest. But a federally commissioned study found that COBRA enrollment increased by only 15%. 

Mathematica senior researcher and study co-author Jill Berk told NPR that only about 30% of eligible workers even knew the subsidy existed, and those who were aware largely felt that COBRA was still too expensive. At the time, the average premium—even after the subsidy was accounted for—was about $400 per month for a single worker with family coverage.

“When you’re actually facing those choices, choosing between rent and food and other bills,” Berk told NPR, “that COBRA bill looks quite high.”

Berk and her team also found that people who actually used the subsidy were four times more likely to have a college degree and a higher income than those who didn’t use it, meaning the subsidy was not particularly helpful to those who needed it the most. 

“When you’re actually facing those choices, choosing between rent and food and other bills, that COBRA bill looks quite high.”

The COBRA proposal and Medicare expansion are not the only ideas floating around D.C. Sanders, Potter, and other healthcare advocates previously called for the 14 states that have refused to expand Medicaid, the nation’s public insurance option for low-income individuals, to do so.

“The Centers for Medicare and Medicaid Services must immediately expand Medicaid in each of these 14 states and override the state government’s refusal to expand Medicaid to ensure comprehensive coverage to those in the greatest need and in coverage gaps,” healthcare activist Peter Morley told COURIER in April. 

Nearly 8 in 10 Americans support expanding Medicaid, including 65% of Republicans, according to the poll from Public Policy Polling.

Democrats have also pushed to create a new sign-up period to allow uninsured people to enroll for coverage via the Affordable Care Act (ACA) exchanges, an idea that 76% of Americans said they support, according to the PPP poll. But creating a special enrollment period on its own is no silver bullet either, as the cost of coverage under the ACA can also be expensive. While costs vary from state to state and plan to plan, the average monthly premium for a benchmark plan (the second-lowest-cost silver plan) in 2020 is $388 for a 27-year-old enrollee and $1,520 for a family of four, with costs rising even higher for older adults. 

NPR also reported that MIT Economist Jon Gruber and several Democrats are also considering other ideas, including efforts to have the federal government subsidize a greater amount of ACA premiums and extending ACA subsidies to those who earn too much to qualify for any assistance and to lower-income people in the states that have refused to expand Medicaid.

Strengthening ACA subsidies, which are tied to income, could help millions more Americans obtain coverage and would be a more targeted approach to ensure those at the bottom are getting more help than those who are better off. But much like COBRA, any expansion of ACA subsidies could be prohibitively expensive. 

Both of the more moderate proposals also face other obstacles. Republicans have said that any new subsidies to COBRA need to include restrictions on federal money going toward health plans that cover abortion, an idea Democrats have balked at. 

“The life issue is a huge holdup,” a Senate GOP aide told The Hill. “It’s not clear that we can overcome that holdup since both sides feel dug in at this point.”

The ACA, meanwhile, is the subject of an ongoing Supreme Court case brought by a coalition of Republican states that are seeking to strike down the law in its entirety. President Trump supports the lawsuit and his administration has declined to defend the ACA in court, even though repeal of the law would take away insurance coverage from 20 million Americans in the middle of a pandemic. 

RELATED: How America’s Health Insurance System Could Make the Coronavirus Outbreak Even Worse

Recognizing the new reality of the coronavirus and the potential political blowback of stripping health care away from millions in the current climate, Attorney General William Barr on Monday made a push to try and persuade the Trump administration to step back from its demand that the entire law be struck down. It’s unclear whether Barr’s argument will be persuasive, but the administration has a Wednesday deadline to make any changes to its legal arguments in the case, according to CNN.

While the Trump administration reviews its arguments (or doesn’t) and Congress works to address health care in the next coronavirus relief package (or doesn’t) insurance companies are celebrating record profits during the coronavirus, which would only increase under the proposed COBRA subsidies. Ordinary Americans aren’t so lucky and now have to wait and see what, if anything, the federal government does to help them maintain health insurance during the worst pandemic in a century.

This story has been updated to include Potter’s statements to COURIER.