US health insurers begin charging co-pays and deductibles for COVID-19 patients

Patients who have been hospitalized for COVID-19 but survive return home glad to be alive. But they are anguished by scenes of mass suffering, overworked hospital staff and a desperate struggle to survive. They will now have something else to deal with: even higher bills to pay.

Throughout 2020, co-pays and deductibles—the cost-sharing amounts usually charged for medical treatment and hospitalization—were waived by health insurance companies and some self-insuring employers for coronavirus patients. Those waivers for the most part have now been ended.

The Kaiser Family Foundation found that nearly three-fourths of the largest private health plans are phasing out cost-sharing waivers, with most ending them at the end of August. Another 22 percent of plans are ending the waivers by the end of the year. Medicare waivers will continue until the end of the federally declared Public Health Emergency in October. Employers who fund their own insurance and did not charge enrollees for COVID treatment are also ending waivers.

Dr. Rafik Abdou and respiratory therapist Babu Paramban check on a COVID-19 patient at Providence Holy Cross Medical Center, LA, Nov. 19, 2020 [Credit: AP Photo/Jae C. Hong, File]

In the private health insurance system in the US, costs for medical services are “shared,” with policyholders paying a deductible, co-payment and coinsurance. For example, in 2021, the lowest-premium private insurance sold on the Affordable Care Act’s marketplace had deductibles that could be as high as $8,550 for an individual and $17,100 for a family. That means a family with one of these high-deductible plans has to pay $17,100 before its insurance starts paying anything.

It is well known these high costs often lead to ill people delaying or forgoing treatment. With COVID, any delay could mean increasing the spread of the disease while infected people get sicker.

In addition to out-of-pocket expenses required by insurance companies, hospital charges are a nightmare. As debt.com explained: “There is no standard system that determines what a hospital charges for a particular service or procedure. Many factors figure into hospital pricing, including an individual’s health circumstances, the cost of lab tests, X-rays, surgical procedures, operating room and post-surgical costs, medications, and doctors’ and specialists’ fees.”

For most people, medical costs are more than they can afford. In 2018, 40 percent of Americans lacked sufficient savings to pay for a $400 emergency, according to federal data. A Blue Cross Blue Shield Association study found that total costs for treating patients hospitalized with COVID-19 are $22,500 to $45,000 on average. Patients could see bills, after insurance, as high as $13,500. If patients need treatment in the ICU, total costs average $56,250 to $112,500, with patients seeing bills after insurance as high $33,750.

While huge medical bills bankrupt many—60 to 65 percent of all bankruptcies are related to medical expenses—private health insurance companies have seen profits soar during COVID.

Health insurance companies waived cost-sharing payments because it was in their financial interests to do so. Federal regulations imposed as part of the Affordable Care Act (Obamacare) require that they spend at least 80 percent of premiums they collect on medical treatment, and no more than 20 percent on administrative costs.

When COVID began, many people postponed elective medical procedures and doctor visits. Insurance companies were still collecting premiums, but no longer paying for these postponed services. Their profits soared, but their 80-20 ratios were thrown off since the administrative costs (including executive salaries) were not reduced, even as medical payments declined.

Many insurers decided to meet the spending requirement by covering the deductibles and co-payments for coronavirus patients. It was also good public relations. As Health Alliance Plan CEO Dr. Michael Genord claimed in a March 2020 PR video about the insurer’s efforts during COVID: “Our top priority at HAP is the health, safety and well-being of our employees and members.”

The very sharp decline in the use of medical services meant billions more in profits for insurance companies in 2020, which continues in 2021:

  • UnitedHealth Group reported $4.9 billion in profits in the first quarter of 2021, compared to $3.4 billion in the same period in 2020—a 44 percent increase.
  • Anthem reported $1.67 billion in profits in the first three months of 2021, a 9.5 percent increase from the same period last year.
  • Humana’s net income was $828 million in the first quarter of 2021, a 75 percent increase from the same period in 2020.
  • CVS Health, the drugstore chain that owns the Aetna health insurance provider, reported $2.2 billion in profits, up from $2 billion in the same quarter in 2020.

Now, however, with false but widely publicized claims that the pandemic is winding down, elective procedures have resumed, and the insurance companies no longer need to continue the cost-sharing waivers for COVID-19 patients to sustain their 80-20 ratios. Co-pays and deductibles are back with a vengeance.

In an email to Modern Healthcare, a publication for health care leaders, Kaiser Permanente stated: “With the economy continuing to improve and vaccinations readily available, treatment is currently covered subject to the standard cost-share provisions of the member’s health plan.”

As Modern Healthcare put it: “Most private insurers are no longer waiving cost sharing for COVID-19 treatment due to the widespread availability of vaccines rendering the illness largely preventable.”

How are health insurance companies justifying placing this tremendous financial burden on people during a mass health catastrophe? If you get coronavirus now, they claim, it’s your own fault, because you could have been vaccinated.

Singing a different tune than in 2020, Dr. Genord, the Health Alliance Plan CEO, recently told Bridge magazine, “There’s been a lot of effort for people to take personal responsibility for prevention of COVID that we didn’t have before.” COVID will produce a surge in hospitalizations in the future, just as flu does each season, he stated. But he noted that “personal responsibility” plays a role in blunting the peaks.

Melissa Riba, director of research and evaluation at the Ann Arbor-based Center for Health and Research Transformation, told Bridge that resuming patient costs associated with COVID treatment is another step in “moving away from the incentives to more of the penalties associated with making a choice to be nonvaccinated.”

The 35 million students in elementary school don’t have the option to get vaccinated. Even though there is no vaccine for children younger than 12, families are being given no choice about sending their children into crowded schools where COVID is spreading. A similar situation confronts people who live in areas where there are government bans on mask-wearing. Nor have people with breakthrough infections after having been vaccinated made a “choice” to get ill.

Policy choices are in the hands of capitalist governments that represent big industry, banks and health insurance companies. To implement policies to eliminate COVID, the working class must organize to make public health and the lives of masses the first choice, not corporate profit. This applies to the health care system as a whole, which should be nationalized, under the democratic control of working people, and reorganized as a public service providing free health care to all as a basic right.