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Fall 2021: Covid & Health Insurance

By Michael Giusti

Unquestionably, the front line in the battle against COVID-19 is waged by the health care industry. Doctors, nurses, respiratory therapists — without them, the modern plague would be rampaging our society infinitely worse than it is today.

Standing immediately behind that front line is the health insurance industry, ensuring that the lights stay on and the front-line workers can be paid.

As we enter fall and COVID continues its assault of variants and the health care workers counter that attack with vaccines and therapies, the health insurance industry must now grapple with how it is going to respond as plans are being laid for the 2022 policy year.

Political Influences

In his first year in office, President Joe Biden has set policies with the aim of slowing down the virus.

One of those big initial ways he pushed back against the virus was wrapped into the American Rescue Plan, which he signed into law in March.

The American Rescue Plan did many things to help staunch the virus, not the least of which was expanding the Affordable Care Act in several key areas. One of those areas was enhancing the health insurance premium subsidies so they cover more middle-income people for 2021 and 2022.

While those premium subsidies are scheduled to sunset at the end of next year, several lawmakers have written a proposal to make it permanent as part of the budget reconciliation plan that is being debated in congress. While it is far from a given that Congress will pass the $3.5 trillion package, or that it won’t strip out elements from it, its current version does permanently extend those premium subsidies.

Another way the American Rescue Plan enhanced the Affordable Care Act was it offered expanded subsidies to people who were on unemployment through the end of 2021. It also fully subsidized COBRA premiums for people who were laid off, but that benefit has already sunset. The Plan also extended a special enrollment period for Affordable Care Act plans, but that extension has also since passed.

For what they were worth, the Congressional Budget Office estimated that the combined effect of all those changes was an expansion of coverage to millions of previously uninsured people.

Moving forward, because of the Supreme Court’s 7-2 decision in Texas v. California, the future of the Affordable Care Act appears secure. That lawsuit, brought by the attorneys general from several states led by Texas, claimed that the Affordable Care Act was unconstitutional because the so-called Individual Mandate had been reduced to $0, eliminating the taxation justification that originally allowed the law to stand in the first place.

However, the court ruled that Texas didn’t have standing to sue and allowed the Affordable Care Act to stand in its entirety.

So, looking into 2022, the Affordable Care Act remains the governing law for health insurance plans, and at least for one more year, Congress will continue to subsidize those plans at a higher level than it did before the pandemic.

How that will translate into the future is largely in Congress’ hands.

COVID and Health Care

From the perspective of the health insurance industry, COVID-19 has been a question of who should pay for what, and what those premiums should look like moving forward.

To start, COVID-19 vaccines are free to the end user. That has been true since Congress prepaid for those vaccines as they were being developed, and it will continue to be true moving forward. No patient should be charged a cent for getting a COVID vaccine.

COVID tests are also free for the end user, but for a slightly different rationale.

COVID tests are paid for by Medicare, Medicaid, and Affordable Care Act-compliant plans. And if someone doesn’t have health insurance, the cost for those tests is reimbursed by a federal program.

Treatment for patients who contract COVID-19 is a different story.

Initially in the pandemic, health insurance companies chose to waive all cost sharing for patients. That meant that patients early in the pandemic often received no-cost treatment. The key to understand there is that the waiver was a voluntary one, not a federal mandate.

Beginning in late 2020, that policy began changing, and now most patients who contract COVID-19 must pay the co-pays, co-insurance, deductibles, and out-of-network costs, and any other costs they would have to pay if they contracted any other disease spelled out in their policy.

And those costs can be significant. Recent analysis shows a typical COVID hospitalization costs upward of $20,000, with ICU stays costing drastically more. If a typical silver plan has a $1,000 deductible and then pays 90% of the cost after that for in-network care, it wouldn’t take long for a hospitalized patient to hit their out-of-pocket maximum pretty quickly, leaving the rest of the substantial bill for the health insurer to pay, and then later pass along in the form of increased premiums down the road.

Rising Premiums

Despite the astronomical costs for treating someone with COVID, some early analysis of initial rate filings for state marketplace plans show that while rates will likely go up in 2022, the stated reason most of those insurers are giving for those increases doesn’t seem to be based on COVID treatment costs.

Another phenomenon related to COVID may be in play instead, which is that health care utilization may be returning to normal. During the peak of the pandemic, many people deferred or even skipped routine health treatments, such as diabetes and cancer screenings.

But now, with more widespread vaccinations, and even amid the scary variants circulating, much of the health care world seems to be returning to normal, with people heading back to the clinic in numbers similar to those before the pandemic hit.

And now, with regular care to cover, and potentially increased cost to treat neglected conditions, premiums look like they will resume their previous march upward. The key question is how much they will increase and how quickly they will climb.

Telehealth Calling

One prominent change in treatment plans that may stick around after the pandemic is telemedicine.

When people were reluctant to visit their doctor, many turned to technology and opted for virtual clinic visits. Health and Human Services aided that adoption by greenlighting payment for Medicaid and Medicare telemedicine appointments.

But what started as a pandemic work-around now seems to be settling in as a new care-delivery vehicle.

Some health care appointments seem tailor made for telemedicine, such as mental health therapy appointments, or routine dermatology visits, or even minor pediatric consultations.

Beyond avoiding contact with people, telemedicine also meant that parents could get care without having to arrange child care, and people with limited transportation could see a doctor without worrying about logistics, not to mention office workers who could pop in for a visit on a lunch break.

Plus, rural communities with limited health providers can easily tap into world-class care networks hundreds of miles away using telemedicine.

It is hard to see health care turning its back on telehealth any time soon.

Vaccine Debates

Among the most contentious debates about COVID and health care is how people should be treated if they opt out of a vaccine. That debate came to a head when major employers, such as Delta Airlines announced they were going to impose a $200 surcharge on employees who opt out of a vaccine.

Advocates for surcharges point to the high cost for treating COVID-19 and the efficacy of the vaccines as a way of minimizing those costs for the insurer. They say that passing a surcharge on to people who opt out of the vaccine makes sense as a way of offsetting those costs.

And in a way, there is some precedent here.

Ever since the Affordable Care Act’s inception, employers have been allowed to impose surcharges or higher health insurance premiums on people who smoke tobacco for the same reasons that employers are now looking to impose surcharges on people who opt out of the vaccine.

But there is a problem here.

The legislation that authorized the Affordable Care Act specifically allowed for tobacco to be singled out, but since COVID-19 was nowhere to be seen, it was obviously not included in that very specific authorization.

Going further, the Affordable Care Act specifically prohibits insurers from using health care history as part of the premium pricing equation between similar patients.

So, opponents of the COVID surcharge say that charging higher fees for people who aren’t vaccinated flies directly in the face of the Affordable Care Act’s prohibition on pricing according to health history.

Employers then looked for some work arounds, and the Equal Employment Opportunity Commission offered a bit of cover here.

The EEOC issued a rule saying that employers were allowed to offer “incentives” to employees who were vaccinated without running into rules barring discrimination.

Many employers took that to mean they can offer gift cards or other small tokens to encourage what they saw as good behavior — getting the vaccine.

Other employers took the tack of instituting the vaccine surcharges as part of their employee wellness programs.

Still other employers opted to include the vaccine surcharges as part of their employee assistance programs.

However those programs are structured, it is almost certain that the vaccine surcharges will end up in front of a judge. For one, the EEOC ruled that incentives should not be “coercive.” And opponents will be sure to say that structuring the surcharges through some alternate name is just an end run around the Affordable Care Act’s health history prohibition.

Employer Mandates

Interestingly, though, one area of employment law where vaccines are involved has already been settled. And that is whether employers can mandate vaccines as a condition of employment.

That issue came to a head in Houston when the employees of the Methodist Hospital System sued to push back against the hospital’s vaccine mandate. But a federal judge upheld that mandate, and more then 150 of the workers were fired by Methodist.

Another politically charged question was raised in September when President Biden announced that any employer with more than 100 employees must now mandate the vaccine moving forward.

Biden’s mandate relied on a rule written by the Occupational Safety and Health Administration mandating that employers maintain a safe working environment for their employees.

Several Republican-led states have since announced they will fight that mandate, though it is not clear what legal standing states would have to sue over private employer mandates

Gov. Ron DeSantis of Florida has prominently stepped into the debate, saying the state will go so far as to fine cities or counties for every employee that they mandated to get vaccinated.

On the other end of the political spectrum, New York City’s Metropolitan Transit Authority announced that it is going to deny a $500,000 COVID-19 death benefit for its unvaccinated employees who die of the disease. 

The one clear thing about these vaccine mandates is that they are going to end up in court with controversial decisions sure to come down.

Covid Vaccine Boosters

President Biden announced earlier this summer that he would like to see COVID booster shots to be given as an extra insurance policy against deadly variants. But that announcement was not met without controversy.

Many top health officials have said they don’t think those boosters would be necessary just yet, and the World Health Organization came out strongly against giving already-vaccinated people another shot while much of the world still waits for their first shot.

The FDA has already approved booster shots for certain high-risk categories and decisions regarding wider booster shots will be handed down later this fall.

What isn’t controversial, however, is how those shots would be paid for.

Just like all COVID vaccines, a booster shot would be free to the end user, just like all COVID shots have been treated.

The same goes for the shots for children under 12.

So far, the vaccine is only FDA approved for people 12 and up, but that leaves a significant portion of the population not qualified for the shot.

While many parents are clamoring for their grade-school-age kids to be vaccinated, they will likely have to wait until mid fall at the soonest, because the initial vaccine study data has only recently been given to government regulators to analyze.

The under-5 crowd will need to wait even longer. 

Even still, early vaccination numbers from 18- to 29-year-olds shows that the younger populations aren’t rushing to get a jab, with that group registering the lowest vaccination numbers of any age group.

It isn’t clear how many parents will opt to get their children vaccinated even after they are approved.

Mental Health

The good news about mental health coverage during the pandemic is that according to the Affordable Care Act, mental health must be covered just like any other medical treatment, with just a standard copay for the patient.

That is true even for Medicaid and patients with Medicare Part B.

But that doesn’t mean that everyone who wants mental health coverage has it easy.

That is because, even when mental health care is covered, access to mental health providers can be a challenge. According to data from the National Alliance on Mental Health, as many as 55% of psychiatrists are not accepting new patients, and a third of people who want to find a mental health provider say they cannot find someone who would accept their insurance.

Some industry analysts hope that innovations in telemedicine may help ease that bottleneck, but a shortage of mental health providers is likely to continue into the foreseeable future.

New Policies

Fall is a key time for people who are uninsured to start paying attention. That is because of a period called “open enrollment.” That is the time of year when people who don’t have health coverage can jump into a new plan.

Open enrollment for the Affordable Care Act for the 2022 policy year begins Nov. 1 and runs through Dec. 15. That means anyone who doesn’t have employer-based health care can begin to shop for Marketplace-based plans during that timeframe.

Moderate-to-lower income people who don’t have employer-based health care are eligible for sometimes-hefty government subsidies to help pay for those plans.

People with employer-based plans also need to pay attention, because while enrollment for employer plans does depend on the employer’s plan year, open enrollment is still typically in the fall. So, employees would do well to begin looking out for employer benefits packages any time pumpkin spice lattes are a thing.

Employer-based plans and Marketplace plans are rated according to metal tiers — bronze, silver, gold, and platinum.

Those metals have to do with cost sharing and premiums, not quality of care. A patient with a bronze plan gets just as good as one with a platinum plan, they just pay different premiums, copays, and deductibles.

Some people don’t have to wait until open enrollment to sign up for health care, specifically low-income people and many children.

Medicaid, which is a program designed for low-income people, allows for enrollment throughout the year, as does the Children’s Health Insurance Program, which is a program designed for uninsured children.

People can also jump into a plan at any time if they qualify for a change of life special enrollment period. That is when you or your family experience some event, such as losing health coverage, moving, getting married, or adding a baby to the family.

In Conclusion

Going by the initial 2022 rate filings, the health insurance industry is looking forward to some return to normal, if only in the world of pricing health insurance premiums. With luck, that will be because the pandemic subsides, but at the very least it would be because patients return to normal health care patterns and get the regular care they have otherwise been putting off.

Employers will likely face continued vaccine hesitancy, whether that is in the break room, or in the court room.

And the national debate polarizing the conversations about COVID aren’t likely to subside any time soon.

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