What’s Next for the US Health Care System After COVID-19?

The coronavirus pandemic has laid bare longstanding problems with the fragmented US health care system. Lack of universal coverage, high costs, and health insurance coverage linked to employment have prevented the United States from responding quickly and effectively. Many would like the pandemic to be the wake-up call that puts the United States on a sure path to significant reform. However, the path forward is not so easy.

The pandemic presents a twofold crisis for American families: the risk of contracting the potentially deadly virus with the additional costs of testing, treatment, and a possible expensive hospital stay and the potential loss of employment and employer-sponsored health insurance. Hardest hit are those with low incomes and limited cash flow and savings. People with preexisting health conditions are also vulnerable; one in five individuals with a preexisting condition is uninsured. Moreover, COVID-19 is disproportionately affecting populations of color: nationally, deaths for African Americans are nearly twice the proportion of their share of the population.¹

The cost of treating COVID-19 is on people’s mind. In a recent national survey, 40% of US adults reported worrying about the costs of COVID-19 treatment.² Health care is expensive. In 2018, almost half (49%) of Americans with employer-sponsored health insurance were enrolled in high-deductible health plans and spent $3300 on out-of-pocket medical expenses. Almost one in five Americans (18.8%) faced a high medical cost burden.³

The economic impact of COVID-19 also highlights the tenuous link between employment and health insurance coverage. In 2018, two thirds (64%) of workers aged 19 to 64 years and their dependents received coverage through an employer. Relying on an employment-based system of coverage is not sustainable during an economic crisis. Estimates by the University of Minnesota found that of the 22.3 million workers who filed unemployment claims in the week ending April 18, 2020, 18.4 million workers and their dependents faced disruptions with potential loss of their health insurance coverage.⁴

The United States has a complex patchwork of safety net programs to provide access to needed medical care to those with low incomes and the 28 million currently uninsured. Tax-funded programs include Medicaid, the Children’s Health Insurance Program, subsidized premiums for Affordable Care Act Marketplace plans, and care provided by federally qualified health centers and public hospitals. These programs are facing increased demand during the COVID-19 pandemic, and they will continue to face increased demand when the subsequent economic crisis takes hold. The Urban Institute estimated that an increase in unemployment to 20% would add 12 million people to Medicaid and 7 million newly uninsured.⁵ Not well funded in the best of times, the safety net is stretched beyond capacity.

The crisis created by COVID-19 should be the impetus needed to move toward a national health insurance system like Medicare for All. This single-payer approach would provide the best opportunity to achieve universal coverage and remove the link between employment and coverage. Although 56% of adults favor Medicare for all, the support declines with the mention of potential tax increases and is split across party lines.⁶ Today’s polarized political system and vested health care interests preclude such a major overhaul.

The public option would provide a government-run health insurance plan that individuals could purchase in the nongroup market. A state or federal public option could be offered either on or off the Marketplace and could compete with private health insurance. Presidential candidate Joe Biden has proposed a public option plan. Costs would be lower, as government would use its size and negotiating power to constrain spending. This incremental strategy would likely not achieve universal coverage and would retain employer-sponsored insurance. However, it may be one of the most politically viable strategies. The public option polls well, with 69% of Americans in favor of it. Washington State passed a public option plan, and studies on a public option plan have been authorized in New Mexico, California, Delaware, and Oregon.

Buy-in proposals and expansions of existing public programs are another strategy. Several national proposals would allow individuals aged 55 to 64 years to buy into Medicare. Premiums would be subsidized either through federal income-eligible Marketplace subsidies or through employers’ contributions to premium payments. This strategy would certainly help the 3.7 million Americans, aged 55 and older who have no health insurance and are at higher risk for serious illness from COVID-19.⁷

Lack of universal coverage, the perilous link between employment and coverage, and an underfunded safety net put the United States at a significant disadvantage during a pandemic. Significant reform is still on the table, but state innovation will be stymied by the financial fallout of the coronavirus. State budgets have been hit hard with the significant reduction in tax revenue; states are looking at reductions, not expansions of their public programs. States will need additional federal support to sustain existing programs, let alone develop new public options. However, there will be limited appetite for additional federal spending after the COVID-19 pandemic ends. As of May 8, 2020, Congress had approved four COVID-19 relief bills representing $2.4 trillion in aid with additional pressure to spend more.

Although there is no clear consensus on the path forward, there is much more awareness of the fragility of the US health care system. This is a good thing. Nevertheless, it is likely that reform will be back to the status quo—that is, incremental reform with expansion of coverage based on limited extensions of existing public programs.