Mass Job Cuts Across U.S. Threaten to Leave Millions Without Health Insurance

(Bloomberg) -- A record 3.28 million people filed for unemployment insurance last week as the coronavirus locked down business activity across the U.S., raising the possibility that millions could lose health coverage during a global crisis.

Nearly half of Americans receive insurance through their employer, according to the Kaiser Family Foundation. The mass layoffs caused by the coronavirus pandemic could force them to find alternatives at a time when they may need it most.

A test is required to determine whether a person has Covid-19, the disease the new coronavirus causes. Serious cases can send people to the emergency room and in some cases to the intensive care unit, a costly out-of-pocket expense.

There are fallbacks for people who find themselves out of work. A program known as Cobra allows some to continue to purchase the insurance they had through their employer, though typically at a much higher out-of-pocket cost. Some may be eligible for Medicaid.

The Affordable Care Act also allows people to buy insurance if they go through an event like a job loss that costs them coverage, and the Centers for Medicare and Medicaid Services is also considering reopening the insurance marketplace under the law; Generally, ACA health plans can be purchased only during an open-enrollment period late in the year.

For private insurers, the upheaval poses a huge threat. Actuaries carefully calculate premiums about a year in advance. They consider the number of people they cover and how much they expect to spend on their care.

An instant loss of customers coupled with a spike in expenses throws the math out of whack.

CVS Health Corp., which acquired health insurer Aetna in 2018, outlined the dilemma in a regulatory filing Thursday. The company said the situation is developing rapidly and the damage will depend on the severity and duration of the pandemic, its effect on the economy and state and local governments’ response.

“Those primary drivers are beyond our knowledge and control, and as a result, at this time we cannot reasonably estimate the adverse impact COVID-19 will have on our businesses, operating results, cash flows and/or financial condition, but the adverse impact could be material,” the company said.

America’s Health Insurance Plans and the Blue Cross Blue Shield Association last week sent recommendations to Congress aimed at boosting enrollment and covering some of the costs insurers will face. The proposals weren’t included in the stimulus bill the Senate passed Wednesday.

©2020 Bloomberg L.P.