The Pandemic’s Effect on US Health Insurance

What impact has the pandemic had on the current US health insurance system? What bottlenecks/constraints have there been to care, and are there ways to relieve them? How could this impact access to a vaccine? Associate Professor of Markets, Public Policy, & Law Tal Gross sits down with Insights@Questrom to discuss how COVID-19 has impacted the US health insurance system.

HOW HAS COVID–19 IMPACTED THE U.S. HEALTH INSURANCE SYSTEM?

Tal Gross: While 2020 was, unquestionably, a terrible year, it was relatively kind to health insurers. The market capitalization of top, publicly traded health insurers was relatively flat through 2020. On the one hand, the COVID–19 pandemic has meant that insurers have had to pay for intensive medical treatment for those who have contracted the virus. On the other hand, the pandemic also temporarily eliminated elective procedures, which lowered insurers’ costs. The CARES Act requires insurers to pay for testing and the administrative costs of vaccinations, but those expenditures are unlikely to have a big effect on insurers’ overall finances.

HAS THE PANDEMIC HIGHLIGHTED ANY CONSTRAINTS OR BOTTLENECKS IN THE CURRENT HEALTH INSURANCE SYSTEM?

Tal Gross: As a health economist, I have always been concerned about the number of Americans who lack health insurance. Research has shown that health insurance coverage increases the amount of healthcare that people consume, reduces financial distress, and, in the end, lowers mortality. And so the fact that roughly 30 million people in America lack health insurance is a problem. That problem has not necessarily made the pandemic worse – access to healthcare does not prevent people from getting the disease. But, that said, all of the country’s inequities have become more apparent and more impactful this year. The numbers are staggering: African Americans are three times more likely to be hospitalized for COVID–19 as compared to non-Hispanic White Americans.

HOW CAN THOSE HEALTH INSURANCE CONSTRAINTS BE ALLEVIATED, IF AT ALL?

Tal Gross: Under the Affordable Care Act, every state had the option to expand Medicaid. Doing so costs each state relatively little – under the law, the Federal government covers 90 percent of the cost of expansion. To date, 12 states have yet to expand Medicaid. All the research we have on health insurance suggests that that decision leads to higher mortality rates and, generally, more misery in those states. So it is reasonable, in the wake of the pandemic and all that occurred in 2020, to argue that all states should adopt the Medicaid expansion.

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HOW ACCESSIBLE WILL THE COVID–19 VACCINE BE UNDER THE CURRENT HEALTH INSURANCE SYSTEM?

Tal Gross: Fortunately, all Americans will have access to a vaccine free of charge. Making the vaccine free is sound economic policy. Every dose of the vaccine not only benefits the patient being vaccinated, it benefits everyone, because the vaccine makes it less likely that the patient will transmit the virus to others. Economists use a technical term to describe that: consumption of the vaccine involves “positive externalities.” And so it makes sense to keep the out-of-pocket cost of the vaccine low, because we all enjoy the benefits of each dose distributed.

There have been reports of local, elected officials attempting to keep the vaccine from immigrants. Such a policy is not just cruel, it is also stupid. Until I get vaccinated, I may contract the virus from anyone who has it, either a fellow American citizen or an undocumented immigrant. The virus does not check citizenship papers before infection. So it makes no sense to prevent immigrants from being vaccinated.