Coronavirus’s impact on the U.S. economy calls for hospitals to increase financial counseling and review financial assistance and accounts resolution policies

• As of March 27, half of states and more than half of the population of the United States is under stay-at-home orders, causing a shutdown of the U.S. economy, which has resulted in a significant dislocation of the workforce.
• Health systems need to increase financial counseling resources, re-evaluate policies determining under which circumstances they will subsidize an individual’s COBRA coverage and re-evaluate financial assistance and accounts resolution policies, considering their communities’ shifting economic fortunes.
• Advocates for a state-backed public option will use the coronavirus outbreak as further proof/rationale for why there needs to be, or even movement to, a single-payer system to accelerate universal coverage at the same time states’ economic activity and tax collections have tanked.

As of March 31, 30 states and more than two-thirds of the population of the United States are under stay-at-home orders in an effort to staunch the spread of COVID-19. The resulting shutdown of the U.S. economy has caused a significant dislocation of the workforce. For the week ending March 21, before most states issued stay-at-home orders, jobless claims spiked to 3.2 million. According to Congressional Quarterly, “The weekly record had been 695,000 in October 1982. The highest weekly number during the Great Recession was 665,000 in March 2009. St. Louis Federal Reserve President James Bullard said [March 22] the unemployment rate could rise to 30 percent.”

The CARES Act increases the unemployment benefit by about $600 per week, up from an average of $385 per individual, for up to four months. It also extends the period of unemployment eligibility to 39 weeks through the end of 2020. The legislation creates a Pandemic Unemployment Assistance program that would provide benefits to the self-employed, independent contractors, those who have previously used up eligibility for weekly benefits and others.

Takeaway

Based on the coronavirus pandemic’s effect on the economy and jobs in the U.S., here are two key takeaways for healthcare systems to note:

1. Self-pay strategies: In the short term, health systems need to increase their financial counseling resources. Those among the recently unemployed who had insurance through their employer will have access to COBRA coverage. Health systems may want to re-evaluate their policies that determine under which circumstances they will subsidize an individual’s COBRA coverage and the duration for which they will subsidize it. Some state-based exchanges are also re-opening enrollment to provide coverage for those who have either lost their employer-based coverage as it may be a cheaper option than COBRA or to allow the uninsured to access coverage due to the pandemic. Finally, health systems may want to re-evaluate financial assistance and accounts resolution policies because of their communities’ shifting economic fortunes. We are aware of at least one health system that has paused outbound self-pay calls for 30 days due to the job losses in their community related to their state’s shelter-in-place order.

2. Public option/single payer: Washington state is in the process of implementing a public option. Colorado’s governor was aggressively pursuing one prior to the crisis. Several others are in various stages of exploring one. On the one hand, advocates for a state-backed public option will use this as further proof/rationale for why there needs to be one, or even movement to a single-payer system to accelerate universal coverage. That will crash headlong into the reality of state budgets in the wake of the crisis. As economic activity in states has tanked, and with it tax collections, many states must dip into their “rainy day funds” to respond to the crisis. While the CARES Act has some funding to buttress state efforts, it will not replace the lost tax dollars or replenish reserve accounts.