Free COVID-19 Tests Aren't Enough To Protect Patients From High Costs

Congress has already assured that anyone who can actually get tested for coronavirus won’t face any costs for the diagnosis. But in the high-priced U.S. health care system, that won’t be nearly enough.

The free testing for COVID-19, the disease caused by coronavirus, that was made available in the legislation President Donald Trump signed last week alleviates only one concern.

Patients who show possible symptoms of the coronavirus are typically first screened for other illnesses, such as influenza, to determine whether they need a coronavirus test. Those diagnostics and any other services a patient receives while undergoing COVID-19 testing will still cost money, which can deter someone from seeking the test at all.

Then there are the treatment costs for those diagnosed with COVID-19. While there is no proven medical treatment to fight the viral infection itself, patients who are too sick to recover at home frequently require hospitalizations, and with hospital stays come hospital bills. Intensive care unit beds, ventilators and specialized physician treatment can get very expensive.

The American health care system is particularly unsuited to a moment like this, when potential millions of people get sick at the same time with a disease for which there is no cure and that requires aggressive medical interventions.

High Costs For Everything But The Coronavirus Test

The medical costs of the coronavirus will be considerable, as high as $251 billion over the next year, according to an analysis from Covered California, the state’s health insurance exchange. That assumes 15 million Americans are diagnosed with COVID-19, which is the upper end of Covered California’s projections. But even the low end of the Covered California projection anticipates 4 million cases and $31 billion in costs.

Patients will pay a substantial portion of that themselves in the forms of deductibles, copayments and other kinds of out-of-pocket costs required by their insurance policies. By examining job-based health benefits ― the most common type of private health coverage ― the Henry J. Kaiser Family Foundation estimated that the average COVID-19 patient younger than 65 will incur at least $1,300 in out-of-pocket costs for treatment, depending on the severity of their illness. That’s on top of the premiums policyholders pay for their insurance.

To some, that may not seem like much money. But last year, the Federal Reserve Board reported that four in 10 Americans don’t have enough savings to cover even $400 in unexpected expenses. And even under normal circumstances, big health care bills can lead to financial ruin. From 2013 through 2016, 59% of people who filed for bankruptcy cited medical costs as a reason.

Those calculations don’t include other aspects of the U.S. health care system, such as higher charges from out-of-network medical providers, which can lead to surprise bills. Eighteen percent of hospital admissions for people who have pneumonia with major complications ― which the sickest COVID-19 patients experience ― resulted in bills from out-of-network providers, according to the Kaiser Family Foundation.

Those with deductibles into the thousands of dollars will pay even more, including people who work for small businesses and those who buy the lower-cost policies available from health insurance exchanges like HealthCare.gov or directly from insurance companies. So-called Bronze plans this year have an average deductible of $6,506, and the average Silver plan deductible is $4,554, a separate Kaiser Family Foundation report found.

Similar to people with private insurance, Medicare enrollees must pay up to their deductibles and for a share of their medical costs, unless they have supplemental “Medigap” plans that cover those. Those with private Medicare Advantage plans face cost-sharing that varies among the policies, but the federal government has instructed insurers not to charge patients more when they see out-of-network providers. In most states, Medicaid beneficiaries have little to no out-of-pocket costs.

The 28 million uninsured people in the U.S., of course, will have it much worse.

The sticker price for COVID-19 care ranges from $9,763 to $20,292 for people who have employer-sponsored health insurance. But even that doesn’t capture the potential costs for an uninsured person because employers and insurers negotiate lower fees with hospitals and other medical providers while those without coverage face the full, non-discounted prices.

Time reported last week that a Massachusetts woman with no health insurance had received bills totaling $34,927.43 after getting treated for COVID-19. There will be more like her.

A System Designed To Deter Care

The private health insurance system was designed to discourage Americans from getting medical treatments and to erect financial and logistical barriers to care. During a national and personal emergency, patients who have or think they have COVID-19 still have to navigate their insurance companies’ rules.

They must choose from the providers in their networks or be subject to higher costs, including surprise bills from hospital personnel who aren’t in a network even when a hospital is. In 2018, 39% of Americans reported receiving a surprise bill.

High cost-sharing, especially large deductibles, has been a growing trend in private insurance for more than a decade, and is a big reason why 45% of those who have health coverage are “underinsured” and have coverage that doesn’t meet their financial needs.

Insurers — and employers, in the case of job-based benefits — want patients to get less medical care and discourage them with big deductibles, copays and the like. And it works: More than one-quarter of Americans had gone without medical care they needed over the past 12 months due to the cost, according to a 2019 West Health/Gallup poll. Since it’s only March, most patients won’t have paid down much of their annual deductible yet.

Eleven states and the District of Columbia are offering some help by re-opening their health insurance exchanges to uninsured people during the outbreak. So far, however, Idaho’s state-run exchange and federally run exchanges in the rest of the country remain closed, although people can still apply for coverage in those places under certain circumstances, such as losing a job. The federal government also is fielding requests from states that want to make it easier, temporarily, for qualified individuals to sign up for Medicaid.

There are 14 states that have refused to adopt the Affordable Care Act’s Medicaid expansion ― 90% of which is financed by the federal government ― that could do so at any time if they want to protect low-income residents from coronavirus costs. That would allow 4.4 million uninsured people in those states to qualify for Medicaid coverage.