What Are State Officials Doing to Make Private Health Insurance Work Better for Consumers During the Coronavirus Public Health Crisis?

Updated since original publication on March 13, 2020. 

Slowing the spread of the novel coronavirus, or COVID-19, and ensuring affected patients receive treatment requires an urgent, coordinated, and comprehensive response from the federal government and states. Efforts must include improving testing capacity, supporting providers, addressing the lack of paid sick leave, and expanding access to Medicaid for the uninsured. At the same time, policymakers also must consider that many privately insured Americans fear they will face substantial bills if they seek testing or treatment for coronavirus.

In the past decade, deductibles for employer-based health insurance have increased dramatically, now accounting for almost 5 percent of the average family’s median income. The average annual deductible for a single employee in an employer plan is more than $1,800; the average deductible for an individual market bronze-level plan is more than $6,500. Some people could face hundreds or even thousands of dollars in out-of-pocket costs if they go to an emergency room, urgent care clinic, or doctor’s office for testing. Individuals in short-term plans, health care sharing ministries, or other products that do not meet the Affordable Care Act’s (ACA) minimum standards are at even greater risk for coverage exclusions, high cost-sharing, and surprise balance billing. If people are worried about these costs, they may delay or forgo seeking treatment, potentially increasing the virus’s spread.

State Action Related to Private Insurance and Coronavirus Coverage

On March 18, Congress passed the Families First Coronavirus Response Act, which includes provisions requiring health insurers to waive cost-sharing for COVID-19 testing services. In doing so, Congress was following the lead of numerous states that had stepped up, beginning in early March, to help reduce financial barriers for privately insured people to get needed medical care. New York’s Governor Andrew Cuomo was the first out of the gate when he announced emergency rules on March 2 prohibiting private insurance companies from imposing cost-sharing on enrollees when they visit a doctor’s office, urgent care center, or emergency room to seek COVID-19 testing. In addition, New York’s regulations ensure or encourage coverage of other services related to treatment of COVID-19 such as a future vaccine, telehealth, access to needed off-formulary drugs, and protection from surprise bills from out-of-network providers.

Within hours of Governor Cuomo’s announcement, Washington’s insurance department issued a similar emergency directive, requiring both ACA-compliant and short-term plans to cover coronavirus testing before any deductible is met and without cost-sharing and to allow a one-time early refill of a covered prescription medication so patients can maintain an adequate supply. Eight states — Colorado, Connecticut, Maryland, Massachusetts, Nevada, Rhode Island, and Washington — also  have created a limited-time special-enrollment opportunity for people who lack health insurance to enroll in the health insurance marketplace.

Several more states have now also issued directives to mandate expanded coverage, including California, Colorado, Maryland, Nevada, Alaska, and New Hampshire. Many of these states are requiring insurers to waive enrollee cost-sharing for COVID-19 testing services, as well as requiring coverage of other services such as a vaccine if developed, early prescription drug refills, and telehealth. Massachusetts and New Mexico, meanwhile, have instructed their insurers to cover COVID-19 testing and treatment without cost-sharing; New Mexico also requires coverage of pneumonia and influenza. Oregon’s insurance department took a somewhat different approach, convening selected insurers and brokering a voluntary agreement to waive cost-sharing for testing services and a future vaccine.

Other states’ insurance departments, such as Florida, Georgia, and Missouri, have tried to use their bully pulpits to encourage insurers to cover coronavirus-related costs, but are not requiring them to do so. For example, Georgia’s bulletin “invites” insurers to “consider options to reduce potential barriers of cost-sharing for testing and treatment of COVID-19.” Similarly, Florida’s insurers have been directed to “consider all practicable options” to reduce barriers to care. Some insurance departments may lack authority to impose requirements absent legislative action. Maryland, New York, Nevada, and Washington are all acting under a governor’s emergency declaration or directive. New Hampshire’s department of insurance, somewhat counterintuitively, points to its statutory authority to protect against insurer insolvency, noting that lowering barriers to COVID-19 testing is essential to stemming a public health crisis.

While the federal “Families First” Act extends cost-sharing protections for testing to people in all health plans, including self-funded plans, it does not include some of the broader protections included in many state requirements, such as coverage of a future vaccine or for prescription drug refills. Those additional state protections apply only to those in fully insured individual and group-market health plans. Under federal law, states cannot impose requirements on self-funded employer health plans, which is where more than 60 percent of people with employer-based coverage are insured. State insurance departments also must balance coverage requirements with an obligation to make sure that insurance companies remain financially solvent.

Looking Ahead

Our nation has a patchwork system of health coverage that leaves millions uninsured and millions more facing high costs any time they seek care. To slow the spread of the coronavirus and protect the public, we must expand access to insurance coverage, particularly through Medicaid, and make sure those who do have insurance do not face financial obstacles to delay or forgo testing or treatment. As the primary regulators of health insurance, states have a critical role to play and several are leading the way by requiring insurers step up with coverage enhancements. However, without federal action, states cannot impose standards on self-funded employer plans, leaving most privately insured people uncertain and apprehensive regarding coronavirus-related coverage.