Employers split from health care industry over coronavirus demands

Bob Herman AXIOS APRIL 30, 2020

Illustration: Aïda Amer/Axios

Several large employer groups this week refused to sign on to funding requests they consider a "handout" for hospitals and insurers, according to three people close to the process.

The big picture: Coronavirus spending bills are sharpening tensions between the employers that fund a significant portion of the country's health care system and the hospitals, doctors and insurers that operate it.

Driving the news: The industry's most recent request — written primarily by the large hospital and health insurance lobbying groups — focused on a few items for the next coronavirus legislation.



Providing subsidies to maintain employer-sponsored insurance, which already receives a large tax break, as well as providing subsidies for COBRA for people who have lost their jobs. Some analysts predict 12 million to 35 million people will get thrown off their job-based coverage due to the pandemic.

Increasing subsidies for Affordable Care Act plans and creating a special ACA enrollment window.

Opposing the use of the industry's bailout funds to pay for uninsured COVID-19 patients at Medicare rates.

Between the lines: Employers know they get charged a lot more for health care services compared with public insurers, but many weren't keen about urging Congress to "set up a government program to pay commercial reimbursements," said an executive at a trade group that represents large corporations.

The demands "make perfect sense for hospitals who are trying to maximize their reimbursement and for insurance companies who are getting a cut when someone is in private insurance," said another employer group lobbyist. The sources asked not to be named to speak candidly.

Many employer groups still have a bad taste in their mouth after the industry torpedoed a fix to surprise medical bills last year.

The other side: Several health care groups that signed the letter dismissed the idea of any disagreement with employers.

"As far as I know, everyone is rowing in the same direction," said Chip Kahn, head of the Federation of American Hospitals, which lobbies on behalf of for-profit hospitals and is a prominent voice in the U.S. Chamber of Commerce.

The coronavirus is exposing the holes in employer health insurance
Bob Herman AXIOS MARCH 30, 2020

Illustration: Sarah Grillo/Axios


A record 3.3 million people filed for unemployment in one week, in the wake of the coronavirus outbreak, but people didn't just lose their jobs. Many also lost the health insurance that came with the job.

Why it matters: U.S. workers, even those who feel relatively secure in their health benefits, are a pandemic away from falling into the ranks of the uninsured.

Many of the people losing their jobs right now may not have had coverage to begin with — which would make the coronavirus-related disruption smaller, but still highlights the very large holes in this system. Industries like retail, restaurants and hospitality, as well as small businesses, are less likely to offer coverage

The concern: People who get the virus but don't have insurance are susceptible to high medical bills, or even death if they avoid or are denied treatment.

The big picture: People who lose their jobs have some options.

COBRA: This option allows people to keep their employer coverage for up to 18 months, which is good for those who are getting treatment and don't want to switch doctors. 

However, people have to pay the full insurance premium — an average of $1,700 a month for a family plan — which will be unaffordable for most of the newly unemployed.

Medicaid: State Medicaid agencies determine eligibility on current income, so this may be the easiest, lowest-cost way for people to get health coverage.

Affordable Care Act plans: The health care law created marketplaces for coverage, and people who lose their jobs can sign up outside the standard enrollment window. People may be able to get subsidies, depending on income.

Short-term plans: These stopgap plans, promoted by the Trump administration, provide some coverage but often don't cover major hospitalizations.

Yes, but: All of these options have their own administrative hurdles.

The bottom line: "The ACA made health insurance more recession-resistant, but ... there's still significant disruption when you lose your job," said Cynthia Cox, a health insurance expert at the Kaiser Family Foundation.