Close-up Of Stethoscope On Us Currency And American Flag.

America’s Underinsurance Crisis in the Age of COVID-19

By Dessie Otachliska

The COVID-19 pandemic has shone a light on the underinsurance crisis that has long kept millions of Americans on the precipice of financial disaster — just one unexpected illness or injury away from bankruptcy.

A 2019 Gallup poll showed that 25% of Americans reported delaying treatment for serious medical conditions due to cost concerns — the highest proportion since Gallup first began asking the question in 1991. Even during the pandemic, when medical treatment could mean the difference between life and death, studies show that nearly 1 in 7 Americans would avoid seeking medical care if they experienced key COVID-19 symptoms because of fears associated with the cost of treatment.

These statistics are unsurprising, and the concerns they underscore well-founded: the average treatment costs for COVID patients with symptoms serious enough to require inpatient hospital stays range from $42,486 for relatively mild cases to $74,310 for patients with major complications or comorbidities.

In the pandemic context, hesitance to seek medical treatment due to fear of the associated cost has proved tragically fatal. Darius Settles died after being dissuaded from seeking further COVID-19 treatment due to his uninsured status. The Nashville, TN hospital where Settles originally received care had failed to disclose the possibility that his medical costs would be covered by the federal government. And, despite the availability of reimbursement funds, the hospital nonetheless sent his widow a bill for a portion of his treatment costs.

Uninsured America

Prior to the pandemic, approximately 27.5 million Americans did not have health insurance of any kind. It is difficult to measure how these numbers have changed as a result of COVID-related economic instability and layoffs, because national surveys producing such estimates often lag by months or even years.

However, according to an August Economic Policy Institute estimate, an additional 6 million Americans may have lost their employer-based health coverage since the pandemic began. While at least some of the losses may have been offset by enrollment in Medicaid or health care plans offered through the public health insurance exchanges, it is clear that tens of millions of Americans have been uninsured during the worst health crisis this country has faced in over a century.

Notably, under the Affordable Care Act (ACA), nearly one in four of those uninsured in a typical year are eligible for financial assistance to buy coverage — in fact, most of those eligible qualify for free or nearly free health insurance plans. For example, in 2018, 11.2 million uninsured people were eligible for health insurance completely free of charge, largely through the public health insurance exchanges developed under the ACA. It is likely that the total number of those eligible for free or low-cost insurance is even higher today, given that the vast majority of people who have lost employer-based coverage as a result of the pandemic would qualify for similarly subsidized ACA plans.

Despite the widespread availability of affordable health coverage, many Americans losing their health insurance may not be aware of their eligibility for financial assistance through the ACA. This is not surprising, given that the Trump administration reduced funding for marketing and outreach activities for the federal exchange by nearly 90%. Moreover, those who attempted to sign up for coverage under the ACA may have been precluded from doing so by the administration’s scheduled periods of maintenance during several open enrollment periods.

COVID Relief

On April 3, 2020, the Trump administration announced a new treatment reimbursement program under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

The program allows health care providers who test and treat uninsured COVID patients to be reimbursed by the federal government at Medicare rates.

However, the statute imposes certain limitations. For one, the program makes eligibility for reimbursement contingent upon a primary diagnosis of COVID-19. But hospital coding protocols often require patients who are being treated for complications arising from the virus not to be coded with a primary diagnosis of COVID-19. The American Hospital Association has estimated that participating hospitals have not submitted between 40 and 70 percent of uninsured patient claims because COVID-19 was not ruled their primary diagnosis.

Perhaps even more problematically, the program neither requires providers to participate nor guarantees reimbursement for those who do, as reimbursement is contingent on available funding. This leaves health care providers in a tough spot. On the one hand, they must encourage sick patients to seek treatment and provide the necessary care, but on the other, they have no way of knowing how much a patient would end up owing in medical bills following their visit.

In practice, this ambiguity means that many providers and hospitals never tell patients that their COVID-related treatment costs may be covered by the federal government. According to Jennifer Tolbert, the Director of State Health Reform at the Kaiser Family Foundation, a nonpartisan research organization, part of the problem is that physicians don’t always know how the program works or that it even exists. And even if lack of information is not an issue, physicians may be reluctant to broach the subject with patients.

Financial Consequences

Often, patients still recovering from the effects of COVID are left to challenge erroneous bills and negotiate with providers. Take the case of Marilyn Cortez, an uninsured retired cafeteria worker in Houston, TX, as an example. Even though Ms. Cortez’s COVID-19 treatment should have been covered by the CARES Act reimbursement program, the hospital still sent her a $36,000 bill. After discovering their mistake, the hospital informed Ms. Cortez that she need not worry. However, they then sent another erroneous bill for twice the amount.

These difficulties are by no means limited to the uninsured. Even people with comprehensive health insurance coverage may still find themselves unable to afford rising deductibles or the “surprise” or “balance” bills associated with medical care for treatment of COVID-19 and its accompanying complications.

If a bill goes unpaid, health care providers often contract with collection agencies or law firms to sue the patient in order to obtain payment. According to a Pew Research Center report, such lawsuits disproportionately target lower income populations and racial minorities, who often lack legal representation; in over 70% of such cases, the suits end in default judgment (where a court rules in favor of the plaintiff because the defendant has failed to respond).

These proceedings can further exacerbate the financial strain on patients and their families, as courts frequently require them to pay court fees and accrued interest in addition to the default judgement. What’s worse, even those lucky enough to escape litigation can face additional financial strain in the form of wage garnishment.

While the financial consequences for hospitals unable to collect payment for treatments rendered are severe (the Kaiser Family Foundation estimates that hospital costs for uninsured COVID patients alone could reach between $13.9 billion and $41.8 billion), the brunt of this crisis currently falls disproportionately upon COVID patients and their families, who often have to make the impossible choice between life-saving treatment and financial ruin, with literal questions of life or death hanging in the balance.

However, there are signs of hope. In the words of Dr. Susan Bailey, the president of the American Medical Association (AMA), COVID-19 has shown that “universal health coverage is within our reach.” In February 2021, the AMA announced the formation of a new Affordable Coverage Coalition dedicated to eliminating the uninsurance (and underinsurance) crisis in America. This first-of-its-kind initiative relies on the combined efforts of physicians, hospitals, employers, and consumers to advocate for changes to the system that would allow for comprehensive, affordable coverage for all Americans. These efforts have been warmly received by the Biden administration, which recently announced a new health care plan that includes a “Medicare-like” public option, which advocates hope will help transition the country to universal health care.


Dessie Otachliska graduated from Harvard Law School in May 2021. 

This post has been adapted and updated from its original form, which ran on April 28, 2021 on the COVID-19 and the Law blog

The Petrie-Flom Center Staff

The Petrie-Flom Center staff often posts updates, announcements, and guests posts on behalf of others.

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