While for-profit health insurers have reported record-high earnings this year amid the coronavirus pandemic, small companies across the U.S. are reporting difficulty paying premiums for their employees—and tens of millions of workers are expected to lose their employer-based health insurance by the end of the year, even if they keep their jobs.
The New York Times reported on Monday that although some small businesses were able to use funds from the Paycheck Protection Program (PPP) to cover their employees’ health benefits, nearly a third of employers reported to Harvard Business School researchers In August that they didn’t think they’d be able to pay for premiums this month and going forward.
Under the current for-profit healthcare model, small businesses are reluctant to cut back on paying for their workers’ health coverage, according to Daniel Barlow, executive director of Business Leaders for Health Care Transformation (BLHCT).
“A lot of these businesses were out of their own pockets were paying their employees’ health insurance because they realized just how unfair and devastating it would be for a person to lose both their insurance and their income during a deadly pandemic,” Barlow told Common Dreams on Monday. “So a lot of these business owners are personally floating their employees to keep them on health insurance and that just shows how ridiculous it is to have a system where a person’s health insurance is tied to their job.”
The Harvard Business School study also showed last month that business owners are attempting to keep employees covered for as long as possible, even as they face sharply reduced profits and yearly healthcare costs that average, according to Barlow, $7,000 per year for an individual and upwards of $20,000 per year for a family.
“Small businesses forecasted a 50% decline in demand during the pandemic, placing them under extreme pressure to cut costs,” wrote the researchers. “In the month of April, 30% reported they did not make rent or mortgage payments. In spite of cost cutting across the board, small businesses have prioritized health insurance premiums: Our survey shows only 5% have resorted to cutting the health insurance benefit for their employees.”
But in order to keep businesses open and workers paid, more employers are reporting a need to cut health insurance costs, or concerns that they eventually won’t be able to pay for them. Aaron Seyedian, a member of BLHCT who runs a house-cleaning business called Well-Paid Maids in Washington, D.C., and covers his employees’ vision and dental as well as medical insurance, has only been able to cover health coverage costs because of federal coronavirus aid, and had benefited from a year-long deferral program implemented by the District of Columbia. He still owes $14,000 in back premiums to his company’s insurer.
“I don’t know how we’re going to pay them next summer,” Seyedian told the Times.
Jeremy Fritz, an employee at a gym in Southern California described to the Times his experience of keeping his job until July, but being informed in April, a month into the pandemic, that the company could no longer cover his healthcare and would provide him with help signing up through the Affordable Care Act marketplace instead.
Losing his insurance in the first weeks of the pandemic was like “going into this thunderstorm without an umbrella,” Fritz told the Times.
Estimates vary for how many Americans are likely to lose their employer-sponsored health coverage by the end of 2020; a recent study by Avalere Health estimated 12 million while the Economic Policy Institute said last month that about 12 million have already lost their insurance since February.
Amid the crisis, while for-profit insurers are raking in huge profits, the Times reported last month that they are spending a smaller portion of premium payments than usual on healthcare costs, with more earnings going to administrative and marketing costs.
“We’re looking at the fact that healthcare can’t be regulated by the marketplace,” Rep. Pramila Jayapal (D-Wash.), told the Times last month.
Employers say more federal aid is needed as businesses continue to struggle with falling revenues amid the pandemic, but another aid package before the general election appears increasingly unlikely. Barlow noted that some proposals to help the newly uninsured could provide only short-term relief.
“There’s various proposals to enroll the newly unemployed in Medicare or have Medicare cover their medical bills,” Barlow told Common Dreams. “Those are also great ideas for short-term solutions, but this really points to just how outdated and inefficient the employer-sponsored health system is… Long-term, we need Medicare for All.”
“That just doesn’t make sense anymore for a modern economy, it doesn’t make sense for in the middle of a global pandemic,” he added. “If we want these businesses to reopen and our economy to recover and jobs to be created, we have to end the employer-sponsored health insurance system. It’s holding us back economically and it’s going to hold us back as we try to recover from the shutdown and the pandemic. Certainly something like Medicare for All… would be a major help both for the employees and the businesses.”
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Julia Conley is a Common Dreams staff writer.
