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Coronavirus: What would it cost the federal government to pay for health care through Medicare?

Written by Diane Archer

Economists at the University of Massachusetts, PERI, have just released a report analyzing the cost of the Medicare Crisis program, a program proposed by Representatives Pramila Jayapal and Joe Kennedy to help 95 million people afford needed health care during the coronavirus pandemic. The researchers find that the cost to the federal government of the Medicare Crisis program is far less than the cost of a proposal by Representative Bobby Scott, which would subsidize COBRA coverage for people who have lost their jobs and their employer coverage.

Notably, the Medicare Crisis program covers many more people and provides far more generous benefits than the Worker Health Care Protection Act, the bill which would subsidize the cost of COBRA coverage for people who have lost their employer coverage. Specifically:

  • The Medicare Crisis program covers all recently unemployed workers–around 19.2 million people–and their families, regardless of whether they had health insurance through their jobs. The COBRA bill only covers recently unemployed workers who have lost employer coverage–around 12.9 million people–and their families.
  • The Medicare Crisis program covers all health care costs, including deductibles and copays, for all COVID-related care for unemployed workers and their families. The COBRA bill only covers health insurance premiums and does not cover deductibles and copays for any care.
  • The Medicare Crisis program covers all out-of-pocket COVID-19 costs for people with traditional Medicare and people in Medicare Advantage. The federal government picks up the cost for people in traditional Medicare, and Medicare Advantage plans pick up the cost for their members. The Medicare Crisis program also covers Part A and Part B premiums for people in traditional Medicare.
  • The Medicare Crisis program caps out-of-pocket costs for non-COVID care for unemployed workers and people in traditional Medicare at five percent of their monthly income. The COBRA bill does not cover these costs at all.

The cost to the federal government of the Medicare Crisis program to cover 38.7 million people is $22.7 billion less than the full cost of care for the same number of people under the COBRA bill, $47.5 billion versus $69.8 billion for three months of care. The Medicare Crisis program is far less costly because the federal government would be paying directly for care; it would not be paying private insurance premiums to health insurance companies to cover possible care people received; it also would not be paying the high administrative costs and profits that come with relying on private health insurers. And, it would be paying lower rates; Medicare provider rates are about two-thirds of private insurance rates.

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