Ending COVID Sticker Shock

COVID-19 will have lasting implications for the entire country, but an outsized hit on minority communities. Black and Latino Americans have become sick at almost three times the rate of whites, hospitalized at four times the rate — but so far are vaccinated at far lower rates. The health effects have been devastating, but minority communities have been stung with another, less-cited challenge: medical debt associated with COVID.

How bad? According to a 2020 Gallup survey, half of all U.S. adults said that a major health event in their household would bankrupt them. For nonwhite adults who are more likely to be uninsured or underinsured, it was close to two-thirds. And for the nearly 100,000 Americans who are currently hospitalized for COVID and the many before, the costs are staggering.

Among uninsured people between ages 50-60, COVID hospitalization bills averaged $45,683. The average was $34,662 for those in the 23-30 age range. Even for those with insurance, the average charges ranged from $17,094 to $24,012, according to a study by FAIR Health. While a patchwork of protections have tried to insulate patients from these costs, Americans are very vulnerable to loopholes with those protections and rising out-of-pocket costs overall. One-quarter of adults and more than 40 percent of nonwhite adults say they would need to borrow money to pay a medical expense that cost more than $500.

Taken together, all communities are hurt from COVID’s health and financial havoc, but minority communities are being crushed: Infected more, higher lethality, and an insurmountable debt load should they survive.

There are answers. Beyond efforts to better test and vaccinate those in minority communities, the Biden administration has proposed an out-of-pocket cost cap as part of their pandemic relief package. President Joe Biden’s  cost cap would limit what people pay out of their pockets and paychecks to a maximum of 8.5 percent of their yearly income. Biden doesn’t cover every insurance plan, just what are known as “exchange” plans: the nearly 12 million policies from the Affordable Care Act that people buy individually or through small businesses on the exchange marketplace.

This is an excellent start but we should go further – beyond capping COVID costs and limiting cost caps to exchange plans but to all health insurance plans. No one should be without insurance and it is unconscionable that people with insurance could still fall into financial ruin if they get sick.

Third Way has called for Cost Caps and Coverage for All, which would do just that. First, it would give cost protection to those who are uninsured by covering everyone through automatic enrollment. Health care is a human right, and every person should have it. Second, for those who are already covered and those who just became covered, it would cap costs across the board. Out-of-pocket costs associated with premiums, copays, hospital stays, ambulance rides and any other medical cost should all be capped at a portion of an individual’s income – like Biden’s 8.5 percent. This allows families to budget the cost of their health care for the year — and it will never be more than they can afford.

Together this would give people what they need and want. Health care that is stable and secure, at a price they can afford, and with a limit on what they’ll ever be forced to pay. And it would reduce health disparities that have ravaged minority communities. Vaccine distribution still needs to be more equitable. Black and brown communities need better access to proper testing and treatment options during this pandemic and beyond. But we also cannot forget about the staggering weight that health care cost has on all families, and particularly minority families. With the pandemic threatening the lives and livelihoods of millions of Americans, there is no better time than now.

Ladan Ahmadi is deputy director of economic communications and health policy at Third Way.

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