I’ve been calling for greater private insurance coverage of COVID-19 testing. I’ve been wrong

When New York Gov. Andrew Cuomo became the first to direct insurance companies to cover and waive cost-sharing for COVID-19 tests, I cheered. When the same provision was enacted in the federal Families First and Coronavirus Relief Act (FFCRA), I criticized some of the loopholes that would allow insurers to avoid covering all possible testing scenarios. Now I realize that my focus on private insurance coverage of COVID-19 testing was misguided. To truly end this pandemic and get everyone back to work, schools, and community life, we need an entirely different approach. Testing needs to be free and available to everyone, at any time. To accomplish this, testing services will need to be financed by a publicly administered fund that directly compensates providers, regardless of the patient’s source of coverage (or lack of coverage). This fund should also be used for a vaccination campaign, which we all hope is in the near future.

Why The Insurance Model Doesn’t Work

Health insurance is designed to serve as financial protection in the event of unanticipated medical events or health issues. COVID-19 testing, whether to diagnose the virus or check to see if someone has already had it (a serological test), is the opposite of that. We know that hundreds of millions of people will need this test, perhaps multiple times during the year. Furthermore, since we do not know how long people retain immunity from the virus, it is possible people will need multiple serological tests over their lifetime.

There are 328.2 million people currently living in the United States. Of those, close to 30 million were uninsured before the pandemic started, and that figure is expected to rise, thanks to the economic fallout of COVID-19. The rest of us have coverage through multiple different sources: employer coverage, Medicaid, Medicare, the individual market, and other sources. For consumers, the costs of a COVID-19 test can vary widely, depending on their type of coverage, whether or not the provider administering the test participates in their insurance network, and other factorsSome clinics and other testing sites do not take Medicaid or Medicare and do not participate in any private insurance networks. At these sites, patients (who can afford to) are required to pay up front and may later submit a request for reimbursement from their insurer, although this process can be time consuming.

Consider the case of Tiffany Smith, whose story was reported by the Washington Post. She works at an assisted living facility and began experiencing COVID-19 symptoms (fever, cough, headaches, etc). But neither she nor her husband and five children could afford the $90 per patient upfront payment demanded by her local urgent care clinic. She and her husband finally found a free testing site a week after falling ill. Cost barriers like this have no place in our fight against this pandemic.

Federal law requires private insurers to pick up the full tab for a COVID-19 test for the duration of the public health emergency. (The law also requires insurers to cover a vaccine, if one is developed.) However, the law does not limit how much providers can charge insurers for a test. Anecdotal reports suggest that laboratory providers are charging anywhere from $50 to over $1000 for a single COVID-19 test. These costs, spread across millions of people, potentially multiple times per year, could well exceed the costs of treatment. The insurers who must cover these tests will try to limit their exposure by restricting the number of tests an enrollee may have, requiring prior authorization, or simply passing the cost onto enrollees in the form of higher premiums. Many uninsured people will forego testing entirely, risking greater community spread of the virus and delaying any return to normalcy.

We Need A Publicly Administered Testing And Vaccination Fund

To achieve free, accessible, and widespread testing for all those who need it, we need a public “Testing and Vaccination Fund,” ideally administered by the federal government. It could be financed by a broad assessment on insurers, employers, and taxpayers, and should reimburse providers for testing costs based on Medicare rates (currently between $51 and $100 per test). Providers ordering or administering tests would be required to accept payment from the Fund in full, just as they are currently required to accept reimbursement from the Provider Relief Fund as payment in full for treating uninsured COVID-19 patients.

Insurance companies should still be required to cover testing for patients who have COVID-19 symptoms and need to be diagnosed. But a public fund is needed to support free testing services for asymptomatic individuals whose employers require a test to return to work, or whose schools require a test to return to classes. The employers of health care professionals, nursing home residents, childcare workers, and others may require testing multiple times in a year. The Fund could also support serological testing to assess potential immunity in individuals who may have previously had the virus. The individual’s source of insurance coverage (or lack of coverage) should be irrelevant.

If and when there is a vaccine, the Fund could negotiate with the manufacturer for a reasonable price, not unlike the CDC’s Vaccines for Children program, which obtains childhood vaccines at a discount and distributes them to state, local, and territorial public health agencies. The ability to bargain on behalf of 328 million Americans will ensure a far more reasonable price than if individual insurance companies and state Medicaid programs are separately negotiating. Once the vaccines are purchased, the Fund would  coordinate an equitable and fair distribution and reimburse providers for administering them. The Fund could also be tasked with conducting a coordinated public education and outreach campaign.

A Fund with the capacity to negotiate prices and support such a massive and coverage-neutral testing and vaccination campaign is without precedent, and establishing one is likely to be opposed by drug manufacturers, providers, and others who profit from our fractured and inequitable system. Witness how hard it has been for Congress to authorize the Medicare program to negotiate reasonable prescription drug prices.  In spite of a campaign promise from President Trump, a bipartisan effort, and broad public support, even relatively modest legislation to reduce drug prices has stalled in the U.S. Senate. Also stalled is bipartisan legislation to protect patients from surprise out-of-network medical bills that sets limits on the amount out-of-network providers can charge. Both proposals risk reducing the revenue of deep-pocketed industry stakeholders with millions of dollars to spend on lobbying efforts.

The massive and continual testing and vaccination effort required to extricate us from this crisis is will be extraordinary. If we are ever to fully return to our workplaces, schools, concert halls, sporting venues, and other community experiences, widely accessible and free testing and vaccination is our only option. Extraordinary times call for an extraordinarily different kind of response.

Sabrina Corlette, “I’ve Been Calling for Greater Private Insurance Coverage of COVID-19 Testing. I’ve Been Wrong,” Health Affairs Blog, May 18, 2020, https://www.healthaffairs.org/do/10.1377/hblog20200513.267462/full/. Copyright © 2020 Health Affairs by Project HOPE – The People-to-People Health Foundation, Inc.

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The opinions expressed here are solely those of the individual blog post authors and do not represent the views of Georgetown University, the Center on Health Insurance Reforms, any organization that the author is affiliated with, or the opinions of any other author who publishes on this blog.