The US has always relied heavily on private insurance to cover its citizens.
As of 2019, roughly two thirds of Americans with healthcare (about 90% of the population) got it through a private company. The remaining third used public coverage like Medicare, Medicaid, and tax credits for private insurance through the Affordable Care Act. It’s not a perfect system by a long stretch: Even those with insurance encounter debilitating medical bills due to the exorbitant, variable costs of healthcare from provider to provider, and it misses a full 26 million people, who remain completely uninsured.
But the Covid-19 pandemic cracked the door for a new kind of federal involvement. The US government sprang into action to create a system where, at least for Covid-19, people could access tests and vaccines for free, with hospital visits heavily subsidized by the government for the uninsured. It was a scaled-down version of something that for decades has been a third rail in American politics: universal healthcare.
“People have called for ‘Medicare for all,’ and it was like that—but it was Medicare for Covid,” says Janet Currie, an economist at Princeton University and co-director of the Program on Families and Children at the National Bureau of Economic Research.
Covid-19 provided a test-case scenario of how the federal government could expand coverage to include more people, Currie said. Though Currie and other economists have always doubted there is enough political support to pass universal healthcare, the efforts to test and vaccinate hundreds of millions of Americans showed a way forward. “We have already a structure that touches almost every provider in the country,” she says. “They took that bureaucracy and went with it.”
How the US covered Covid-19
Last March, it was clear the pandemic was overwhelming the US health system. Hospitals were starting to incur massive costs as they treated more and more patients who didn’t have insurance, and those who were insured weren’t getting tests quickly enough to properly isolate pockets of the disease.
So, Congress did what it was supposed to do: Its members worked together to pass bipartisan bills to help out. In March 2020, former US president Donald Trump signed the Families First Coronavirus Response Act, which, among other things, required public and private insurance to pay for the full costs of Covid-19 tests when they were deemed medically necessary. In April, Trump signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which allocated $2.2 trillion to dozens of other projects, like stimulus checks, and $100 billion to reimburse hospitals for the cost of care for uninsured patients.
The pandemic still walloped hospitals and individuals with overwhelming bills, but these timely efforts likely averted at least some financial stress they would have incurred otherwise. And even before vaccines for Covid-19 were available, the federal government had already stepped in to cover the costs of clinical trials, and promised the eventual shots would be free to healthcare providers and individuals.
The shock of Covid-19 to the US healthcare system is something it hopefully won’t have to go through again—but it did illuminate a way around one of the stumbling blocks lawmakers have found when drafting legislation around expanding public healthcare: the deep financial interests of private insurance companies. “Insurance companies wouldn’t like [universal healthcare] unless they were entrenched as the intermediaries,” Currie says.
Right now, insurance companies profit from customers who pay them to cover medical expenses. Because the US chooses not to regulate what healthcare providers can charge for treatments or care, its medical expenses are two or three times as expensive as they are in other countries. Private insurance is therefore expensive because it covers expensive care, even if it’s routine.
The idea of a single-payer system would mean the US government pays for healthcare entirely, which would greatly reduce the need for insurance companies at all. Despite the murmurings of plans to implement this kind of system among Democratic lawmakers, it probably wouldn’t work in the US, Currie says, because groups like insurance companies and hospitals would be loathe to give up their ability to negotiate costs for various procedures.
On the other hand, expanding a public option for health insurance that uses Medicare rates to negotiate reimbursements for hospitals for those without insurance—like Congress did with the CARES Act during the pandemic—could leave the private insurance market alone. Patients with private insurance would still get their visits covered by their plans, and would likely have a wider range of doctors and hospitals to choose from if those providers only took private insurance. Those without insurance would still get medical care, and their bills would be covered by the federal government, based on the rates Medicare currently pays for various procedures. Ultimately, the government could save money on those publicly insured by preventing emergency room visits for preventable circumstances, like common chronic conditions gone out of control.
To be sure, that plan is much easier said than done. If the intent is to preserve a private insurance market—and that’s likely the only way the health insurance industry would ever support public health coverage becoming law—there would have to be some way to limit enrollment to only those unemployed or not otherwise covered. If not, many employers would potentially stop offering health insurance as a benefit, undercutting the private market.
Given the US’s tumultuous track record with increasing federal healthcare coverage (and the taxes needed to provide it), it’s unlikely that lawmakers would ever vote to apply the Covid-19 system for all Americans in normal times. Instead, changes along this line would be more gradual—like lowering the age for Medicare. Right now, lawmakers are toying with the idea of proposing the idea of lowering the qualifying age from 65 to 60, which would make an additional 23 million new people eligible to receive coverage. But even that is far from decided.
The pandemic is still far from over, though millions of Americans are receiving vaccines every day. The fact that they’re free means eliminates the financial barrier for people trying to get them. Perhaps if vaccinations successfully curb the length of the pandemic, it’ll be an argument in favor for similar government-run coverage in the future.