Q&A with Professor Allison Hoffman and Simone Hussussian L’20 on the Coronavirus Aid, Relief, and Economic Security Act (CARES)
On Wednesday, March 25, 2020, the Senate unanimously passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) in response to the economic devastation wrought by the novel coronavirus (COVID-19). The House is expected to approve the bill today (Friday) and send it to President Trump for signature.
We recently spoke to University of Pennsylvania Carey Law School Professor Allison K. Hoffman, health care law and policy expert, and Simone Hussussian L’20 about the main health care related provisions of the CARES Act as well as a remaining major gap in terms of financing medical care.
Office of Communications: What is the CARES Act designed to do?
Professor Hoffman: A primary goal of this round of relief legislation, which is the third so far (see summary of the second, the Families First Coronavirus Response Act here), is to provide direct aid to American families, businesses, and state, tribal, and local governments. That said, there is a lot on health care as well.
This nearly 900-page Act includes provisions to support individuals and families directly as well as small businesses and corporations that are acutely affected by this public health emergency.
For individuals, two key provisions are direct payments to low- and middle-income households and bolstered unemployment supports. The bill provides that households with earnings of $75,000 a year for an individual or $150,000 for a couple will be eligible for a $1,200 payment per adult and $500 per child. A lesser payment on a sliding scale is available to households with incomes up to $99,000 for an individual or $198,000 for a married couple. The Act also creates a significant and broad-reaching temporary unemployment assistance program, which, notably, covers people sometimes excluded from uninsurance benefits, such as self-employed and part-time and gig economy workers. The benefits are $600 weekly on top of state unemployment benefits for 39 weeks with a possible extension.
The Act allocates $350 billion dollars for small businesses, including partially forgivable loans of up to $10 million dollars to pay for sick or medical leave, employee salaries, and debt obligations. And it authorizes $500 billion dollars in aid to large corporations, including passenger airlines and businesses that have incurred losses “such that the continued operations of the business are jeopardized.” Although the initial draft legislation gave Treasury Secretary Steven Mnuchin discretion in granting this aid, the compromise CARES Act that the Senate passed addresses Democrats’ demands for tighter oversight over this corporate aid.
The Act also includes a $150 billion dollar fund for state, tribal, and local governments to cover costs from COVID-19.
Office of Communications: Does the CARES Act include any provisions regarding health care?
Professor Hoffman: Yes! Hundreds of pages worth. The CARES Act continues to mobilize the U.S. health care system to respond to the growing number of confirmed COVID-19 cases. This support will come in a few major ways, including most importantly cash aid for hospitals and providers. A major health-related provision is the creation of a Public Health and Social Services Emergency Fund, which includes $100 billion for hospitals and medical providers and an additional $27 billion to support preparedness and response through, for example, purchase of supplies, vaccine development, workforce modification, and telehealth investments.
The Act also directs more limited streams of funding to specific providers, such as $1.32 billion to federally qualified health centers, which serve primarily low-income communities, for COVID-19-related services. Over 28 million individuals receive care at these health centers. There is also targeted support for community health centers, teaching hospitals, and diabetes programs.
CARES makes a number of changes to Medicare reimbursement to maintain or increase current funding levels for hospitals, physicians, inpatient rehabilitation facilities, and others.
Simone Hussussian: In terms of more focused health provisions, the CARES Act does many different things for health care financing, health care delivery, and drug and medical device regulation and development – too many to describe all of them here. To give a sense of a few:
When it comes to health insurance, it builds on the Families First Act requirements that health insurance plans — including both employer-sponsored plans and individual plans — cover, without any cost-sharing on the part of patients, both COVID-19 diagnostic tests and provider services related to administering the test, including office visits and evaluations. It makes some, albeit weak, attempts to limit surprise medical bills for these tests by out-of-network labs, by requiring providers to publish their prices when there is no pre-negotiated rate (it doesn’t limit the rates they can publish!). The bill also requires insurance plans to cover services that prevent or mitigate the virus, when they become available, including vaccines.
The CARES Act allocates funding of $29 million to the National Telehealth Resource Center Program, which helps to provide remote telehealth services to rural and medically underserved areas for fiscal years 2021 through 2025. It eliminates other regulatory barriers to telehealth and expands Medicaid reimbursement for telehealth at federally qualified health centers and rural health clinics.
There are also a number of drug law modifications. Some aim to ensure sufficient supply of drugs and medical devices to treat COVID-19 and any future epidemics. For example, the Act authorizes the U.S. Food and Drug Administration (FDA) to prioritize and expedite the review of drug applications or manufacturing facilities for life-saving drugs that could face a shortage. It also creates greater reporting requirements for manufacturers of these drugs when they predict a temporary or permanent stoppage of their manufacture to enable contingency plans to mitigate the scale of disruptions in the supply chain. Manufacturers of certain medical devices have similar reporting responsibilities. Although unrelated to COVID-19, the Act also reforms the regulatory review process for over-the-counter drugs.
Office of Communications: What provisions of this bill surprised you, if any?
Simone Hussussian: There is a provision that allows menstrual products to be paid for out of health savings accounts (HSAs), which are tax-advantaged savings accounts that individuals can use to pay for medical services and products. This could be considered one small step toward eliminating the so-called “tampon tax” (35 states continue to impose sales taxes on tampons and other menstrual products). That said, because HSAs are primarily used by individuals who are enrolled in an employer-sponsored plans and are only available for plans with high deductibles, the reach of this provision may be relatively narrow.
The Act also allows that over-the-counter medicines can be paid for out of an HSA, without a prescription.
Office of Communications: From your perspective, are there remaining unaddressed concerns in the congressional response to the novel coronavirus?
Professor Hoffman: The relief package is still notably missing any language to address the significant costs American families will face for COVID-19 medical treatment.
Although that issue may not seem the most immediately urgent problem, the cost of COVID-19 care will devastate many families in the wake of the initial medical crisis. Americans pay a higher share of their health care costs than in peer nations, even with insurance.
For someone who buys a health plan directly, such as through an Affordable Care Act exchange, the average annual deductible, or the amount of money she must pay for health care on her own before the insurance plan starts to pay, can be upwards of $4,000 for single coverage and more than twice that for family plans. For those with insurance through an employer, over fifty percent have deductibles of $1,000 for single coverage and the average deductible for family coverage is nearly $5,000.
Early estimates of the cost of inpatient COVID-19 care range from $20,000 to over $70,000. Families with high deductibles and cost-sharing obligations will not be able to shoulder their share of these costs, especially as unemployment rates rise. Even more, people with insurance can face high surprise medical bills for out-of-network care. Even if someone goes to a hospital that is in her insurance plan’s network, they might get care from an out-of-network doctor or be transported by an out-of-network ambulance to the hospital and receive an extremely high bill. Plus, ten percent of the population under age 65 remains uninsured.
So far, the relief bills have done nothing to address the impending crisis of medical debt that will result.
* For the most current information on the Law School’s response to the novel coronavirus (COVID-19), please visit https://www.law.upenn.edu/coronavirus.