California workers’ loss of job, hours may lead to no health care during coronavirus pandemic

Infecting more than workers’ health, COVID-19 may be targeting their critical livelihood and every staffer’s most coveted benefit — an employer-sponsored health care plan.

It stands to reason that when companies cut back jobs and even hours for employees, their health care plans are in jeopardy. During the pandemic, the loss of health care represents double-whammy devastation.

More than 2.7 million people are uninsured in the state, according to U.S. Census Bureau data. Covered California, the state version of the U.S. Affordable Care Act, or ACA, states that number may amount to many more in 2020. At least 1.2 million are eligible for assistance.

The health care network, which announced Thursday it’s extending the open enrollment period through mid-May, has signed up 1.4 million people for the coverage.

“That’s the highest number we’ve ever started the year with,” Covered California spokesman James Scullary told the Business Journal.

According to the Economic Policy Institute in Washington, D.C., since the onset of the COVID-19 shock to the economy, about 6.2 million workers have lost access to health insurance they previously had with their employers.

The Urban Institute, another think tank conducting research in the nation’s capital, has collected data predicting about 12 million more could lose coverage by the end of January.

With U.S. unemployment hitting double digits and the North Bay economy dominated by tourism and hospitality, health care advocates and insurance brokers are concerned more people will have no coverage to fall back on in case they get sick.

“People are definitely going to fall out of the health care system. This was not unexpected. PPP money was running out. Health care coverage is extremely expensive. It’s worse in California,” said Craig Hasday, who represents the National Employee Benefits division of EPIC, an insurance brokerage advocacy group.

“Clearly, we’ve seen employers have had to make the difficult decision to discontinue coverage for their employees,” said Mary Ellen Grant of the California Association of Health Plans.

Some sectors in the California economy are doing well, while others are facing unprecedented losses. The San Francisco Bay Area — with all its wealth, influence and innovation — is no exception.

“When you look at the statistics, it’s really concerning,” said Valerie Brown, senior program officer for United Policyholders, an insurance advocacy group based in San Francisco. In her organization’s data quest, Brown found that hospitality, retail, manufacturing and health care were singled out as industries “disproportionately impacted” compared to others.

“This is not going to be resolved quickly,” she said.

“Restaurants have been laying off a lot of people. The real question is if they’re furloughed, can they keep their health care plan?” said Elaine Madson, the employee benefits service manager at the George Petersen Insurance Agency in Santa Rosa.

In the hopes of the coronavirus outbreak eventually eased, some companies which rely on the insurance brokerage firm to provide coverage furloughed their employees on a temporary basis, Madson pointed out. But as months went by, the situation became dire — especially with government shutdowns that yanked at least half a restaurant’s sales. Workers were sometimes forced to go it alone.

“A lot of people can’t afford COBRA,” Madson said, referring to the Consolidated Omnibus Budget Reconciliation Act of 1985, an insurance plan that extends coverage after an employee is terminated.

“Some end up going to MediCal, Covered California (ACA), or they go without,” she said.

Much of that distinction is whether an employee qualifies for subsidies. Sometimes the level of income in the household is too high to receive them. To qualify for ACA financial assistance, the estimated annual income for 2021 should be under $12,760 for a single person or $17,240 for a couple.

By the same token, those seeking coverage may also not be poor enough to qualify for MediCal or Medicaid.

“That’s where they get stuck,” she said. “It kind of puts people in a bad position.”

Madson is not only concerned for workers’ health within certain economic sectors, but she also fears what happens to the system with many going without insurance.

To the detriment of the uninsured, they ignore symptoms until the advanced stages of their ailment. Then, they end up in the emergency room. Masses of people relying on emergency rooms for health care jacks up the costs even further — and worse yet, some medical facilities don’t accept patients without it.

What’s the solution?

“We just have to blow up the whole system and start over by looking at costs. Injections should not cost $4,000,” she said.

Madson’s colleague Jack Fess said what has helped many mid-sized businesses is the federal Paycheck Protection Program loans, offered as a vehicle for companies to maintain their staff levels.

Smaller companies under 50 employees aren’t required to provide coverage. Some do anyway.

Despite these uncertain times, especially in hospitality, Stephanie Martens of Pond Farm Brewing Co. in San Rafael just signed up this month to offer a health care plan. The brewery now employs 11 people.

“It seemed like the right time. It’s going to attract the right candidates. It’s not a sustainable business model, if you can’t pay people what they’re worth,” Martens told the Business Journal.

There are exceptions to every rule.

Andrew McNeil, an insurance broker and principal of Arrow Benefits Group in Petaluma, agreed with Fess about the importance of PPP funding. He also noted that his clientele consisting of many nonprofits have benefitted from the overall wealth in the region.

“The funding hasn’t dried up,” he said.

But McNeil admitted this bright spot isn’t the across-the-board reality for many industries, especially when considering that workers are clamoring to receive any amount of work.

“What we’re hearing is most lost insurance because they lost their jobs, but others had their hours reduced,” North Bay Jobs for Justice Executive Director Max Bell Alper said. “So many people work here in tourism and in farming. “If these workers don’t come back, it hurts our whole economy.”

California Hospital Association spokeswoman Jan Emerson-Shea said this isn’t the first time the economy has dented the level of health care for workers in the state.

“Back in 2007, when companies were doing layoffs, hospitals did see an increase in companies that didn’t have as many plans,” she said.

In today’s pandemic, health care advocates have noticed both insureds and uninsureds avoiding medical facilities, fearing the virus spread.

What have we learned?

When it became clear the agony was going to be prolonged, California Insurance Commissioner Ricardo Lara stepped in to the crisis in October to notify state health insurers to issue refunds to residents with health care plans because of stay-at-home orders.

“As the regulator of the largest insurance market in the nation, it is my duty to make sure consumers are protected and insurance companies remain solvent,” Lara said in a statement.

Covered California is stepping up to allow more people to sign on to services.

“The pandemic and recession continue to be a painful reality, and Covered California is doing whatever it can to make sure people have every opportunity to sign up for health care coverage,” Executive Director Peter V. Lee said in a statement announcing the extension of open enrollment.