Paying the Bills for COVID-19: Three Ideas for Protecting Patients and America’s Health Care System

COVID-19 is hitting the United States harder than any other country in the world.

Ambulances with COVID-19 patients onboard, at the Jacob K. Javits Convention Center in New York City, April 7, 2020. U.S. Air National Guard photo by Senior Airman Sean Madden, CC BY-ND 2.0.
  • A disease-specific federal benefit.
  • A hospital capitation model.

What’s been done so far isn’t enough

Congress has passed three emergency relief packages to address the emergence of the novel coronavirus. The Families First Coronavirus Response Act and the Coronavirus Aid, Relief, and Economic Security Act (CARES), requires federally regulated health plans (public health plans and private self-insured plans) to cover testing free of charge. Some state governments have also directed state-regulated insurance companies to waive cost-sharing associated with testing. Congress did not earmark funding or pass regulations requiring coverage of COVID-19 treatment costs.

A robust federal reinsurance program

Reinsurance is not a new or partisan idea and PPI has argued for the use of a permanent reinsurance program before. Reinsurance is essentially insurance for insurers: The government helps pay for exceptionally high-cost claims. It is currently used in Medicare Advantage and the Medicare Part D Prescription Drug Program and has been approved by both Republican-led and Democratic-led states in their insurance markets.

A disease-specific federal benefit

Another way to cover costs would be to set up a federal program that would cover all of the health care costs associated with COVID-19.

A hospital capitation model

Maryland has not had the same type of hospital layoffs that have been seen in other states. That is because the state has a capitation model where each hospital is given an annual budget from all the payers — Medicare, Medicaid and commercial — to cover all in-patient care. So when “elective care” all but stopped, they didn’t see a change in funding as they are not dependent on fee-for-service procedures.


In the short term, patients stricken by the coronavirus should not have to worry that they can’t afford the medical treatment that could save their lives. This extraordinary public health emergency demands an extraordinary response for our government. This response could take a number of forms, but we believe the most efficient answer would be to reimburse health care providers directly for COVID-19 patients.

Radically Pragmatic. We seek to advance progressive, market-friendly ideas that promote American innovation, economic growth, and wider opportunity.

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