Emma Sargent, Policy Fellow

As the COVID-19 pandemic races across the states, many have turned their attention to the federal-level relief packages that promise much-needed support for state economies and health systems. This is a summary of the three federal acts that have been passed so far.

C1: Coronavirus Preparedness and Response Supplemental Appropriations Act (HR6074)

The first phase of the COVID-19 response provided funding for the research and development of potential treatments and vaccines, and for federal agencies to acquire medical supplies and bolster infectious disease response efforts. It quickly moved through both houses with near-unanimous support and was signed into law on March 6th. 

C2: Families First Coronavirus Response Act (HR6201)

The second act focused on mitigating the effects of the economic crisis caused by the health crisis. It included provisions requiring employers with fewer than 500 employees to provide paid family and medical leave and sick leave for people affected by COVID-19, provided grants to states to provide unemployment benefits, and provided funding for various food assistance programs. It also required private insurance companies to cover COVID-19 testing and required public programs, like Medicaid, to cover testing without cost sharing. Finally, the Act increased the federal Medicaid funding percentage (FMAP) by 6.2 percentage points, lessening the portion that states pay for some Medicaid claims. Federal assistance is crucial to ensure Medicaid’s solvency and to ease the state budget. Medicaid enrollment is expected to increase significantly with the rise in unemployment as people lose employer-sponsored coverage and income, which will require Colorado to increase spending. However, Colorado is projected to experience a staggering shortage of funds because sales and income tax revenue has plummeted. One study calculates that each one percentage-point increase in unemployment roughly equates to a $40 billion decline in state tax revenues in a typical recession – and our current crisis is likely much worse because the discretionary economy has essentially shut down. Because Colorado is unable to increase tax revenue due to TABOR, the only way to avoid this fiscal crunch is to receive federal assistance, like the FMAP bump, to cover some of the increased costs.

C3: CARES Act: Coronavirus Aid, Relief, and Economic Security Act (HR748)

The third act was the most comprehensive of the three and largely focused on sustaining the economy and providing funds for crucial public and private institutions to ensure their stability. 

Direct Economic Relief. The act included a variety of direct economic relief provisions, like individual cash payments, increased unemployment benefits, and funding to assist impacted industries including tourism, airlines, food production, and manufacturing. The act expanded unemployment benefits by extending the amount of time that unemployment insurance is available, increasing the amount available by $600 weekly, and extending the benefit to gig workers and those who are self-employed. The full $1,200 direct cash payments are available to tax filers with social security numbers and incomes less than $75,000. The industry loans were one of the most contentious provisions in the bill; Democrats pushed for sufficient oversight of the loans to ensure that companies weren’t using them to buy back their stock. The CARES Act also extended funding for various community health programs and provided grants for other essential social service organizations, as well as some additional funding for nutrition programs, housing assistance programs, education institutions from early child care to higher education, arts and humanities institutions like libraries and museums, and public transit to help them adapt to changing needs.

Research funding. The act also provided resources for various entities conducting pharmaceutical research into potential treatments and epidemiological research to better understand the virus, as well as funding for infection prevention and control programs. For example, the CDC created a grant to help local efforts at contact tracing.

Funding for health care providers. The CARES Act also attempted to stabilize the cash flow of vital health care providers by raising the Medicare reimbursement rate by 20% for COVID-related care and making additional grants available for certain providers to offset the cost of that care. Last week, the white house announced that facilities that accept these funds will not be able to balance-bill patients who are treated for COVID-19, meaning that patients should not receive a bill for the difference between what their insurance covered and what the provider charged. In 2019, Colorado’s legislature passed a prohibition on balance billing that applies to Colorado-regulated insurance plans – typically individual and small-group plans that are bought on the Exchange. This provision expands these protections to every patient treated for COVID-19 in a facility that accepts CARES Act funding.

Insurance coverage changes. For private insurance carriers, the act required coverage of COVID-19 tests beyond those that are FDA-approved, including state-developed tests and some tests from clinical labs, with no cost-sharing. If consumers are tested by an out-of-network lab, their insurance plan is required to reimburse the lab, but there is no protection against balance billing consumers for an additional amount. The CARES Act also required rapid coverage of preventive services and vaccines when they become available. The aim of these measures was to reduce cost barriers to accessing this care in order to reduce the spread of the virus and harm to patients.

Digital infrastructure improvements. Interestingly, many of the provisions focused on adapting to the crisis by ensuring that people have access to the resources needed to work, learn, and access services remotely. Provisions for facilitating the development of digital infrastructure appeared throughout the act, exemplifying the scope of this stimulus act and the importance of equitable and widespread access to these resources. The act increased funding for broadband improvement in rural areas, provided additional funding for many government agencies to expand remote working capabilities, removed barriers to telehealth utilization, and provided grants for states and localities to prepare for the 2020 elections – funding that could potentially enable a shift to mail-in ballots, like Colorado already uses, to avoid making voters choose between exercising their right to vote and following public health advice to avoid crowds.

Funding for states. For Colorado, one of the most significant provisions was a grant program through the Coronavirus Relief Fund for states, territories, tribal governments, and some localities to cover a portion of the additional spending resulting from the coronavirus. The grants come with restrictions: they can only be used on expenses incurred between March 1 and December 30 that resulted from the COVID-19 crisis and are not already accounted for in the budget. The most recent budget forecast estimated that Colorado will see around an $800 million decline in revenue, which means that current programs will either see cuts or require federal assistance; these programs can’t be funded with this grant money. Some of this money could cover increased Medicaid expenses, which are likely to be significantly higher than predicted because of COVID-19 treatment and additional enrollees. The funds could also support health care providers who are facing financial difficulties, like those that rely on elective surgeries or well visits for their income, or help state agencies procure medical supplies and protective gear. The funds could also be used to supplement the federal economic relief measures, like additional housing support and food assistance, or to supplement the federal small business loan program. Many of Colorado’s beloved small businesses, like those along South Broadway in Denver, are struggling to access the federal loans and face uncertain futures because they still owe rent and other expenses to keep their space, but won’t have any customers or income for the foreseeable future. State policymakers will need to weigh these needs to determine how the funds are appropriated.

Voluntary actions

In addition to these federally-mandated responses, some private companies are taking initiative and working to mitigate the crisis themselves. Kaiser Permanente, for example, recently announced that they would waive all consumer costs associated with COVID-19 treatment. Cigna and Humana also announced they would waive all cost sharing for COVID-19 treatment, while Aetna is waiving cost sharing for in-network hospitalizations. The average treatment cost for a hospitalized patient with COVID-19 is around $30,000, so waiving the cost-sharing amount lifts a significant financial burden off of consumers. These companies are recognizing that cost often deters consumers from receiving needed care, and are doing their part to remove those barriers.

C4: Next Steps

Federal lawmakers are already discussing a fourth relief package, which will likely be crafted soon. State activists are working to develop recommendations for that package to ensure that the needs of the most-impacted communities are being met. So far, we have identified a few gaps that need to be addressed, which are described in our letter to Colorado’s congressional delegation. While the CARES Act boosts funding for necessary programs and expands coverage, the next package should go farther. A larger FMAP bump, for example, would ensure that Colorado is able to cover everyone that needs Medicaid, without stressing the state’s budget. Additionally, Congress could expand financial assistance programs for those with private coverage, and could implement federal programs to lower the cost of medical care. Colorado’s reinsurance program and surprise billing protections, for example, could be adopted at a federal level to reduce costs for everyone. The next act should also increase funding for many programs that already exist, like coverage enrollment assistance programs, safety net clinics and hospitals, the loan program for small businesses, and housing and nutrition assistance programs. This health and economic crisis has revealed significant gaps that need to be filled for people to enjoy good health and financial stability; what needs do you see?

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