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How to Affordably Insure the Gig Economy in a Covid-19 Recession

Given what’s at stake, now is the time to determine - and act on - private market and public policy solutions to strengthen America’s safety net.

Independent workers may surpass 50% of the American workforce before the end of the current recession. Independent workers already face substantially higher uninsured rates as compared to traditional employees due to:

• high cost of healthcare in the US; • self-employment tax penalties vs employer-based insurance; • adverse selection; and • lack of a competitive market for health insurance for independent workers.

The recession will result in significant increases in the number of Americans without insurance for several years, even with expansion of Medicaid.

Health systems were already in a precarious financial position as well. Pre-COVID, patient payments accounted for 30 percent of healthcare revenue. A significant increase in America’s uninsured and under-insured means health systems face a broken revenue model.

A number of established health insurers are focusing on ACA-compliant “micro network” products to increase affordability while meeting buyer needs, as well as growing their highly profitable supplemental insurance membership. Innovative, non-ACA-compliant insurance models tailored to serve independent workers also are emerging: self-service, mass personalization of benefit designs, digital-first coverage, new forms of price transparency, and AI-based care.

However, systemic barriers to a robust individual health insurance market, combined with the financial hardships and uncertainty faced by individuals and families in this segment during a prolonged recession, means federal and state governments will need to act. There are several measures that can support a more innovative, competitive, affordable health insurance market for independent workers:

• The newly-enacted Individual Contribution HRAs (ICHRA) could be modified to enable gig platforms and other employers to contribute to independent contractors’ health insurance. • Health insurance tax breaks currently available only to employers could be extended to independent workers. • Expanding the incentives for and regulation of non-ACA-compliant insurance could spur competition based on value.

These solutions should be considered as part of upcoming debate at federal and state levels to reduce burdens on Medicaid budgets, better manage the volume of uninsured and underinsured patient care health systems must navigate, and provide a safety net for so many of America’s essential workers during a prolonged healthcare crisis. 1

It’s hard to predict how bad and how long the “covid recession” will be. The U.S. was already headed into recession well before COVID: a Sept 2019 CNBC article flagged 10 “major recession signals flashing red” - including inverted yield curve, manufacturing growth and GDP growth.

Gig economy workers are a key variable in the upcoming U.S. economic recovery. More Americans than ever have been joining what we’ll call the “gig economy”: a scrappy mix of the self-employed, solo entrepreneurs, freelancers and contract workers. Fifty-seven million Americans freelanced in 2019, or 28 percent of the workforce, according to a recent study by the Freelancers Union. Among millennials, that number rises to 53 percent. Over 90 percent of net employment growth in the U.S. between 2005 and 2015 fell in the alternative work category.

Can hospitals and health systems survive the financial exposure of a post-COVID gig economy - over 50% of American workers - with high uninsured rates?

Health systems, which were already in a precarious financial position, have seen a 40-60% reduction in revenue coupled with increased costs associated with COVID. Numerous health systems have already furloughed workers, closed critical facilities in some high need areas, and more. Virtual medicine (called Telemedicine... but it really needs to be rebranded) reimbursed at the same rate as in person care is helping many healthcare provider groups. Notably, patients are loving it! Policy changes will be critical at both state and federal level, but we’ll hopefully see long-overdue changes to care delivery post-COVID.

Pre-COVID, patient payments accounted for 30 percent of health system revenue. That 30% of health system revenue has been in the headlines due to surprise bills, hospitals suing patients, and healthcare costs as the leading cause of personal bankruptcy in the US. With unemployment claims skyrocketing, the percent of Americans that are uninsured and underinsured will also grow. This will increase the portion of health system revenue attributable to patient payments. Health systems face a broken revenue model.

Why are so many more independent workers uninsured as compared to the national average?

Per Economic Policy Institute, roughly 25% of independent contractors had no health insurance in 2017, in the midst of a strong US economy, as compared to the national average of 10% uninsured. The CEO of Catch, a venture-backed startup providing benefits to independent workers, told TechCrunch what keeps her up at night: “The safety net is not built for individuals. It’s built to be distributed through HR departments and employers. We are very worried that the products we offer aren’t on equal footing with group/company products.” For example, there’s a $6,000/year IRA contribution limit for individuals while the corporate equivalent 401k limit is $19,000.

There are 4 key reasons so many more independent workers are uninsured vs the US overall: 1. Affordability: Gig workers have lower annual incomes than employees, on average. Healthcare is very expensive in the U.S. as compared to every other developed country, and thus health insurance is also very expensive. 2. U.S. Tax Code: As the CEO of Catch alluded, for even the wealthiest solopreneurs, U.S. tax code increases costs substantially as compared to employers. Employer-paid premiums for health insurance are exempt from federal income and payroll taxes while self-paid premiums are not. 3. Adverse selection: Centers for Medicare & Medicaid Service (CMS) estimate individual market enrollment declined 10 percent between 2016 -2017 from adverse selection. The more expensive insurance is, the more

likely healthier people are to go without coverage (or find alternatives). This causes further price increases (and the cycle continues). Repeal of the penalty associated with the individual mandate exacerbates the challenge. 4. Lack of access / lack of a competitive market: on average, there are 4.5 individual market insurers on ACA exchanges per state - 25% of counties have just one carrier - as compared to over 55 Medicare Advantage plans per state. Notably, insurer participation on ACA exchanges increased in 2019 and 2020, following 3 years of decline, with regional and local carriers driving this increase.

Why is the Medicare Advantage market so robust, while the Individual health insurance market is not?

There are, on average, 55 Medicare Advantage plans vs 4.5 individual market insurers on ACA exchanges per state. This is in part because the Medicare Advantage market is larger than the ACA-compliant market both in terms of number of people as well as premiums per person. As Chart 1 illustrates, though, consumers view the individual insurance market differently. The non-ACA compliant health coverage market is robust. Premiums are often more affordable, and benefits are much more diverse, featuring a range of consumer-friendly innovations. Yet the non-ACA compliant market also contains a range of predatory practices, and destabilizes the ACA individual market. More on that below.

Chart 1: Estimated Market Size for Medicare Advantage versus Individual Insurance

What are consumers purchasing for healthcare coverage?

ACA coverage, and the innovations the ACA markets support, is not adequately meeting the needs of Americans in the individual market. This is evidenced not just by the high uninsured rate, but also by the robust market of highly profitable, less-regulated alternate insurance products serving independent workers. As the US looks to very rapidly provide affordable health insurance to America’s growing gig economy (including solopreneurs, independent contractors and beyond) - we need to tap into this ecosystem, encouraging innovation while also ensuring consumers are protected.

Table 1: Assessment of Private Market Individual Healthcare Coverage Options

Individual Description Benefits Concerns Healthcare Coverage Type

1. Comprehensive Available on government-created Access to subsidies Extra paperwork/ hurdles (but they Major Medical - marketplaces (federal and state) Clarity of what’s covered are needed to assess qualification “On-Exchange” ACA-compliant plans cover essential for subsidies) ACA compliant health benefits, pediatric dental, and adhere to ACA consumer protections 2.Comprehensive Sold directly by private insurers and Avoid paperwork of Marketplace No access to subsidies Major Medical - brokers (outside of gov’t "Off Exchange ACA-Compliant" “Off-Exchange” marketplaces) creates extra complexity and ACA compliant ACA-compliant (see On Exchange) confusion for consumers and health plans

3. Catastrophic - “On- For those below 30 years old or with Lower premium costs No access to subsidies Exchange” ACA hardship exemptions Includes 3 PCP visits Not HSA-qualified compliant Covers ACA essential health benefits Hardship paperwork is complex, takes Adheres to ACA consumer protections time to approve 4.MEWAs (Multiple Vehicles for individual workers to Per DOL AHP Final Rule (June 2018) Appealing to healthy individuals, but Employer Welfare purchase as a group, exempt from sole proprietors and self-employed unattractive/ unavailable to people in Arrangements) ACA workers may be eligible for AHPs poor health, which spurs adverse including AHPs Multi-employer plans are portable, for Trump administration issued selection (Association Health moving from employer to employer proposed regulation for self- A number of AHPs have gone under or Plans), multi- Enrollment estimate: MEWA 2.5M/ employed individuals and small been found fraudulent employer plans multi-employer plans 4.9M (includes businesses in AHPs to purchase small group + individual) across state lines 5. Short-term Typically provide minimal benefits & Lower premium attractive to In many states, consumers may have Medical financial protection for those who healthier populations with incomes claims denied or their policy rescinded become sick or injured; 17 states have too high to qualify for ACA Available only to those who can pass restrictions narrowing Trump subsidies medical underwriting - adverse administration's new policies Coverage can last up to 36 months selection 6. Medical Cost Members contribute funds to pay for Affordable option for those who Several instances of fraud Sharing including qualifying medical expenses of others. do not qualify for subsidies Can exclude pre-existing conditions. Health Care Cost Member’s monthly “share” may vary May elect to not reimburse for certain Sharing Ministries based on age and coverage level situations or conditions Exempt from ACA 7. Supplemental Pays a predetermined amount on a Can be a good supplement to a Consumers reported feeling Insurance - Other per-period or per-incident basis, high-deductible/catastrophic “confused or misinformed - Medical (Non- regardless of the total charges major medical plan appeared similar to a major medical Comprehensive) - incurred policy,” but was not Indemnity Plan, May not provide coverage for Hospital Insurance essential health benefits 8. Supplemental Policies that provide coverage for Good add-on protection Not comprehensive enough to Insurance - Limited vision, prescription drug, and/or any Relatively low cost replace major medical coverage, but Benefit - Single other single service plan or program can be a nice compliment to a Service catastrophic plan 9. Supplemental Provide benefits only for the Relatively low cost additional Instances covered are generally Insurance - diagnosis and/or treatment of a coverage for emergencies such limited to few illnesses or Specified/ Named specifically named disease or as heart attack or cancer. Can be emergencies (in most cases life Disease - Critical diseases used for any expenses, e.g. threatening), and include many Illness medical, daily living expenses stipulations Source: Shift Health Advisory assessment of numerous public sources, May 2020.

1., 2., and 3. ACA-compliant individual market health insurance includes on-exchange, off-exchange and catastrophic health insurance coverage options. The ACA‘s consumer protections apply to all individual major medical policies, regardless of whether the coverage is sold on the exchange. A Healthinsurance.org summary notes plans that are sold on the exchanges must also be certified as qualified health plans (QHPs). QHP certification is granted by the exchanges, and can vary from one state to another. ACA catastrophic plans are currently available only to those under age 30 or demonstrating financial hardship. The plans are less expensive and provide less coverage, but still cover preventive care.

With COVID worsening/accelerating America’s new recession and hitting employer coverage, Bruce Japsen wrote in Forbes that we are seeing health insurers looking to expand their ACA individual market coverage. On their Q1 2020 earnings call, UnitedHealth Group executives said they were giving thought to re-entering markets to sell ACA individual coverage. The ACA exchange markets in which United is currently active are Nevada, New York and Massachusetts.

Conversations we’ve had with several industry executives note a number of established health insurers are focusing on ACA-compliant “micro network” products to increase affordability. This makes sense: an independent worker and her family likely only need doctors in the immediate local area, as compared to an employer-based health plan requiring broader geographic coverage to suit a range of employees.

Centene, Bright Health and Oscar are among the carriers that expanded individual health plan offerings for 2020, and each, as well as Anthem, are moving to expand their exchange presence for 2021. Centene’s AmBetter is the largest health insurance marketplace carrier at 2M enrolled in 2019, primarily with those eligible for subsidies. Coupled with their strong Medicaid presence, they are well positioned to grow in light of current dynamics. Centene’s Investor Day featured Ambetter’s Artificial Intelligence chatbot, Amber, which assists members with benefits and costs, rewards, making a payment, digital ID card, and creating an account. Centene is also piloting Amber capabilities in premium payment, billing inquiries, cost share info, telehealth, MHP, and coverage. 8-year-old Oscar emphasizes virtual care and member engagement, covering 375K members in the individual market. 4-year-old Bright typically partners with one health system in each market to help set up its insurance plan. Bright covered 60K members in total as of May 2019.

4. MEWAs, AHPs and Multi-employer plans are included in Table 1 for completeness. Governments have created these vehicles to enable group purchasing by groups of small businesses or individuals. MEWAs and AHPs present notable challenges (see Table 1). These plans are a retrofit to employer-based coverage vs. a true individual market option.

5. Short term health insurance has been growing quickly, as the Trump administration has expanded duration to 3 years and loosened regulation. As the table highlights, there are numerous, very serious concerns about these health plans in terms of consumer protection. It is telling that 11 states have no short-term plans available and several others have imposed restrictions on these plans. Worryingly, short-term plans are exempt from requirements in the new COVID-19 response law, which requires coverage of all services related to COVID-19 testing be covered without cost-sharing.

Medical cost sharing (6), as well as supplemental insurance including indemnity (7) and limited benefit plans (8), can offer gig workers an appealing compliment to catastrophic coverage while also helping drive down cost of healthcare - the underlying cause of expensive health insurance. These plans often pay providers at the time of care and do not require claims submission, both of which improve providers’ financial viability.

6. Medical cost sharing communities such as faith-based Christian Sharing Ministries have been in existence for decades. They were grandfathered under ACA, including exempting members from ACA mandate penalties. They

5 currently cover around 1 million Americans, up fivefold since the passage of the Affordable Care Act. Sedera and KNEW Health are two startups that operate as medical cost sharing communities that do not have religious affiliations.

While not insurance, members consider these products to be a significantly more affordable alternative to ACA plans, particularly for individuals who do not qualify for subsidies. Another attractive feature of these plans is that many lack a restrictive provider network, instead providing assistance to members in negotiating lower rates for medical care (members present as cash-pay to their medical providers). Because costs are shared amongst members and plans are not obligated to share a member’s costs, there can be a greater incentive to stay healthy and shop for high-value care. An increasingly available model is pairing direct primary care (“DPC”), which charges a set fee and covers a range of primary care services and “unlimited omnichannel access”, with medical cost sharing to help cover larger medical needs not included in DPC memberships. This can provide affordable, high tech, high touch medical cost management.

But… medical cost sharing comes with limitations. Organizations are not legally required to share funds with members that have health care needs. NPR reported that to industry watchers, marketing materials don't lay out the risks clearly enough. And, not surprisingly, players in this segment may target healthy people: for example, KNEW Health markets itself as “a medical cost sharing community for healthy people”. While these products need to be further regulated to protect consumers - they are not currently regulated as insurance companies, and are not required to have reserves - they provide an alternative that helps the market continue to innovate and evolve.

7/8. Limited Benefit and Fixed Indemnity Plans typically pay a predetermined amount per-period or per-medical- incident, regardless of actual cost incurred. A popular form of limited benefit insurance pays for primary care - including urgent care - but provides much less coverage for inpatient care.

Hooray Health, founded in 2017, is one such plan covering “everyday medical needs.” At the core is their network of retail clinics and urgent care centers, plus 24/7 medical concierge, 24/7 telemedicine, a pharmacy discount program, and outpatient accident benefits. They also offer supplemental in-hospital and critical illness coverage. As with most non-ACA-compliant insurance, Hooray’s benefits are less likely to appeal to patients with a continuing chronic condition.

Sidecar Health was founded in 2018 and offers plans in 6 states. Their purchase experience meets current consumer digital shopping expectations, featuring mass personalization such as the ability to quickly and easily customize deductible and maximum (Sidecar’s max, not the member’s); elect whether Rx is included; and fix the rate for 3 years (handy for increasing retention, which is notably challenging in the individual market).

Similar to many Medical Cost Sharing plans, Sidecar has no network. Their platform helps members shop for providers - including sharing prices other Sidecar Health members have paid. Members can see the reimbursed rate to aid negotiations, and pay for care upfront using their Sidecar Health payment card. To get reimbursed the preset fee for a given covered service/procedure, members upload a picture of their itemized bill (another feature that feels less stressful than traditional insurance). If a member obtains care at a lower cost than the preset rate, they keep the balance; and if a member’s care costs more than the preset rate, they pay the balance.

But while Sidecar’s consumer experience is strong, there are two major shortcomings. First, Sidecar doesn’t cover people who are obese or have pre-existing conditions, nor offer maternity coverage. They redirect individuals to the ACA marketplace - fueling adverse selection (currently allowed based on regulations). Second, these plans are supplemental: insurance only covers till the max is hit, after which the member is liable.

Beyond the health insurance products and innovations described above, more companies are targeting uninsured and underinsured by offering innovative lower-cost, higher-convenience healthcare. Direct-to-consumer digital healthcare delivery brands such as Lemonaid, hims & hers and Nurx are growing rapidly. Sam’s Club is piloting “Care Accelerator” health packages to lower out of pocket costs in partnership with Humana, on-demand text-based primary care provider 98point6 and Quest Diagnostics across primary care, dental, optical, alternative medicine and digital health. Anthem’s Exponential Technology team launched virtual doctor app Sydney direct-to-consumer in late 2019, already racking up 170K downloads and a 250% increase in engagement rates on text & video virtual care.

Current barriers and challenges, combined with the financial hardships and uncertainty faced by individuals and families in this segment during COVID and a prolonged recession, means federal and state governments will need to act.

How can the government reduce gig workers’ uninsured / underinsured rate?

Some states’ efforts to “protect” gig economy workers focus on forcing employers to treat gig workers as employees and provide them the protections employees receive. California’s AB5 law was enacted in September 2019, and New York, New Jersey and Illinois seem to be following it with similar legislation in the works. Investopedia summarizes AB5 as extending employee classification status to gig workers. AB5 is designed to regulate companies that hire gig workers in large numbers, such as Uber, Lyft, and DoorDash.

But this is just closing a partial loophole, as many classes of independent workers are exempt, and those who work for more than one company are also excluded. As Chris Taylor writes for Reuters, “our healthcare systems are designed for the workforce of 1950.”

Lack of a robust individual health insurance market is impeding the innovation and entrepreneurship so core to America’s identity, too. A 2015 study by RAND estimates that the “entrepreneurship lock”, inhibiting individuals from leaving employers to start new businesses due to employer-based health insurance, is just over 1 percentage point relative to the annual base business creation rate of 3 percent.

The COVID stimulus packages represent the first time the federal government recognizes independent workers, and could set the stage for permanent improvements. There are a number of proposals in the works - several already in place in some states - that would go a long way to increasing health insurance coverage amongst independent workers.

Table 2a and Table 2b summarize the policies we have identified as most impactful in providing affordable, consumer- focused health insurance to independent workers. Before we tackle initiatives that are both politically and financially feasible, we start with an obvious asymmetry that nonetheless we haven’t seen getting air time.

1. Extend Health Insurance Tax Breaks to Everyone Who Works. This part of what’s known as “self-employment taxes” is something that should be a no brainer… but we haven’t found any activity advancing this in the legislature or executive branch so admittedly this may NOT be feasible in the near term. The inequitable tax treatment of health insurance is an artificial distortion. Fixing this would make health insurance more affordable for independent workers without significantly impacting tax revenue, given the current small size and income brackets of the individual market.

Table 2a: Policy Change Recommendations

Financial Feature Benefits Federal Activity State Activity Challenges Impact

1. Extend Health Eliminate None found None found Lost tax collections; Costs $, Insurance Tax Breaks independent worker small given market unless paired to Everyone Who penalty size/ low avg. with Works, and/or tax Pre-tax health income reduction of healthcare spend insurance is more May drive richer healthcare over a certain affordable for all benefits as covered premium tax amount per person Tax excessive care is pre-tax, as benefits for healthcare spend to seen w/ employers employers incent cost-sensitivity 2. Revise ICHRA Enable multiple 1/1/2020 launch of None adopted to Defined Cost to set (Individual Coverage platforms/ clients to ICHRA, but final rules date contribution ICHRA up and HRA) to achieve contribute pretax $ do not include WA portability is (like 401k) regulate portability: (1) toward independent independent workers proposal has long simpler than Employers independent workers workers’ health Alternate portable way to go current employer move to can set up/ insurance purchase models include No independent benefit purchase or defined contribute to ICHRA; Portable ICHRA: Multiemployer plans worker proposals pensions, but will contribution, (2) Platforms/ Clients accumulate funds to which often revolve exist that cover require adapting with more can contribute for smooth monthly & around specific trade all types of systems at insurers, control over independent lifetime income 5/6/2020 Warner / workers: WA companies and benefits workers; variability; ensure DelBene propose Domestic government/ spend (3) workers own benefits do not reset $500M emergency workers; NY Black regulators/ IRS ICHRAs, funds remain with new project/ fund to pilot Car Fund; only YoY; (4) can coexist when moving portable benefits, certain worker with subsidy between platforms building on stalled types covered by eligibility 2017 proposal CA AB5 3. Expand eligibility Cover workers with Short-term plan 2018 CO bill to As some Bronze/ Costs $ for ACA catastrophic pre-existing duration expanded in expand Silver members coverage beyond conditions who do 2018, but they pose catastrophic shift to those below 30 years not qualify for a number of coverage with Catastrophic plans, old or with hardship subsidies and cannot problems impact study. lower premium exemption afford major medical No federal activity on Inquiry sent to collections. Reduce number of catastrophic federal Funding could be medical bankruptcies eligibility expansion government re required to waiver grant. No stabilize the response thus far. market. Source: Shift Health Advisory proprietary assessment of multiple sources, May 2020.

2. ICHRA, with a few modifications, could be a great health insurance funding vehicle for gig economy workers. As of January 1, 2020, employers can offer employees (and their families) an Individual Coverage Health Reimbursement Arrangement (ICHRA) instead of offering a traditional group health plan. Accepting ICHRA funds requires an employee to enroll in individual health insurance coverage. Currently, employers must have at least 1 W2 worker to offer ICHRA.

We propose expanding ICHRA eligibility to include self-employed and independent contractors. They are already considered employers and employees when it comes to payment of self-employment taxes... should they not also be considered employers when it counts in their favor? Second, ICHRA should be portable year over year and remain with the individual when they move to work for another employer - much like HSA accounts. This would ensure accounts are funded while self-employed are younger and healthier, and these funds can be drawn upon when gig economy workers become less healthy as they age. Additionally, gig worker incomes are inherently volatile - portability and employee ownership of funds would help fund accounts in lucrative periods and draw on them in the periods of low income.

One might envision a platform such as Catch or Alia to facilitate gig workers’ ICHRAs. State-based exchanges could have the platform and capacity to help facilitate this also. Alia set up an online platform where it acts as an intermediary between employers of home workers, home workers and Alia partner insurance providers. Savvy builds its product offering off ICHRA, where it guides employers through picking a pre-tax contribution amount for employee’s healthcare insurance plan premiums and manages ICHRA administration. It also provides employees with an in-app marketplace with access to every individual health plan. A platform like Savvy’s could be extended to integrate with key gig economy platforms (Uber, Lyft, Upwork, etc) and provide similar offerings to independent workers.

Our proposed expansion of ICHRA can also facilitate universal coverage. To date, there are a number of insurance models and state laws addressing the needs of specific subtypes of independent workers: domestic workers in WA; the “Black Car Fund” which includes Uber & Lyft in NY; and only certain types of workers covered by CA AB5. These are band-aids. America’s uninsured problem cuts across too many sectors already. Technology advances ensure that labor markets will continue to evolve in ways lawmakers cannot anticipate.

3. Expanding access to ACA-Compliant Catastrophic plans would provide affordable coverage to more Americans. While not as comprehensive as full medical coverage, it might also help prevent some of the bankruptcies due to medical cost.

Table 2b - Continued: Policy Change Recommendations

Feature Benefits Federal Activity State Activity Challenges Financial Impact

4. Expand Address #1 reason workers For qualified plans Some states have wrap Costs $$$ Costs $$$ Subsidies to are uninsured only, up to 400% FPL benefits/ subsidies on higher FPL with a Increase market size exchange above what sliding scale More revenue security to ACA provides attract insurers 5. Strengthen Reduce health insurance In place until repealed 4 states + DC have Innovative non-ACA- Generates small $ Mandate + cost by expanding pool for 2019 and beyond instituted mandates, compliant coverage Penalties for Penalties provide funding Pre-ACA Republican and use penalty $ to options would not those who can Expand market size to proposal with strong fund reinsurance or currently qualify afford coverage attract insurers bipartisan support subsidies 6. Expand Reduce premiums by 20%, ACA included a 12 state-based Costs $$$ Costs $$$; or $$$$$ Reinsurance primarily benefiting subsidy temporary reinsurance reinsurance programs Escalating cost without without mandate + ineligible people program which expired receive federal mandate due to penalty Reduces degree to which in 2016 funding; 2 additional adverse selection healthy must subsidize sick states are discussing 7. Reporting & Consumer protection: 2018 Federal Several states have Requires continuous Adds slight admin cost oversight for numerous benefits, and also Framework governing instituted regulations monitoring as product for companies and for non-ACA- numerous challenges alternate coverage for alternate coverage innovation will regulatory orgs compliant States have authority to arrangements in the Comparison of federal continue! Eg, brokers coverage & new level the playing field, individual market vs. state short-term were found to mislead products (some though Federal is simpler health coverage consumers regarding aren’t technically regulation short-term health insurance) plans amid COVID Source: Shift Health Advisory proprietary assessment of multiple sources, May 2020.

4. Expanding Subsidies is essential, especially given the financial hardships to come. This increases the size of the market and increases the certainty of revenue collection for health insurers - critical to making the individual market attractive to competitors. A study of a Massachusetts program, offering additional subsidies (beyond ACA) for enrollees, found that reducing premiums by just $40/month increased the take-up of individual market coverage by 14-24% with largest effects at lower income levels. In addition, this research found that the people enrolling due to enhanced premium supports were healthier, further reducing premiums due to a healthier risk pool. 9

5. Strengthen Mandates with Penalties: is this really feasible, when so recently repealed at the federal level? Mandates were originally a Republican idea. In 1993, the mandate made its first legislative appearance, co-sponsored by nineteen Republicans. In 2007, the Wyden-Bennett Healthy Americans Act was co-sponsored by eleven Republicans and nine Democrats, receiving more bipartisan support than any other universal healthcare proposal in Senate history. Expanded catastrophic coverage eligibility (#3 above) would enable more consumers to supplement catastrophic with innovative non-ACA-compliant coverage. Mandates can reduce costs by 10% or more by reducing adverse selection, and - Bonus! - the penalties generate income that can be used to fund reinsurance or subsidy programs. In the short time since being repealed at the federal level, 4 states plus Washington DC have already put mandate penalties in place.

6. Reinsurance has been found to reduce premiums by 20%, primarily benefiting subsidy-ineligible people. 12 states have already received partial federal funding for state-based reinsurance with 2 additional states currently evaluating. Unfortunately, with COVID and recession forcing states to find substantial budget cuts, health strategy and policy advisor Mara Baer of Ago Health notes that state funding for reinsurance is at risk.

7. Reporting and oversight of non-ACA-compliant coverage and future new products includes reversing the expansion of short term plans - and requiring reporting, as states currently don’t have visibility. In fact, stronger oversight might enable these plans to be included in ICHRA; currently they are excluded. Additionally, requiring all non-ACA-compliant alternatives to conform to the ACA’s “Summary of Benefits and Coverage” as well as oversight of consumer marketing would go a long way to protecting consumers while supporting innovation and competition.

“If not now, when? If not us, who?” - Pierce Brown, Dark Age

Independent workers may surpass 50% of the American workforce before the end of the current recession, and already face high uninsured rates as part of a broader lack of a safety net. The recession could result in significant increases in the number of Americans without insurance for several years, even with expansion of Medicaid (which the TradeOffs podcast reports isn’t exactly viable, as evidenced by prior recessions). At the same time, the US has one of the lowest life expectancies in the developed world. Underlying all these problems is the high cost of American medical care.

With the catalyst of a recession and COVID, perhaps we could see more comprehensive, yet market-friendly reform. Mark Shepard, Katherine Baicker and Jonathan S. Skinner’s November 2019 proposal for a less generous, higher value “Medicare for All”, with a robust supplemental insurance market, similar to the UK, would be a solid contender. The cost effectiveness system they propose is currently banned in Medicare but serves as the bedrock of public health programs in other countries including the United Kingdom, France, Germany, Canada and others.

Absent that, this article highlights a number of strategies and policies - several already in place in some states - that would go a long way to increasing health insurance coverage amongst independent workers, while also cultivating the disruptive innovation in health insurance and care delivery needed to heal America’s broken healthcare system.

About Shift Health Advisory, LLC

Shift Health Advisory is a gig economy boutique that helps innovative clients with complex, multi-stakeholder business models accelerate growth and navigate the rapidly changing healthcare landscape.

We bring small, cross-functional teams with deep strategy, product development, finance and operations expertise to help our clients address these challenges: • Designing business models—and offerings—where multiple stakeholders are involved (e.g. payors, providers and patients) • Shortening the time and cost required to identify and test key hypotheses • Capitalizing on emerging market dynamics such as value-based payment • Evaluating ROI and outcomes from interventions and offerings • Designing for scalability

To learn more about how Shift Health Advisory can support your business, visit our website at shifthealthadv.com or email us at [email protected].

About The Authors

Jaime Iosue Moran As founder and CEO of gig economy boutique Shift Health Advisory, Jaime has had the Founder and CEO opportunity to work with Boards of Directors and C-suite executives supporting strategy, strategic partnerships, product development and design and launch of pilots for innovative healthcare companies and health tech venture capital firms.

Committed to transforming the U.S. healthcare ecosystem, Jaime has had the privilege of serving as Interim CEO of consumer digital health company Yaro (via Shift Health Advisory), which was acquired by Virgin Pulse, and served in leadership roles at Walgreens, Aetna and the national Blue Cross Blue Shield Association. Jaime has helped design, build, evaluate and scale a range of consumer clinical technology products and services focused on improving healthcare quality and outcomes, lowering cost and improving consumer experience.

Before working in healthcare, Jaime spent five years advising technology companies raising capital and completing acquisitions. Jaime earned an MBA, Arjay Miller Scholar, from Stanford Graduate School of Business, a Certificate in Product Strategy from Kellogg Graduate School of Business Executive Education, an MSc in Chemical Research as a Fulbright Scholar at University College London, and a BA in Chemistry and Mathematics from College of the Holy Cross in Worcester, MA.

Isabella Mancini Isabella brings 20+ years of experience in consulting and operational roles in a variety of Partner industries including Healthcare, Information Services, and Financial Services. Previously, she was with Wolters Kluwer as a head of sales incentives for one of the four divisions to drive sales performance, and led a customer insights team to drive go-to-market strategies and revenue growth for Financial Services business units. While at BCBSA, she developed business strategies and competitive assessments to optimize BCBS performance, and while at HSBC North America, she led pricing strategy for consumer lending products. Isabella’s foundation for her strategic and analytical advisory approach comes from six years of progressive management consulting experience at Booz & Company and Roland Berger as well as a University of Michigan MBA and MA in Economics from University of Ljubljana.

Susan Asby, RN Susan brings a unique blend of expertise to client engagements, combining financial and Consultant analytics expertise with a clinical perspective. She has over eight years of management consulting experience assisting executive teams, their boards, and stakeholders in evaluating strategic and financial priorities based on rigorous market and operational analytics. At Kaufman Hall she provided integrated strategic and financial planning services to over 60 healthcare provider clients nationwide across a broad range of provider settings. Susan began her consulting career at Huron Consulting Group where she served clients in a number of industries by performing financial valuations of business enterprises, intangible assets and other corporate securities. Susan earned her BS in Finance at Gies College of Business, University of IL Urbana-Champagne, and completed an accelerated curriculum at University of Illinois Chicago’s College of Nursing, earning licensure as a Registered Nurse.