The race begins Friday for a piece of the $349 billion small-business rescue fund dubbed the Paycheck Protection Program.
Meanwhile, the people who run the state’s three largest health insurers are already looking ahead, to the next round of federal stimulus funding.
They want another rescue package, one specifically tailored to help their small- and mid-sized business clients cover the costs of health insurance premiums.
Yes, the Paycheck Protection Program created by Congress last week offers some relief, or at least the potential for it. Eligible businesses can apply for loans to cover a range of expenses — including insurance for employees — and have those loans forgiven if they keep their staff on board for a certain period of time.
But executives at Blue Cross Blue Shield of Massachusetts, Harvard Pilgrim Health Care, and Tufts Health Plan worry this program simply won’t be enough. They are already starting to field requests from clients asking to postpone their insurance payments, as their revenue dries up.
The insurers want to be helpful. But they have their own bills to pay. They can’t risk too much money going out one door without enough coming in the other. They are nonprofits, but they are not in the position to subsidize vast amounts of free health care.
The Massachusetts Association of Health Plans started its lobbying efforts in earnest more than a week ago, sending out letters on March 24 to members of the state’s congressional delegation. In those letters, the trade group asked for federal funds specifically designated for premium assistance to be included in the $2 trillion relief package under consideration in Congress. But by that point, most of the work on that legislation was done.
However, association president Lora Pellegrini said this lobbying push laid important groundwork for the next round of stimulus money. She is also working to include colleagues in other states, to broaden the push. This isn’t just a Massachusetts issue. It’s a nationwide one.
By the end of last week, as the so-called CARES Act neared the finish line in Washington, insurance executives were personally lobbying members of the state’s delegation by phone. Blue Cross CEO Andrew Dreyfus, Harvard Pilgrim CEO Michael Carson. and Tufts CEO Tom Croswell hopped on calls with representatives Richard Neal, Jim McGovern, and Katherine Clark to plead their case.
The letters to the delegation were deliberately open-ended about the mechanics of how such help would be provided. One possibility: a state-administered program, in which federal funds could be distributed directly to local businesses in need.
Carson suggested another idea: a sequel to the Paycheck Protection Program. Small- and mid-sized businesses could access loans to cover their insurance bills, but those loans could be forgiven if they keep workers on their insurance plans.
No matter how the rescue plan works, Carson warned that a public health crisis of this magnitude is a terrible time for people to lose their insurance. Carson said federal help needs to come quickly. It doesn’t have to happen tomorrow, he said, but it can’t be two months away, either.
Many of these smaller businesses are furloughing workers if they have little or no revenue. These particular clients aren’t paying displaced workers a salary, but are still paying premiums to keep their insurance intact, often through the COBRA program, Carson said. But these clients are struggling with other expenses, and could face some tough choices in the weeks ahead.
Another important point: Keeping as many workers as possible attached to their employers in some form could prove crucial to the economic recovery, once the health crisis subsides.
Like Harvard Pilgrim, Tufts is granting extension requests on a case-by-case basis. (Tufts and Harvard Pilgrim are still planning a merger, with the deal slated to close later this year.) Croswell worries about preserving the near-universal coverage that exists now in Massachusetts, a success story that could be undone by the coronavirus. If too many employers stop paying or go out of business, Croswell said, a wave of consumers could end up without any coverage at all, or flood the state’s MassHealth program.
That latter concern drove JD Chesloff, executive director of the Massachusetts Business Roundtable, to join a list of business groups that endorsed the insurers’ letter. Chesloff represents large employers. But he said the entire state economy could be hurt if the MassHealth membership, already a budget buster in good times, swells even more and taxes the state’s finances.
Members of other business groups that endorsed the letter, such as the Retailers Association of Massachusetts, could benefit directly. RAM president Jon Hurst said many small-business owners have closed their doors, in keeping with the state’s shutdown order for nonessential businesses during this emergency, and continue to pay for health insurance even if they can’t afford to pay their workers’ wages.
How long can that last? The specific answer varies depending on the business owner. But all would invariably agree on this: not forever.
Jon Chesto can be reached at email@example.com. Follow him on Twitter @jonchesto.