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Biden's free Covid test plan through private insurers is a mess

New rules requiring private insurance companies to cover costs for at-home Covid tests are already exposing big problems.
Photo illustration: Image of a rapid antigen self testing kit for Covid-19 with nasal swabs, tube and detection device and next to an image of Joe Biden.
Under new rules, private health insurance companies must cover the costs of at-home coronavirus tests for their customers — but there are several catches.MSNBC / Getty Images

President Joe Biden’s plan to make rapid Covid-19 tests available by coordinating with private health insurers officially kicked off this weekend. And it’s already going very, very poorly.

My colleague Hayes Brown warned in December of the pitfalls of setting up a complicated reimbursement system through private insurance. But the president didn’t listen to him! And right now we’re seeing in real time how coordinating with an industry whose profit model entails reducing access to health care is — shocker! — producing a poor policy solution. It's an illustration of how sticking Americans with a time tax, by shifting the burden of information-gathering and the administration of a government benefit onto the public, makes for bad policy.

It seems even insurance companies themselves aren’t prepared for this rollout.

Here’s how the policy works: Under new rules, as of Jan. 15 private health insurance companies must cover eight at-home coronavirus tests per person every month. An insurance company can work with a partner distributor to create “preferred” locations, where a customer can pick up tests for free, paying nothing out of pocket. (What counts as a preferred location will vary based on plan.) Customers who don’t go to a preferred location will need to pay out of pocket and then submit paperwork and receipts to get compensated. (Because of a lack of clarity in guidance, some health insurance brokers are even advising their policyholders to keep the boxes the tests come in as proof of purchase.) The compensation for purchases at non-preferred locations only covers $12 per test (the Kaiser Family Foundation has found tests can cost as much as $50). If an insurance company doesn’t arrange for any preferred locations, the customer will need to submit receipts and paperwork to be fully reimbursed.

This policy setup not only demands that people know about the plan and a bit about how it works, but it also requires them to reach out to their insurance provider to figure out what benefits they are eligible for. As Natalie Shure wrote for The New Republic, figuring out how she could get free tests this weekend by contacting her insurance company was a huge hassle:

After being transferred three times, I was simply informed that they’d reimburse me for tests. I stopped to clarify: Will they reimburse full freight for any test? Or do they have a preferred vendor where we can get them for free? I was put on hold for several minutes, while whomever I was on the phone with scurried away to find the answer to the obvious question his employer hadn’t prepped him for, after which I was finally told that their partner pharmacy is Walmart.

According to Google Maps, I live a 39-minute drive away from the nearest Walmart, or a whopping one hour and 23 minutes away by public transit. Unless I make that trek (and it may not shock you to hear that I won’t), my reimbursement requires me to save receipts, fill out paperwork, and mail it to my insurer if I want to get paid back less than half of what I paid for my last test at CVS. By the time I hung up the phone, the call had lasted 38 minutes.

As Shure’s call illustrates, it seems even insurance companies themselves aren’t prepared for this rollout. Had someone not as informed as Shure called and not pressed for details, they wouldn’t have been told where to go for free tests or how reimbursement works — and doesn’t work. Shure’s experience also showcases how letting insurance companies choose preferred locations means some people are going to have difficulty finding tests they don’t have to pay for up front, which may prevent people who are too cash-strapped or too pressed for time from using the reimbursement program.

Hesitation about speed of reimbursement is not an unreasonable concern. According to The New York Times, some insurance companies are openly admitting that they’re not yet ready to enact Biden’s plan, and that they’re manually processing reimbursement claims. One health insurance broker described fear that it could be a “six-month nightmare trying to get reimbursed” for a test that’s been paid for. Some people are not going to take that financial risk.

Oh, and if you’re one of the tens of millions of Americans who aren’t insured, this plan has nothing to offer you. (You have to find “certain community health centers” to get a free test, according to CNN.)

Biden’s private insurer plan is imposing what The Atlantic writer Annie Lowrey has called “the time tax,” which she described as “a levy of paperwork, aggravation, and mental effort imposed on citizens in exchange for benefits that putatively exist to help them.”

The time tax is a regressive tax, because it takes more of a toll on people with fewer resources.

The idea is that when government benefits like unemployment insurance and tax credits are only accessible through tedious paperwork, it slaps a hidden cost on those seeking the benefits, as Lowrey explained:

The United States government—whether controlled by Democrats, with their love of too-complicated-by-half, means-tested policy solutions; or Republicans, with their love of paperwork-as-punishment; or both, with their collective neglect of the implementation and maintenance of government programs—has not just given up on making benefits easy to understand and easy to receive. It has in many cases purposefully made the system difficult, shifting the burden of public administration onto individuals and discouraging millions of Americans from seeking aid. The government rations public services through perplexing, unfair bureaucratic friction. And when people do not get help designed for them, well, that is their own fault.

The time tax is a regressive tax, because it takes more of a toll on people with fewer resources — if you have less money, education, or time, it can be harder to understand and use government benefits. Given that this program involves coordinating with a profit-seeking sector, that would seem to incentivize an even more intense burden on citizens. And it’s guaranteed to be a drag on our ability to tackle the sweeping problem of containing an ever-changing pandemic.

But the Biden administration has a separate policy that holds much more promise. On Tuesday, the White House launched a website for people to request that free Covid test kits be delivered to their homes. All you need to do is fill out a simple form at Shipping is free, and you don’t need a credit card to order.

The problem is that the number of tests are extremely limited. People are limited to ordering a total of four per residential address, regardless of how many people live there. It seems that the Biden administration is looking to purchase additional free tests to deliver, but the timeline is unclear, and the numbers being floated aren't promising. If this program only works through occasionally sending people a handful of tests — not even enough for one per person in some households — that will fall well below what's needed to effectively contain outbreaks and what some European governments have offered their citizens.

The home delivery program offers precisely the kind of simple and universally accessible aid program design that we need. But the administration needs to pour far more resources into it in order to actually protect the public and keep our society running as smoothly as possible.