Federal unemployment benefit lapse will hurt healthcare workforce

Healthcare workers who were furloughed or laid off stand to lose as generous federal unemployment beneifts lapse, but continuing the increased payouts could hurt providers’ finances as it keeps employer-sponsored insurance rolls low.

Congressional leaders and the Trump administration failed to reach a deal to extend additional federal unemployment benefits before their expiration on Friday. That could mean benefit cuts for healthcare workers who are furloughed or laid off. The additional federal benefits were previously set at $600 per week in the CARES Act, which passed in March.

The enhanced benefits meant that health systems and other healthcare providers could furlough or lay off employees knowing they had a cushion of unemployment benefits to buoy them through the worst of the COVID-19 pandemic. But now the more generous benefits are gone, and it’s not clear if, how or when they might be reinstated.

Employment in the healthcare sector has rebounded since April, but hasn’t fully recovered. The unemployment rate in the healthcare and social services sector was 7.2% in June compared with 2.8% in March. An Altarum analysis of the latest federal unemployment data found that hospitals lost 161,000 jobs in March, April and May, and recovered only roughly 7,000 in June. Nursing home and residential care facilities have steadily lost jobs for the past four months.

Around 848,000 people were on temporary layoff in the healthcare and social services sector in June compared with 1.7 million in April, according to the best available Bureau of Labor Statistics Current Population Survey estimates, which are not routinely published by sector due to the limited sample size. For example, Memorial Health System in Illinois in June announced furloughs of 460 employees through Sept. 30.

The workers who will be most impacted by more generous unemployment benefits being cut off are low-wage, low-income healthcare workers who are disproportionately women, said Dr. Atheendar Venkataramani, an assistant professor of medical ethics and health policy at the University of Pennsylvania.

“They will do even worse now that what was once considered a stable job is not there, and there may not enough support for them to face economic challenges,” Venkataramani said.

The expiration of increased federal unemployment benefits could force long-term decision points on both employers and employees, said Ani Turner, the co-director of sustainable health spending strategy at the not-for-profit research and consulting firm Altarum. Employees may be forced to decide to seek other opportunities if they cannot sustainably remain on furlough or temporary layoff, and employers may not be able to bring them back because of the COVID-19 resurgence.

“It’s kind of a double whammy, running out of benefits and that we haven’t been able to get the pandemic under control,” Turner said.

The phenomenon of healthcare workers losing their jobs in the middle of a pandemic illustrates vulnerabilities in the current profit-driven healthcare system, said Wendy Patton, senior project director at the left-leaning think tank Policy Matters Ohio. Patton said that health systems shouldn’t view workers as just another input cost they can cut to make profit goals.

“We are also worried about the current structure, as the healthcare sector looks at workers as a cushion for financial distress,” Patton said.

The major healthcare lobbies have largely stayed silent on unemployment insurance issues. The American Hospital Association has not weighed in on unemployment benefits, a spokesperson said, but has advocated for perks for healthcare workers including hazard pay, tax-free childcare and transportation and education benefits.

For hospitals, keeping supplemental benefits high may be good for their own furloughed workers. But if the benefits are too generous and disincentivize people from returning to work, that means hospitals will see fewer patients on commercial insurance plans that reimburse far more than government programs.

Bon Secours Mercy Health has fewer than 50 people currently furloughed, and the expiration of increased federal unemployment benefits will be a new cost because the system committed to covering the difference between furloughed employees’ former wages and unemployment benefits. However, the health system’s chief human resources officer Joe Gage said he thinks it’s still important for lawmakers to structure benefits to incentivize re-entry into the workforce.

“The best solution for us is to help people get back to work,” Gage said.

Some analyses show that people have lost employer-sponsored healthcare coverage, and that keeping federal unemployment insurance at its CARES Act level may lead to lower employment.

An analysis by the left-leaning Urban Institute and the Robert Wood Johnson Foundation projected that 10.1 million people would lose employer-sponsored health coverage because of the pandemic by the end of 2020.

The Congressional Budget Office published a report on June 4 that estimated if the $600 per week benefits were extended through January 2021, five out of six recipients would make more on unemployment benefits than they would working, and employment would be lower both in the second half of 2020 and the first half of 2021 than it would without such an extension.

However, behind the macro-level economic trend statistics are individuals who will suffer. Buchanan, Ingersoll & Rooney labor and employment attorney Gina Ameci said unemployed or furloughed employees who face a dramatic cut in benefits will face lower living standards, and could face mental health issues with an already burdened healthcare system.

Indeed Hiring Lab economist AnnElizabeth Konkel said many employers are hoping to ride out the pandemic crisis and rehire employees, but with uncertainty of the the coming months looming, some may not be able to hire workers back.

“This is a really really tough time for healthcare workers, and people are going to be feeling a lot of pain in coming weeks,” Konkel said.

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