By the end of April, the company operating the fitness center, Active Wellness, eliminated his health insurance. And in July, he was laid off when it became clear the center where he worked would be closed through 2020. Most of the small company’s gyms are still shuttered.
Losing coverage in the middle of the coronavirus crisis, as millions of other Americans have, was like “going into this thunderstorm without an umbrella,” Mr. Fritz recalled. Active Wellness put him in touch with an insurance broker, which helped him and his husband sign up for a plan under the Affordable Care Act.
For people like Mr. Fritz, as well as those who qualify for Medicaid under the law, “there is still a safety net that wasn’t there 10 years ago,” said Sara R. Collins, a vice president at the Commonwealth Fund.
But that net is already fraying, with thousands of small businesses that had always expressed difficulty in providing employee health insurance under Obamacare now in far worse trouble because of the pandemic.
Hopes have also dimmed for another federal aid package before the presidential election.
Not only are businesses shedding workers, with the nation’s unemployed numbering roughly 13.6 million, but employers are also cutting expenses like health coverage, and projections of rising numbers of uninsured have grown bleak.
Tens of millions of people could lose their job-based insurance by the end of the year, said Stan Dorn, the director of the National Center for Coverage Innovation at Families USA, the Washington, D.C., consumer group. “The odds are we are on track to have the largest coverage losses in our history,” he said.
While estimates vary, a recent Urban Institute analysis of census data says at least three million Americans have already lost job-based coverage, and a separate analysis from Avalere Health predicts some 12 million will lose it by the end of this year. Both studies highlight the disproportionate effect on Black and Hispanic workers.
“There is this expectation that we are going to see big losses in employer-based coverage,” Ms. Collins said.
Many businesses have tried to keep their workers insured during the pandemic. Employers relied on government aid, including the Paycheck Protection Program authorized by Congress to ease the economic fallout, to pay for premiums through the spring and summer.
Government funding appears to have “prevented the economic crisis from becoming a coverage crisis right away,” said Leemore S. Dafny, a professor at Harvard Business School and one of the authors of a report last month looking at the pandemic’s effect on small business.
Describing those employers as “the proverbial canary in the coal mine,” the researchers say there could be significant coverage losses if insurers and lawmakers fail to act in the coming months. Nearly a third of small businesses surveyed in late June said they were not sure they could keep paying premiums beyond August, according to the report.
“We will probably really start to see it during renewal time, November and December,” said Mark Hall, the director of health law and policy at Wake Forest University. “That will be when the money really dries up.”
For many of these companies, insuring their workers has become increasingly difficult.
Aaron Seyedian closed his housecleaning business, Well-Paid Maids in Washington, D.C., for four and a half months before reopening in early August. Even when his employees weren’t working, he paid $5,000 a month toward their health insurance, including vision and dental. “I didn’t think the right thing to do was to kick my employees off the plan during a pandemic,” he said.
He used some federal aid to cover those expenses, but he still owes nearly $14,000 in back premiums to the company’s insurer, CareFirst. He had been given a small discount off one month’s premiums.
The District of Columbia’s insurance department, and some states, have provided some relief to businesses in situations like Mr. Seyedian’s. It permits them to defer missed payments for up to a year during the coronavirus public health emergency. “I don’t know how we’re going to pay them next summer,” he said of back premiums.
Health insurers, whose profits have soared as people stayed away from hospitals and doctors, have been stingy in offering businesses much in the way of breaks, according to the Harvard report. Just 14 percent of the companies said they received premium credits or a longer grace period.
The insurance companies insist they are providing refunds to their customers, but some business owners say they have had more luck with their landlords or the electric company than their health insurer. “When I contacted our insurance agencies, you can negotiate a lot, but you really can’t negotiate health insurance,” said Gary Novotny, who owns Gary Michaels Clothiers in Lincoln, Neb., a small retailer whose sales are down by about half. “No matter what it costs, you have to have it.”
The first check Neil Abramson wrote after receiving his federal loan was to his local Blue Cross plan. Although he furloughed the people working at his group of consignment stores in Leominster, Mass., he continued their insurance.
“You don’t need not to have your health insurance in the middle of the pandemic,” he said, describing his employees as like family. “Are you going to tell your sister that you are going to cancel your insurance because you don’t have the money?”
Small businesses are traditionally the least able to afford health benefits for their employees. While nearly all large companies offer insurance to their employees, only 56 percent of firms with fewer than 200 employees provide coverage, according to the most recent survey by the Kaiser Family Foundation.
“Health insurance is an enormous cost for small businesses,” said Amanda Ballantyne, the executive director of the Main Street Alliance, an advocacy group for small businesses. “It continues to be even after the passage of the Affordable Care Act.”
Many businesses say they need Congress to provide more money, and health insurers say they support federal efforts to help employers continue their coverage. “We believe Congress should provide temporary subsidies or direct financial assistance for employers to protect the health and financial stability of hard-working Americans,” said Justine Handelman, a senior vice president at the Blue Cross Blue Shield Association, which represents the nation’s Blue Cross plans.
Under the Affordable Care Act, insurers must return the excess profits if they do not spend at least 80 or 85 cents out of every dollar in premiums on customers’ health care. But even that provision strikes some as inadequate, given the current circumstances and the timing of the potential rebates.
“We are in the middle of a once-in-a-century health and economic crisis, and it will take everyone stepping up to do their part to get us past it — including health insurance companies,” said Representative Lauren Underwood, a Democrat from Illinois.
Dave Piersall, the owner of Lake Marine & RV, a boating business in Woodstock, Ill., used some of his federal aid on the $7,400-a-month insurance bill to cover his employees. “We came within inches of being canceled,” he said.
Although his business has rebounded as people have bought boats to help them cope with staying home, he worries about the coming cold weather. “I would be lying if I didn’t say winter is a scary time for the boat business,” Mr. Piersall said. “The health care is the biggest concern.”
And as hard as he is trying to maintain insurance for everyone, he is also concerned about efforts to do away with Obamacare. He was uninsured for a year and a half after leaving a corporate job to start the business before he could enroll in an A.C.A. plan that covered his Crohn’s disease.