Support for this research was provided by the Robert Wood Johnson Foundation. The views expressed here do not necessarily reflect the views of the Foundation. Unemployment, Health Insurance, and the COVID-19 Recession Anuj Gangopadhyaya and Bowen Garrett Timely Analysis of Immediate Health Policy Issues APRIL 2020 Introduction for many given their reduced income. and the economy, we examine the The sharp reduction in US economic Those losing their jobs and employer- kinds of health insurance unemployed activity associated with public health sponsored health insurance (ESI) would workers have and how coverage efforts to slow the spread of the be able to purchase individual health patterns have shifted over time under the COVID-19 virus is likely to result in insurance (single or family coverage) ACA. Workers who lose their jobs may millions of Americans losing their jobs through the marketplaces established by search for employment or might leave and livelihoods, at least temporarily. the Affordable Care Act (ACA), possibly the labor market entirely. After a while, The global economy is likely already in with access to subsidies (tax credits) unemployed workers searching for jobs recession.1 Economic forecasts suggest depending on their family income. Under may become discouraged and they could that job losses in the second quarter of current law, they must enroll in nongroup also leave the labor market. We compare 2020 could exceed those experienced coverage within 60 days of the qualifying health insurance coverage for working- during the Great Recession.2 Whereas event (e.g., job, income, or coverage age, unemployed adults with that for the monthly U.S. unemployment rate loss) that initiates a special enrollment employed adults and people not in the peaked at 10.0 percent in October 2009, period. labor force across three time periods: Morgan Stanley forecasts unemployment 2008 to 2010 (years during which the to rise to 12.8 percent in the coming Workers who lose their source of income Great Recession unfolded), 2011 to months, and the head of the Federal and access to ESI may also qualify for 2013 (years of economic recovery before Reserve Bank of St. Louis predicts it health insurance through Medicaid. In the implementation of the ACA’s major could rise as high as 30 percent in the 36 states (including DC) that expanded coverage provisions), and 2014 to 2018 second quarter.2,3,4 During the week Medicaid eligibility under the ACA, most (years of prolonged economic expansion ending March 21, 3.3 million workers nondisabled adults in households with and following full ACA implementation). filed initial claims for unemployment income below 138 percent of the federal We also compare coverage patterns insurance, up from 211,000 claims just poverty level (FPL) would qualify for among unemployed people, which vary two weeks earlier.5 Medicaid coverage.6 In the 15 states depending on whether a person’s state that did not expand Medicaid under the of residence expanded Medicaid under Adding insult to injury, many Americans ACA, including large states like Florida the ACA. who lose their jobs during this health and Texas, working-age, nondisabled and economic crisis could also lose adults without dependent children are We find the following: their health insurance. Most workers ineligible for Medicaid.7 Though working- have health insurance coverage age parents are eligible for Medicaid in • Before full implementation of the through their jobs or through a spouse’s all states, the income limits vary widely ACA’s coverage provisions, 46 employer. Workers who lose their jobs across states, ranging from 18 percent of percent of unemployed adults also may be able to retain coverage through FPL (Texas) to 221 percent of FPL (DC). lacked health insurance. As the the Consolidated Omnibus Budget ACA’s coverage provisions took Reconciliation Act (COBRA), but that In anticipation of millions of Americans effect, the likelihood of unemployed requires former employees to pay the losing their jobs and access to ESI, and adults being uninsured dropped full premium (including their employer’s as Congress has just passed a third by 16.4 percentage points, almost prior contribution toward the premium) major piece of legislation to address the entirely because of a rise in and a 2 percent administration fee, which COVID-19 health crisis and mitigate its Medicaid (a 10.9 percentage-point is very expensive and unaffordable necessary but painful effects on families increase) and marketplace/other Unemployment, Health Insurance, and the COVID-19 Recession 1 Timely Analysis of Immediate Health Policy Issues private coverage (3.1 percentage- particularly in Medicaid expansion states. points from the 2011-2013 period to 28.8 point increase). This is the purpose of the Medicaid percent following the 2014 expansion program. However, given that jobless of Medicaid to low-income childless • Nearly one in four working-age rates may reach unprecedented heights adults in 26 states, with additional adults not in the labor force was under the COVID-19 pandemic, steep states following in subsequent years.13 uninsured from 2008 to 2013. After increases in Medicaid coverage will Individually purchased (nongroup) 2014, under full ACA implementation, strain state budgets, restricting already insurance increased under the ACA for about 18 percent of those not in the limited resources in the very communities this population as well, increasing by labor force were uninsured, a 28 hardest hit by the pandemic. To help about 40 percent from a stable 7.2 to percent decrease relative to 2011 blunt this, current legislation has already 7.4 percent from 2008 to 2013 to 10.3 to 2013. Like unemployed people, enhanced the federal matching rate for percent following the establishment people not in the labor force also Medicaid financing. Still, because our of the ACA’s marketplaces, premium saw their uninsurance rate decrease findings indicate that Medicaid coverage subsidies, and cost-sharing reductions due to increases in Medicaid will reach unprecedented heights, further (2014–18). The ESI coverage rate coverage (5.2 percentage points) increasing the federal matching rate among this group is low regardless of the and marketplace/other private could help provide the critical resources period, as expected.14 coverage (2.1 percentage points). needed to protect the states most in need. Altogether, the uninsurance rate for the • Following full ACA implementation, unemployed was stable for the 2008–10 unemployed adults’ uninsurance The Distribution of Health Insurance and 2011–13 periods but fell sharply rates fell sharply in both states that Types by Employment Status and under the ACA coverage reforms, did and did not expand Medicaid. Time Period dropping 16.4 percentage points (35 However, these decreases were Using 2008–18 American Community percent) from the 2011–13 period to the greater in states that expanded Survey (ACS) data, we examine health 2014–18 period. About 85 percent of Medicaid; unemployed adults’ insurance coverage for three groups: the decline in uninsurance among the uninsurance rates dropped by 19.4 (1) those unemployed at the time of unemployed is attributable to increases percentage points (46 percent) from the survey; (2) those who reported they in Medicaid and marketplace/nongroup the 2011–13 period to the 2014– were not in the labor force; and (3) those coverage.15 18 period in expansion states but employed at the time of the survey.8 We dropped by just 11.2 percentage limit our sample to adults ages 19 to 64, People Not in the Labor Force. The points (21 percent) in nonexpansion and we use coverage types reported in second panel of Table 1 shows coverage states. the ACS and edited by the Integrated among adults not in the labor force. This Public Use Microdata Series to improve includes nonelderly adults not looking • From 2014 to 2018, after full ACA comparability of coverage types over for work or who have retired, adults implementation, the unemployed time.9,10 A relatively small number of with disabilities who cannot work, and in Medicaid expansion states were respondents report multiple types of adults who are full-time students. Like most likely to be covered by Medicaid health insurance coverage, and for these the unemployed, people not in the labor (36 percent), whereas unemployed cases we classify coverage type using force tend to have modest incomes. adults in nonexpansion states were the following hierarchy: ESI, Medicare, However, they are more likely to have most likely to be uninsured (43 Medicaid, marketplace or other private a disability and therefore more likely percent). insurance, and other public insurance.11 than other working-age adults to have Table 1 presents health insurance Medicaid (and Medicare) coverage in any Our findings indicate that though coverage types among nonelderly adults of the three study periods.16 Also like the joblessness will likely affect uninsurance by employment status. unemployed, this population’s Medicaid rates throughout the country, states that enrollment increased significantly from did not expand Medicaid under the ACA The Unemployed. The top panel of 16.7 to 18.1 percent in the periods before will see larger increases in uninsurance Table 1 presents changes in coverage 2014 to 23.3 percent in the ACA eligibility if current policy fails to adapt. Proposed types and uninsurance rates among the expansion period (2014–18)—a roughly policy recommendations such as unemployed. During and shortly after the 30 percent increase (5.2 percentage temporary Medicaid expansions, Great Recession, the number of working- points). With the establishment of the expanding eligibility for subsidies for age unemployed adults ranged from ACA marketplaces and associated marketplace coverage, and providing 12.5 to 13.4 million and fell to 8.4 million premium subsidies, individually subsidies for COBRA benefits could help by the 2014–18 period.12 Among the purchased insurance coverage also mitigate the rise in uninsurance driven by unemployed, Medicaid coverage rates increased for this population, growing by the pandemic’s effects on the economy.