New Urban Institute State-Level Health Coverage Estimates as Unemployment Rises

A new Robert Wood Johnson Foundation study conducted by the Urban Institute estimates the impact of increases in the unemployment rate on health coverage among the non-elderly nationally — including changes in Medicaid/CHIP enrollment and the number of uninsured — and on a state-specific basis.

A variety of scenarios are assessed.  There are three unemployment scenarios with unemployment rates of 15%, 20% and 25%.  There are also two different levels of sensitivity of employer-sponsored insurance to changes in unemployment (base and high scenarios).  For purposes of simplicity, this blog will discuss the 20% unemployment rate base scenario estimates.

Here are some of the notable findings:

  • Medicaid/CHIP will be the key source of coverage for those losing their jobs and employer-sponsored insurance (ESI). Nationally, ESI is estimated to decline by 25.4 million.  Of those losing ESI, 11.8 million (47%) would enroll in Medicaid, 6.2 million (25%) would enroll in marketplace plans and 7.3 million (29%) would end up uninsured.
  • Residents of Medicaid expansion states who lose their ESI will fare much better than those living in non-expansion states. In Medicaid expansion states, 53% of those losing ESI would gain Medicaid coverage, 24% would gain marketplace coverage and 23% would be uninsured.  But in non-expansion states (where the median income eligibility for parents is only 41 percent of the federal poverty line and childless adults are not eligible in nearly all states), only 33% of those losing ESI enroll in Medicaid and 40% end up uninsured.  The percentage enrolling in marketplace plans (26%) in non-expansion states is about the same as in non-expansion states.  The increase in the number of uninsured in non-expansion states (3.5 million) is close to the increase in expansion states (3.8 million) even though total non-elderly population and ESI losses in expansion states is nearly double that of non-expansion states.
  • The overwhelming majority of those losing ESI and becoming uninsured are adults. 74% of people losing ESI are adults but they will constitute nearly 91% of those ending up uninsured.  In comparison, because Medicaid and the Children’s Health Insurance Program (CHIP) cover children at much higher income levels than adults — the median income eligibility for children is 255 percent of the federal poverty line which is considerably higher than adult eligibility levels even in expansion states — children would make up only 9% of the newly uninsured even though 26% of those losing ESI are children.  Of those gaining Medicaid, 58% would be adults and 42% would be children.
  • The increases in Medicaid/CHIP enrollment may be underestimates. That is because the study only examines changes in ESI and the coverage status of those who lose ESI.  It does not estimate movement between other coverage sources including those switching from marketplace plans to Medicaid and CHIP due to reductions in family income.
  • The impact on health coverage from higher unemployment would vary significantly by state. Factors include not only adoption of the Medicaid expansion but also pre-crisis unemployment rates, the relative strength of ESI, the size of marketplace subsidies in the state and the overall pre-crisis number of uninsured.  Table 4 of the study includes state-by-state coverage estimates for the base scenario under each of the 3 unemployment rate scenarios.

Based on these estimates, the Urban Institute researchers make several important conclusions.  First, they note that “…given that jobless rates may reach unprecedented heights under the COVID-19 pandemic, steep increases in Medicaid coverage will strain state budgets, restricting already limited resources in the very communities hardest hit by the crisis.  To help blunt this, current legislation has already enhanced the federal matching rate for Medicaid financing. Still, further increasing the federal matching rate could help provide the critical resources needed to protect the states most in need.”  Second, finally taking up the Medicaid expansion in non-expansion states, enhancing marketplace subsidies and providing COBRA subsidies for former employees could mitigate much of the large increases in the number of uninsured resulting from higher unemployment.  Third, it will be critical to provide sufficient outreach and enrollment efforts to maximize enrollment among those who become newly eligible for Medicaid/CHIP and marketplace subsidies and ensure adequate resources for eligibility systems and workers so they can address the surge in applications.  Finally, they warn that if successful, the lawsuit to overturn the entire Affordable Care Act (which the Supreme Court will consider this fall) would sharply increase the number of uninsured even further.

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