Health Insurance Coverage Policies As America Recovers From COVID-19

This issue brief contains a correction.

One year ago this month, the first wave of COVID-19 cases in the United States led to widespread job loss throughout the country. Early in the pandemic, there was serious concern that the impact of these job losses would lead millions of workers to lose job-based health insurance coverage, causing a dramatic spike in uninsurance.

Evidence to date suggests that the number of uninsured people has not risen as great as initially feared. Although the number of jobs in the United States remains about 9.5 million below pre-pandemic levels, workers in the industries that were most affected by the pandemic’s economic damage tended not to have job-based coverage, to begin with. Some of the estimated 3 million people who lost job-based coverage in 2020 gained other forms of coverage through public programs, including Medicaid and the Children’s Health Insurance Program (CHIP), and through the health insurance marketplaces established by the Affordable Care Act (ACA).

While total coverage losses were not as significant as projected last spring, federal action is needed to fill coverage gaps for the tens of millions of uninsured Americans and improve protection against medical costs for families facing the financial strain of the pandemic. This issue brief describes the extent of coverage loss during the COVID-19 pandemic, outlines the evidence for why the uninsured population did not increase as dramatically as expected and explains how the American Rescue Plan — the stimulus bill that President Joe Biden is expected to sign this week — will alleviate uninsurance and underinsurance as the United States climbs out of the coronavirus crisis.

What happened to coverage during the pandemic?

Following the passing of the ACA in 2010, 20 million Americans got access to health insurance. The most significant increase in coverage occurred in 2014 when the law’s provisions extending Medicaid and opening the health insurance exchanges took full effect. During Trump’s presidency, this trend reversed, with the uninsured rate among the working-age population rising from an estimated 10.0 percent in 2016 to 10.9 percent in 2019. The COVID-19 epidemic and subsequent recession could worsen these coverage losses.
During the Great Recession, the uninsured rate among the working-age population reached 18.2 percent, the highest level in decades.

In 2010, 60 million people reported being uninsured at some point in the previous year. Many analysts worried early in the pandemic that the high levels of job loss might lead to a similar increase in uninsurance. In their May 2020 research, the Economic Policy Institute estimated that more than 16 million workers had lost employer-sponsored insurance (ESI) due to job loss, while the Urban Institute predicted that 5 million to 9.5 million workers might become uninsured.
Recent studies, on the other hand, have revealed a lesser — though still significant — loss of employer-sponsored coverage and a smaller net rise in uninsurance. According to data from the U.S. Census Bureau’s Household Pulse Survey, approximately 3.3 million people lost employer-sponsored coverage by mid-2020, while the number of uninsured climbed by 1.9 million, according to an Urban Institute estimate. 10 The same study discovered that Hispanic and non-Hispanic Asian individuals had the most considerable reductions in ESI coverage, as well as a rise in the uninsured rate of approximately 4 percentage points among Hispanic adults. Separately, according to a Kaiser Family Foundation examination of insurer administrative data, about 2 million to 3 million fewer people will have ESI by September 2020.

While the lower-than-expected number of workers losing health coverage during the coronavirus epidemic may appear to be good news, there are several reasons why the number of uninsured in the United States did not rise as much. Among them are the following: Many of the laid-off workers did not have coverage via their employer, and Americans who lost health insurance during the epidemic were able to obtain coverage through Medicaid or buy coverage on their own through the ACA marketplaces. Because of the ACA’s Medicaid expansion, the creation of markets, and safeguards for preexisting conditions, Americans now have many more options than they did before the Great Recession.

Furthermore, the net change in the uninsured population does not account for changes in the kind of coverage or how the economic effect of the pandemic affects households’ ability to afford out-of-pocket costs.

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Author: Rechelle D. Barbato