How COVID-19 Impacted Employer-Sponsored Health Plan Coverage

In 2020, the prevalence of employer-sponsored health plan coverage fell during the coronavirus pandemic even as employment rebounded, according to a recent study published in the JAMA Health Forum.

Researchers used the US Census Bureau’s 2020 Household Pulse Survey to make their analyses. The US Census Bureau conducted the survey weekly or every two weeks starting in late April 2020. Each week, the survey sampled between 40,000 and 130,000 Americans, 18 to 64 years old.

The unemployment rate dropped over the course of 2020. However, employer-sponsored healthcare coverage increased instead of decreasing alongside the unemployment rate.

Over the course of the study period from spring into summer 2020, the overall insurance coverage rate dropped 0.11 percentage points per week. 

In particular, the researchers noted that the shrinking coverage rate was most pronounced in states that had not adopted Medicaid expansion. There, the employer-sponsored insurance rate declined 0.32 percentage points per week and overall insurance coverage rates dropped by 0.23 percentage points per week.

Middle-aged individuals between the ages of 27 and 50 experienced the most coverage loss during the beginning of the survey period. Hispanic individuals and low-income Americans also suffered a high rate of coverage loss.

However, the decrease partially stabilized in the fall and winter of 2020. Employer-sponsored health insurance coverage continued to see a decline, however, it was not as significant as in previous weeks.

“Because ESI declined throughout the 2 study time periods, a time during which employment was increasing, the results suggest either that ESI declines lagged job loss or that people who returned to work did not necessarily recover their employer-sponsored coverage,” the researchers explained.

However, as employer-sponsored coverage decreased, enrollment in types of health insurance that were not sponsored by employers rose. These increases offset the impact of lost employer-sponsored coverage, particularly later on in 2020 after the initial spike of unemployment. 

The researchers posited that the delayed uptick in enrollment in forms of coverage other than employer-sponsored health plans may be due to uncertainty around length of unemployment, uncertainty about what alternative coverage options were available, and the impetus of a surge in coronavirus cases in the winter of 2020.

Public payer options proved more popular alternatives to employer-sponsored health plans than private payer alternatives such as COBRA coverage. Cost may have been a barrier to adopting COBRA and exchange coverage, particularly for those who did not qualify for subsidies.

The researchers also differentiated between the coverage and employment trends of the Great Recession of 2007 through 2009 and the coronavirus pandemic’s impact. The Great Recession witnessed less of a surge in public payer enrollment because of the demographic that the Recession impacted and the more limited availability of Medicaid and subsidized coverage.

Like other recent research, the study found that the coronavirus pandemic widened racial coverage disparities.

Before the American Rescue Plan Act passed in 2021 and delivered a boost to Affordable Care Act marketplace enrollment, the coronavirus pandemic stalled enrollment on the exchange. After 2016, only five states saw improvement in their uninsurance levels and in 22 states uninsurance worsened.

In 2020, one of the biggest unknowns related to coverage levels and the impact of the coronavirus pandemic was how the coronavirus pandemic would influence employer-sponsored health insurance. Various studies came to different conclusions on this subject. 

Researchers realized that they had not taken into account the demographics that the pandemic affected. The crisis had the greatest economic impact on low-income workers who may not have had employer-sponsored healthcare coverage even before the pandemic struck. 

It became clear that the full impact of the pandemic on coverage would not become clear until researchers had access to more data in 2021.

In 2021, the data forms a clearer picture. Employer-sponsored healthcare coverage declined even as employment levels recovered, potentially indicating a shift to Affordable Care Act marketplace or Medicaid plans.