How to Assess Potential COVID-19 Employer-Sponsored Insurance Loss

Coronavirus-related employer-sponsored insurance losses could be loser than initially expected, although it’s still unclear due to a lack of definitive data, according to a report from the Robert Wood Johnson Foundation, in conjunction with the Urban Institute.

“So far, this recession has had the biggest impact on low income workers, who are less likely to have employer insurance,” explained Katherine Hempstead, senior policy adviser at the Robert Wood Johnson Foundation in a press release that HealthPayerIntelligence received by email.

“To understand the relationship between job loss and coverage loss, we need models that account for the characteristics of workers and their families.”

The researchers reviewed four separate studies on the effects that the pandemic’s recession would have on healthcare coverage. Urban Institute conducted two of the studies. Kaiser Family Foundation (KFF) and Families USA conducted the other two.

The Robert Wood Johnson Foundation report was not intended to be a comprehensive literature review. Rather, it homed in on these four studies because they were released relatively early in the pandemic and because they received the most popular and media attention.

There are three main reasons why the studies produced disparate projections.

First, the four studies did not all fully explore how many individuals would lose their employe-sponsored health plan and how many would be driven into uninsurance as a result of the pandemic.

Second, methodologically the studies vary in a few ways including assumptions about coronavirus-related unemployment overall and how long it would take for individuals to completely lose their insurance. Will the results be concurrent with job loss or will coverage loss occur later in the year or beyond that? The studies integrate different perspectives.

Finally, not all of the studies cover every possible healthcare coverage outcome of job loss. Out of the four studies on which the report focused, only one covered every possible insurance transition to observe the pandemic’s effects—the second Urban Institute study.

The first Urban Institute study, published in May 2020, found that, at 15 percent unemployment, nearly 18 million or 30 million Americans could lose their employer-sponsored health plan, depending on two different econometric models. The result would be around 5 million or 8.5 million becoming uninsured.

This study and Urban Institute’s second study gave policymakers timely estimates of how many might enroll in subsidized Medicaid or marketplace plans, something the other studies did not provide.

The KFF study from May 2020 observed unemployment between February and May 2020 and found that about 78 million Americans lived in a household that experienced at least one job loss. As a result, almost 27 million would lose their employer-sponsored health plan, roughly eight in ten of whom would be eligible for subsidized Medicaid or marketplace plans.

The KFF researchers chose not to estimate how many of the eligible unemployed would enroll on a subsidized plan.

The second Urban Institute study, released in July 2020, found that in the final three quarters of 2020 48 million nonelderly Americans would live in a household with at least one instance of coronavirus-related unemployment. This study also highlighted the recession’s impact on low income individuals.

The researchers projected that 10.1 million people would lose employer-sponsored health plans and many would switch into other plans, leaving a little over a third uninsured.

Families USA released its study in July, reporting that 5.4 million more people became uninsured between February and May of 2020. This study does not discuss impact on dependents.

The studies differed in their assumptions around how many people would lose their jobs due to the recession. Some studies did not take into account that some individuals gained employment in March and April 2020.

Furthermore, they differed in their assumptions around who would suffer job loss. By relying on past recession data, two of the studies assumed that the industries and positions suffering unemployment in this crisis would be the same as in past recessions. However, this is not the case, particularly in healthcare coverage status and also due to the widespread furloughs.

One differing assumption remains unclear. The KFF and the second Urban Institute studies come to contrasting estimates around how many dependents to factor in as losing employer-sponsored health insurance due to COVID-19. Meanwhile, Families USA did not include family members in its estimate at all.

The second Urban Institute study was able to identify all possible coverage transitions as well as better identify and adjust the characteristics of those who face unemployment because it leveraged a microsimulation model, as opposed to an econometric model.

The report found the Families USA study to be somewhat misleading in that it proposed a number of individuals that had already lost their employer-sponsored health plan, offering too simplistic an image.

“We do not yet know how many people will lose both their jobs and health insurance coverage during the COVID-19 recession, and definitive data will not be available until next year,” the researchers concluded.

“Early evidence indicates there have not yet been large losses of coverage, suggesting that studies predicting smaller changes in the number of uninsured people may be more accurate than those predicting large increases.”

Ensuring accurate data that considers all of the possibilities as unemployment and loss of employer-sponsored health plans can have widespread societal impacts, such as prompting unemployment in the healthcare industry.