Medicaid Expansion States May See Lower Uninsurance Amid COVID-19

As national unemployment mounts closer to historic levels, Medicaid expansion states will fare the surging uninsurance far better than nonexpansion states, according to a recent report from the Urban Institute.

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“With historic levels of joblessness around the corner, millions of workers and their families are about to lose their employer coverage,” said Katherine Hempstead, senior policy adviser at the Robert Wood Johnson Foundation, in a press release HealthPayerIntelligence received by email. “Our safety net is about to be tested, and it’s going to work a lot better in states that expanded Medicaid.”

Before the coronavirus outbreak, most Americans obtained their health insurance through their employers. As states continue their lockdowns, businesses are closing and the unemployed or furloughed are losing access to healthcare coverage.

Unemployment could hit 15 to 20 percent by June 2020, according to the Urban Institute’s estimates and corroborated by recent numbers from JP Morgan.

The researchers considered three separate scenarios in which the unemployment rate rises to 15 percent, 20 percent, and 25 percent. For each scenario, they provided a base estimate and a reach estimate to account for the significant unknowns of these circumstances. At 20 percent unemployment, for example, a baseline of 25 million to a reach of 43 million people could lose their employer-sponsored health plan coverage.

Of those individuals, in a conservative estimate 12 million will join Medicaid. For comparison, MACPac estimated that 14.7 million people joined Medicaid over the course of six years from 2013 to 2019.

Nearly 30 percent will become uninsured, in the Urban Institute’s conservative estimate, most of whom are adults (91 percent).

The researchers drew a distinction between the impact in states that have expanded Medicaid as opposed to the 15 states that have not engaged in Medicaid expansion. Medicaid expansion states have lower uninsured rates than nonexpansion states, the report pointed out.

In Medicaid expansion states in a base case scenario at 20 percent unemployment, experts found that of those who lost their employer-sponsored health plan:

• 9 million, or over half, would enroll in Medicaid in the base estimate
• 15.4 million, or 54 percent, would enroll in Medicaid in the reach estimate
• 4 million, or under 25 percent, would become uninsured in the base estimate
• 6.3 million would become uninsured in the reach estimate

In comparison, at 20 percent unemployment, states that chose not to expand their Medicaid programs could see:

• 3 million, or one third, would obtain coverage through Medicaid in the base estimate
• 5 million would obtain coverage through Medicaid in the reach estimate
• 3.5 million, or 40 percent, would become uninsured in the base estimate
• 6 million would become uninsured in the reach estimate

“Though our estimation approach is designed to capture differences in coverage patterns across states after ACA implementation, some uncertainty surrounds what share of workers losing ESI would gain other coverage or become uninsured,” the researchers admitted.

Education about Medicaid and overwhelmed state Medicaid programs could present barriers to accessing coverage, resulting in underestimated uninsurance rates. But especially among those with dependents, motivation may be high to overcome barriers and find coverage, leading to lower than expected uninsurance.

The Urban Institute offered policy recommendations so that states could cushion the impact of escalating unemployment.

The researchers recommended that states adopt temporary or permanent Medicaid expansion to prevent widespread uninsurance. Urban Institute experts suggested expanding eligibility guidelines for ACA exchange plans.

Additionally, states could tie subsidies to COBRA benefits, which unemployed individuals can receive. The idea is not novel. Some health plans have already recommended this move to Congress and Urban Institute itself made this suggestion in early April when the true impacts of coronavirus on employment and coverage became clear.

Lastly, Urban Institute suggested expanding the federal matching rate for Medicaid, another commonly cited injunction. Medicaid programs will need the extra funding for the influx of enrollees, the experts explained.

In addition to these recommendations, the researchers pointed out some gaps in legislation. Namely, they recognized the need for coronavirus treatment coverage for the uninsured—something that has been absent from all legislation thus far.

The report emphasized the need for boosted marketing so that those who are eligible for Medicaid are aware. Also, opening a special enrollment program that does not take into account prior insurance status would especially help those who did not have insurance prior to the coronavirus pandemic.

The report emphasized the importance of the Supreme Court’s pending decision on California v. Texas and found the ACA federal and state health insurance marketplaces to be critical in the coronavirus response.

While most of the recommendations were not novel, they underscored researchers’ unity on a couple of key strategies.