27M Americans Could Lose Their Employer-Sponsored Health Plans

Between March 1 and May 2, 2020, around 27 million people became uninsured as a result of losing their jobs and employer-sponsored health plans, a recent Kaiser Family Foundation (KFF) report stated.

This calculation excludes the 19 million individuals who could switch to a family member’s employer-sponsored health plan. Another 1.6 million may have coverage under Medicare or another source to which they will resort after losing their employer-sponsored health plans.

Nearly half of those who become uninsured (12.7 million) are eligible for Medicaid and 79 percent are eligible for subsidies on the ACA exchange.

However, 5.7 million individuals who lose their employer sponsored health plan will not be eligible for an ACA exchange plan because they fall into a coverage gap, are above the family income limit, can depend on a family member’s insurance, or their immigration or citizenship status prohibits it. For over 60 percent of these individuals (3.7 million), the factor making them ineligible for an ACA exchange plan will be that their family income is too high.

Because certain industries have been hit harder than others, including the retail and restaurant industries, populous states where these industries dominate the economy will see the heaviest employment losses. As a result, eight states hold 49 percent of those expected to lose their employer-sponsored health plans.

Long-term healthcare coverage for those who remain unemployed hinges on whether or not an individual’s state has adopted Medicaid expansion. Five of the eight states with the largest employment losses have expanded Medicaid and 40 percent of those who will be eligible for Medicaid after losing their employer-sponsored health plan reside in one of these five states.

Assuming these 27 million individuals remained unemployed, by next January, their unemployment benefits will have ended. At that point, 17 million will be eligible for Medicaid and 6 million will be eligible for exchange subsidies, the KFF researchers estimated.

For non-expansion states, in January 2021, loss of unemployment benefits for the uninsured could cause a migration of around 2.9 million into Medicaid, 2.7 million into subsidized ACA plans, and 1.9 million individuals would end up uninsured in the coverage gap.

There are certain factors that these estimates exclude, the KFF researchers said.

These numbers focus on the people who have already lost insurance and assume that they will remain unemployed and uninsured through January 2021. It does not factor the future for those who become uninsured after May 1 or the outcome if most of these individuals regain their positions or income before January 2021.

Experts anticipate the uninsurance rate will rise in the coming months. Uninsurance rates could potentially hit Great Depression levels of around 20 to 25 percent.

Additionally, according to a separate KFF poll from late April 2020, while 55 percent of the workforce has lost a job or had a cut in income due to the pandemic, 83 percent of the participants said they anticipate that they will return to their previous job, income, or number of hours in six months. This is likely due to the widespread, temporary shut-down, since most respondents stated that their employer had closed temporarily, likely due to the coronavirus pandemic.

Furthermore, the researchers did not estimate enrollment, thus it is unclear how many will remain unenrolled instead of picking a health insurance plan. In recent years, there has usually been a segment of the population that is eligible for public health insurance but remains uninsured. This can be due to regulatory uncertainties, few health plans on local exchanges, lack of exchange plans’ affordability, and other factors.

“This is the first economic downturn during which the ACA will be in place as a safety net for people losing their jobs and health insurance. The Trump Administration is arguing in case before the Supreme Court that the ACA should be overturned; a decision is expected by next Spring. The ACA has gaps, and for many the coverage may be unaffordable. However, without it, many more people would likely end up uninsured as the U.S. heads into a recession,” the researchers warned.