COVID-19 to Impact Employer-Sponsored Health Plans for 3.5M

New analysis paints a bleak picture for millions of workers covered by employer-sponsor health plans due to coronavirus-related layoffs.

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Based on a comparison of recent unemployment insurance claims data from Washington State and historical data from a national population survey, the Economic Policy Institute estimates that 3.5 million workers likely lost their employer-sponsored health plans over the past two weeks, which represents one-third of those having filed for unemployment during this period. A state-by-state breakdown of estimated unemployment insurance claims indicates that California was hardest hit over the closing weeks of March.

Just last week, the research organization reported that initial unemployment claims rose from 282,000 to 3.3 million over one week in March. That figure now exceeds 8.7 million new claims over the last 14 days.

“This scale of job loss will obviously cause huge distress for the affected workers and their families,” write Ben Zipperer and Josh Bivens.

“One aspect of this distress will be the likely loss of employer-provided health insurance (EPHI),” they continue. “Most non-elderly people in the United States who have health insurance get it through their own employer or through the employer-sponsored plan that was available to somebody in their family. When jobs are lost, this primary source of health insurance coverage is also lost.”

The impact of job losses, therefore, extends beyond the 3.5 million workers to their families. Finding coverage is likely to prove “prohibitively costly” as newly unemployed individuals seek alternative health insurance coverage.

The pair of EPI economists emphasize the urgent action is necessary, considering that benefits have now ended with the change of month.  

“Most EPHI plans are monthly, so April 1 (yesterday) is likely the day the bulk of these losses would have happened,” they observe. “Policymakers should think hard about how to help these workers.”

One policy could include allowing a special period for individuals to enroll in plans accessible through federal health insurance exchanges across the country, following the lead of state-run exchanges in nearly a dozen states. “This special enrollment period would make it easier for workers who have lost EPHI to enroll quickly in the ACA exchanges,” Zipperer and Bivens argue.

More ambitious policies are possible but would require many more moving parts:

At a minimum, all COVID-19 related care should be covered by the federal government at no cost to patients. However, we should also think about how to hold harmless workers who lose EPHI due to COVID-19 and then find themselves facing expensive medical bills because of other health ailments that would have been covered by their previous employer plan. A bolder and comprehensive policy would be to extend Medicare and Medicaid to all those suffering job losses during the pandemic period, with the federal government funding this expansion. Finally, we should bolster overall measures to provide relief and spur economic recovery once the epidemic’s economic effects pass.

These findings and recommendations come a day after the Urban Institute warned that increasing unemployment will increase demand for Medicaid coverage in expansion states and a lack of available coverage options for individuals in non-expansion states.

“Depending on what new legislation emerges, many workers will simultaneously lose their health insurance and their ability to earn a living. With the ACA in place, these gaps will be far smaller than they would otherwise be. Though all states will experience severe adverse effects from this crisis, those that expanded Medicaid will be somewhat better positioned to face the difficult months ahead,” concluded the report’s authors.

With a growing body of literature highlighting the economic implications of the coronavirus pandemic, further federal and state action appears necessary to ensure individuals and their families have access to health benefits as the nation works to turn the tide on COVID-19.