Refuge in the Storm? ACA’s Role as Safety Net Is Tested by COVID Recession

The Affordable Care Act, facing its first test during a deep recession, is providing a refuge for some — but by no means all — people who have lost health coverage as the economy has been battered by the coronavirus pandemic.

New studies, from both federal and private research groups, generally indicate that when the country marked precipitous job losses from March to May — with more than 25 million people forced out of work — the loss of health insurance was less dramatic.

That’s partly because large numbers of mostly low-income workers who lost employment during the crisis were in jobs that already did not provide health insurance. It helped that many employers chose to leave furloughed and temporarily laid-off workers on the company insurance plan.

And others who lost health benefits along with their job immediately sought alternatives, such as coverage through a spouse’s or parent’s job, Medicaid or plans offered on the state-based ACA marketplaces.

From June to September, however, things weren’t as rosy. Even as the unemployment rate declined from 14.7% in April to 8.4% in August, many temporary job losses became permanent, some people who found a new job didn’t get one that came with health insurance, and others just couldn’t afford coverage.

The upshot, studies indicate, is that even with the new options and expanded safety net created by the ACA, by the end of summer a record number of people were poised to become newly uninsured.

What’s more, those losses could deepen in the months ahead, and into 2021, if the economy doesn’t improve and Congress offers no further assistance, health policy experts and insurers say.

“It’s a very fluid situation,” said Sara Collins, vice president for health care coverage and access at the Commonwealth Fund, a New York-based health research group. “The ACA provides an important cushion, but we don’t know how much of one yet, since this is first real test of the law as a safety net in a serious recession.”

Collins also noted that accurately tracking health insurance coverage and shifts is difficult in the best of times; amid an economic meltdown, it becomes even more precarious.

Coverage Was Already on the Decline

Some 20 million people gained coverage between 2010 and 2016 under the ACA’s expansion of Medicaid and its insurance marketplaces for people without employer-based coverage. A gradually booming economy after the 2008-2009 recession also helped. The percentage of the population without health insurance declined from about 15% in 2010 to 8.8% in 2016.

But then, even as the economy continued to grow after 2016, coverage began to decline when the Trump administration and some Republican-led states took steps that undermined the law’s main aim: to expand coverage.

In 2018, 1.9 million people joined the ranks of the uninsured, and the Census Bureau reported earlier this month that an additional 1 million Americans lost coverage in 2019.

The accelerating decline is helping fuel anxiety over the fate of the ACA in the wake of the death of Supreme Court Justice Ruth Bader Ginsburg. The high court is scheduled to hear a case in November brought by Republican state officials, and supported by the Trump administration, that seeks to nullify the entire law.

In July, researchers at the Urban Institute, a Washington, D.C., think tank, forecast that around 10 million workers and their dependents would lose employer coverage in 2020. But they estimated that two-thirds of them will have found new coverage by year’s end — leaving about 3.3 million uninsured.

A more recent Urban Institute report, released Sept. 18, and using 2020 data from the Census Bureau, calculated that of the roughly 3 million people under age 65 who had lost job-based insurance between May and July, 1.4 million found coverage elsewhere — most through Medicaid — and 1.9 million became newly uninsured. Notably, 2.2 million of those who lost their coverage were between 18 and 39 years old; 1.6 million were Hispanic.

Another recent study, using different methods, reported higher numbers for the same period. The analysis released by the Economic Policy Institute last month determined that between April and July 6.2 million people lost employer coverage. The authors didn’t calculate how many found alternative coverage via Medicaid or the ACA, however.

Other findings support the notion that the health insurance loss trend shifted by mid summer. KFF, for example, published an analysis Sept. 11 showing that most companies that offered coverage to begin with chose to continue insuring furloughed and temporarily laid-off workers between March and the end of June. But as the virus continued to batter the economy, employers moved to permanently shed those jobs. (KHN is an editorially independent program of KFF.)

“The issue now is that the temporary layoffs have greatly decreased and permanent job losses, including jobs that came with health coverage, are increasing,” said Cynthia Cox, a KFF vice president and director for the Program on the ACA.

Many low-income workers who lose their jobs and don’t have coverage through a spouse or parent turn to Medicaid, the federal-state health program for low-income people. The Centers for Medicare & Medicaid Services reported last week that enrollment in Medicaid and the Children’s Health Insurance Program grew by 4 million between February and June, a nearly 6% increase since the beginning of the coronavirus crisis.

The Impact of the Marketplaces

Gains and losses of coverage in the ACA marketplace are not yet clear, experts say. The Trump administration issued a report in June indicating that 487,000 people had, between January and June, enrolled in an ACA plan via the federal website, healthcare.gov. But that report failed to say how many people dropped an ACA plan in that period — for example, because they could no longer afford the premiums.

A study by Avalere, a health research and consulting firm in Washington, D.C., has estimated that enrollment in the ACA marketplaces since March could have swelled by around 1 million. That includes new enrollees in the 13 ACA marketplaces that states, plus the District of Columbia, operate. Many of those states held a “special enrollment period” when the pandemic hit. Healthcare.gov, run by the Trump administration, did not offer a special enrollment period.

About 11 million were enrolled in an ACA plan in February. Open enrollment for coverage that would start on Jan. 1, 2021, begins Nov. 1.

Jessica Banthin, a senior health policy researcher at the Urban Institute and until 2019 deputy director for health at the Congressional Budget Office, said it’s anyone’s guess how many people who lost their job-based coverage this year will choose this option. She said numerous factors will influence people’s health insurance decisions this fall, and into 2021.

Chief among them is gauging whether they might soon get a new job, or get back an old job, that offers insurance. That may hold some people back from enrolling in an ACA plan this fall, Banthin said. Plus, buying insurance may be too expensive, especially for families more concerned with paying for housing, food and child care while going without a paycheck.

“Health insurance may not be their immediate concern,” Banthin said. “Many people’s lives have been disrupted as never before. There’s a lot of trauma out there.”

Collins of the Commonwealth Fund said that, even before the pandemic, a growing proportion of families were vulnerable to loss of coverage and care.

In a survey of more than 4,000 adults early this year, Collins and colleagues found a “persistent vulnerability among working-age adults in their ability to afford coverage and health care that could worsen if the economic downturn continues.”

In large part, that’s because 1 in 5 respondents who had coverage were “underinsured.” Underinsurance reflects the extent to which coverage leaves people at risk of high out-of-pocket costs — a situation exacerbated by widespread job loss.

“Now is absolutely not be the time for the ACA to be further undermined, let alone killed outright,” said Stan Dorn, director of the National Center for Coverage Innovation at Families USA.

Kaiser Health News (KHN) is a national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation which is not affiliated with Kaiser Permanente.

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