Recession could lead tens of millions to lose health insurance

By now, just about everyone has seen the headlines: The recession brought on by the novel coronavirus pandemic has already resulted in tens of millions of Americans losing their jobs. In addition, experts largely agree that more economic pain is likely on the way before things start to get better. Given the vast majority of people who have health insurance in the U.S. receive their coverage through an employer, the mass job losses will lead to millions losing coverage in the middle of an international health crisis as well.

At this time, it is difficult to project how many people could end up having their health insurance coverage affected by the downturn, but the number is likely to be substantial. The current unemployment rate is hovering in the 15% range, and data from the Robert Wood Johnson Foundation estimates that, should the rate hit 20% – which is largely considered a likely outcome – there will be a large number of people who are shuffled off employer-sponsored coverage and have to look elsewhere.

For instance, with Medicaid having been expanded in many states across the country in recent years, more than half of workers who lose their jobs in those states are likely to be caught by that safety net. That number slips to about 1 in 3 for the states that have not expanded Medicaid. Notably, fewer than 1 in 4 who become unemployed will become totally uninsured, but that could still lead somewhere between 25 million and 43 million people losing their health insurance, either provided by themselves or a member of their household.

Millions could lose health insurance nationwide in the months ahead.

The current situation
At this point, though, about 1 in every 10 people under the age of 65 (that is, not eligible for Medicare) had lost their employer-sponsored coverage as of mid-May, amounting to roughly 16.2 million total, per estimates from the Economic Policy Institute. Perhaps not surprisingly, the distribution of these trends – both unemployment filings and loss of coverage as a result of loss of employment – varies considerably by region and industry.

For instance, an estimated 50% of workers in the hospitality and food service industry who previously received coverage through their job have now lost it, compared with slightly more than 4% of such workers in the finance and insurance sectors.

Meanwhile, Georgia, for instance, has seen job losses that resulted in coverage loss make up the largest share of total unemployment filings in the state – 41%, slightly ahead of Kentucky, Michigan and Connecticut, which are all north of 36.8%. At the same time, Utah and South Dakota led the nation in smallest share of simultaneous job and insurance losses, at just 10% of all unemployment filings.

Potential future problems
As a result of the wave of unemployment filings, it's also worth noting that even states that may not appear to be hard-hit actually could end up being deeply affected. New Hampshire Business Review noted that many workers in the Granite State who have lost their jobs will likely be able to turn to the Healthcare.gov marketplace (the state does not operate its own exchange) for coverage after filing for unemployment. Many of their counterparts in other states will be in the same boat.

However, many insurers there are hesitant to make any projections about the long-term affordability of coverage in the market simply because so much is up in the air at present. Only about 1 in 4 people in the state – which has one of the oldest average ages in the country, around 43 years old – receive coverage through Medicare or Medicaid, and 56% or so receive it through an employer. Some underwriters are allowing laid-off employees to keep their coverage for varying periods of time, but the future is difficult for all involved to predict.

The outlook for workers
Even beyond the fact that these people are losing their jobs by the millions, the downturn is likely to have large-scale effects on workers' lives for some time to come. The National Bureau of Economic Research estimates that more than 2 in 5 of the jobs lost as a result of this “shock” downturn are not coming back. Moreover, it's predicted that even those which are likely to return at some point will do so slowly, as the economic recovery from this global pandemic is expected to be drawn out, perhaps beyond 2021.

As a consequence of all these difficulties, it's vital for insurers to do more to connect with consumers – whether they lost their jobs or remained employed – to give them the full picture of what coverage will look like for the remainder of 2020 and beyond. The more that's done to foster understanding, the better off all involved are likely to be.