- Current unemployment rates could leave 5.1 million to 9.8 million Americans uninsured.
- Top 10 states with the highest projected numbers of uninsured are non-expansion Medicaid states.
- Uninsured health care costs could amount to $40 billion or 40% of the designated hospital budget under the Coronavirus Aid, Relief and Economic Security (CARES) Act.
The U.S. Bureau of Labor Statistics announced an unemployment rate of 14.7% for April — a sharp increase of 10% from March levels. With millions of Americans losing their jobs and fearing getting sick with COVID-19, employer-sponsored health insurance is also being lost, and the additional fear of not having health insurance is another mounting worry for many. People filing for unemployment will typically seek health insurance options through Medicaid or health care marketplace plans. Unfortunately, for many unemployed people, the costs of marketplace plans or continuing coverage with COBRA is too expensive with unemployment budgets. Medicaid will be the primary option for the majority of unemployed people. Medicaid is an income-based benefit, which could keep a significant number of people from qualifying and leave them uninsured.
We here at QuoteWizard sought to find the real impact of uninsured rates as unemployment continues to rise during the COVID-19 outbreak. We analyzed Health Management Associates data that looked at uninsured rates under three unemployment scenarios. The data estimates the number of people who will lose employer-sponsored health insurance, who will qualify for Medicaid and who will go uninsured. The estimated number of people in each category is based on unemployment scenarios: low levels of unemployment at 10%, medium levels of unemployment at 17.5% and high levels of unemployment at 25%. Given the current unemployment rate of 14.7%, we’re already near a medium-to-high scenario of 17.5% to 25%. In the medium-to-high unemployment scenario, 5.1 million to 9.8 million Americans could be left uninsured after losing employer-sponsored health insurance. Rankings are based on the total number of potentially uninsured people in each state in a low unemployment scenario.
Unemployment scenarios and uninsured rates
The unfortunate reality of these unemployment scenarios is that those who are left uninsured are those who are not able to qualify for Medicaid. What’s more is Medicaid eligibility in certain states will mean a higher number of uninsured people in different parts of the country. States that did not participate in Medicaid expansion will be hit hardest with uninsured people. Medicaid expansion allows for people to qualify at 138% of the federal poverty line, whereas non-expansion states are typically right at the poverty line.
We found that the top 10 states with the highest numbers of projected uninsured are all non-expansion states. The data suggests there is a correlation between the uninsured and Medicaid eligibility. When only a certain population qualifies for Medicaid and unemployment rises, so does the number of uninsured. The difference between the low 10% scenario and the medium 17.5% scenario accounts for a 55% growth in Medicaid enrollment, while the difference in people losing employer-sponsored coverage is over 98%. The wide gap in the rate of people being eligible for medicaid and the rate of people losing employer-sponsored coverage will cause the uninsured rate to grow exponentially. From a low-to-medium scenario, the number of uninsured goes from 715,000 on the low end up to 5.1 million on the medium end — a growth rate of 625%.
We see in a state like California, which is a Medicaid expansion state, in a low 10% unemployment scenario, there’s enough eligibility for Medicaid to cover the number of people losing employer health insurance. Moving up into the medium 17.5% unemployment scenario, California will start to see the gap in Medicaid eligibility close off and the number of uninsured increase to 179,000. Many of the Medicaid expansion states will be able to have positive gaps in Medicaid eligibility. However, once unemployment exceeds the 17.5% scenario, nearly all states will see their eligibility gaps close and their uninsured numbers grow.
The millions of newly uninsured people will create an economic burden on the health care system. The millions of uninsured people will still receive health care, but the debt burden is left with hospitals and health care services. Congress did enact the CARES Act that designates $100 billion in funding for hospitals and other health care services. Kaiser Family Foundation estimates that health care costs for treating uninsured people could amount to $40 billion. Such a significant portion of the relief funds going towards covering the uninsured could leave other entities of the bill under funded. There’s also the long-term impact of high uninsured rates that lead to an increase in the cost of health care.
Low Unemployment Scenario
Medium Unemployment Scenario
|Rank||State||Uninsured Rate||Low Medicaid||Low Employer Insurance||Low Uninsured||Med Medicaid||Med Employer Insurance||Med Uninsured|