COVID-19 Unemployment and the Impact on Uninsured Rates

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.

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 underfunded. There’s also the long-term impact of high uninsured rates that lead to an increase in the cost of health care.

Uninsured rates by state

			Low Unemployment Scenario			Medium Unemployment Scenario
Rank	State	Uninsured Rate	Low Medicaid	Low Employer Insurance	Low Uninsured	Med Medicaid	Med Employer Insurance	Med Uninsured
1	Texas	18%	716,000	-972,000	243,000	1,089,000	-1,952,000	784,000
2	Florida	13%	513,000	-646,000	177,000	778,000	-1,315,000	589,000
3	Georgia	14%	265,000	-374,000	101,000	406,000	-753,000	312,000
4	North Carolina	11%	273,000	-370,000	98,000	411,000	-744,000	311,000
5	Missouri	9%	153,000	-243,000	82,000	244,000	-491,000	222,000
6	Wisconsin	6%	151,000	-239,000	77,000	234,000	-476,000	212,000
7	Tennessee	10%	188,000	-241,000	56,000	277,000	-485,000	195,000
8	Alabama	10%	132,000	-180,000	47,000	200,000	-363,000	151,000
9	Kansas	9%	75,000	-123,000	45,000	122,000	-248,000	116,000
10	South Carolina	10%	136,000	-179,000	44,000	204,000	-360,000	148,000
11	Virginia	9%	258,000	-316,000	37,000	448,000	-636,000	132,000
12	Utah	9%	121,000	-160,000	33,000	224,000	-326,000	86,000
13	Mississippi	12%	87,000	-107,000	21,000	127,000	-216,000	82,000
14	South Dakota	9%	22,000	-35,000	14,000	35,000	-71,000	36,000
15	Indiana	8%	241,000	-273,000	12,000	401,000	-549,000	92,000
16	New Jersey	7%	279,000	-320,000	10,000	454,000	-634,000	101,000
17	Nebraska	8%	66,000	-81,000	10,000	115,000	-163,000	35,000
18	Wyoming	11%	13,000	-25,000	10,000	22,000	-50,000	25,000
19	Minnesota	4%	195,000	-222,000	8,000	317,000	-438,000	74,000
20	Pennsylvania	6%	459,000	-493,000	6,000	737,000	-974,000	150,000
21	Illinois	7%	452,000	-487,000	5,000	729,000	-966,000	149,000
22	Idaho	11%	64,000	-69,000	5,000	109,000	-140,000	27,000
23	New Hampshire	5%	43,000	-54,000	5,000	73,000	-108,000	21,000
24	North Dakota	8%	23,000	-30,000	5,000	41,000	-61,000	14,000
25	Iowa	5%	115,000	-128,000	4,000	187,000	-255,000	42,000
26	Maine	8%	41,000	-45,000	2,000	69,000	-91,000	15,000
27	Oklahoma	14%	135,000	-141,000	1,000	223,000	-286,000	42,000
28	Hawaii	4%	44,000	-51,000	1,000	72,000	-102,000	16,000
29	Maryland	6%	197,000	-215,000	0	312,000	-421,000	61,000
30	Colorado	8%	193,000	-204,000	0	309,000	-402,000	60,000
31	Vermont	4%	24,000	-24,000	0	37,000	-46,000	7,000
32	Connecticut	5%	124,000	-130,000	-1,000	194,000	-253,000	36,000
33	Rhode Island	4%	38,000	-39,000	-1,000	60,000	-77,000	11,000
34	Montana	8%	39,000	-37,000	-1,000	61,000	-74,000	10,000
35	Delaware	6%	35,000	-36,000	-1,000	55,000	-71,000	9,000
36	Alaska	12%	26,000	-25,000	-1,000	39,000	-49,000	6,000
37	Nevada	11%	100,000	-104,000	-4,000	160,000	-210,000	25,000
38	Ohio	6%	425,000	-450,000	-5,000	679,000	-890,000	124,000
39	Michigan	5%	377,000	-389,000	-6,000	599,000	-774,000	110,000
40	Massachusetts	3%	251,000	-256,000	-6,000	387,000	-497,000	70,000
41	West Virginia	6%	69,000	-65,000	-7,000	105,000	-128,000	11,000
42	Oregon	7%	149,000	-145,000	-9,000	232,000	-286,000	33,000
43	Washington	7%	256,000	-259,000	-15,000	395,000	-509,000	58,000
44	Arkansas	8%	114,000	-99,000	-16,000	171,000	-196,000	12,000
45	Kentucky	6%	173,000	-162,000	-18,000	264,000	-320,000	29,000
46	New Mexico	9%	85,000	-62,000	-20,000	118,000	-119,000	-4,000
47	Arizona	11%	250,000	-235,000	-21,000	386,000	-467,000	45,000
48	Louisiana	8%	184,000	-150,000	-33,000	269,000	-295,000	10,000
49	New York	5%	719,000	-658,000	-83,000	1,068,000	-1,274,000	103,000
50	California	7%	1,484,000	-1,301,000	-196,000	2,211,000	-2,555,000	179,000

Study methodology

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.

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