As the global pandemic shutters businesses across the country, about 33 million workers have filed for unemployment insurance in the past six weeks. Millions of those filers will find themselves not only without a job, but also without health insurance; one recent study projected that 25–43 million people could lose their existing job-based insurance due to COVID-19. And people who were already uninsured will now have even fewer resources to pay for health care costs.
In most states, Medicaid will be available to many people who lose jobs due to COVID-19 and fall into poverty, regardless of whether they were previously uninsured. But in states that have not expanded Medicaid, millions of newly unemployed people will not have that option, and as many as 2 million newly unemployed people may be in the “Medicaid gap.”
A New, but Fractured, Safety Net
For the first time during a recession, the Medicaid expansion that was part of the Affordable Care Act (ACA), combined with discounts (premium tax credits) for low- and moderate-income families to buy coverage on insurance marketplaces, will provide a significant safety net for millions of workers.
Those who lose insurance when they lose their jobs will qualify for a special enrollment period (SEP) to sign up for coverage, and many will qualify for deep discounts. Those who lose their jobs but did not have insurance to begin with will only qualify for a SEP in the twelve states that run their own insurance marketplaces; the federal government has not provided such an opportunity in the rest of the states that rely on healthcare.gov. Critically, those who earn below the poverty line will not qualify for discounts, but instead will qualify for Medicaid—but generally only if their states have expanded their Medicaid program. Otherwise, they will only qualify if they meet certain categorical eligibility requirements (for example, if they are pregnant or have young children, and live in deep poverty).
When the Supreme Court held in NFIB v. Sebelius that Congress could not mandate that states expand Medicaid, but that it be a choice, most states opted in. However, fifteen states have not implemented a Medicaid expansion. Before the pandemic, about 2.3 million people adults already fell into the “Medicaid gap,” meaning that those individuals earned below the federal poverty level—too little to qualify for financial assistance on the marketplace—but did not have the option of enrolling in Medicaid.
Medicaid Gap Widens
Since the coronavirus pandemic hit the United States and began shutting down places of work, approximately 33 million individuals have filed unemployment claims. Of those, 8.9 million people have filed initial unemployment insurance claims in states that have not expanded Medicaid.
Not all people who are unemployed will fall into poverty and thus qualify for Medicaid. Some, for example, will have a spouse or other household member who still works. They may also receive enough benefits, such as unemployment compensation, to pull them above poverty. And if their household earnings put them above the poverty line, they may qualify for the ACA’s premium tax credits.
To estimate how many new claimants would be in poverty, I calculated the poverty rate for unemployed individuals during the Great Recession in the non-expansion states, using data supplied to me by the Center on Budget and Policy Priorities. At that time, about 23 percent of people without jobs in those states were in poverty. Using state-level poverty rates among unemployed people in 2009 (the year of peak unemployment) during the Great Recession in non-Medicaid expansion states, approximately 2 million newly unemployed people would find themselves living in poverty and thus may fall into the Medicaid gap.
That number comes with some caveats. Certainly, that number actually may be an underestimate of the increase in the total number of new people falling into the Medicaid gap: it does not include other members of the household, because some of those household members (children) may qualify for other coverage, such as CHIP; many household members, however, would not. That said, the poverty rate for the newly unemployed may be lower than the aggregate 2009 poverty rate for unemployed people, particularly because that number includes the long-term unemployed. Additionally, of those individuals, some may have already been living in poverty and in the gap, despite being employed: about 16 percent of employed people in non-Medicaid-expansion states lack insurance. Finally, some of those people may qualify for Medicaid under the traditional categorical eligibility rules.
A Summer of Uncertainty
Because many of the states hit hardest by the pandemic so far have been those that have already expanded Medicaid—New York, New Jersey, and Washington, for example—Medicaid has likely captured a greater share of workers who have lost income and health coverage than if the early outbreaks had landed elsewhere in the country. However, even as those states see a decline in cases, many of the states that have not expanded Medicaid are still facing caseload increases and experimenting with early reopening that may exacerbate that trend. Now, more than ever, states should expand their Medicaid programs, and, given the challenging budgetary situations facing many states, Congress must do more to encourage states to do so.
Acknowledgments: Thank you to Arloc Sherman at the Center for Budget and Policy Priorities, who provided analysis of poverty rates for unemployed people during the last recession.