What we know so far about health insurance losses and what it means for policy
By Josh Bivens and Ben Zipperer
Economic Policy Institute, August 26, 2020
Although the gold-standard data sources tracking changes in health insurance coverage will not be available until next year, imperfect but available data on job churn and net employment allow us to produce estimates of losses of health insurance coverage since the COVID-19 shock began. These estimates are more accurate than early-crisis estimates, and they account for job gains.
Following are key highlights from the report:
- In any given month, churn in the labor market—some people losing jobs while other people gain them—means millions of workers newly gain or lose access to employer-sponsored health insurance (ESI) each month. For example, between 2015 and 2019, roughly 2.8 million workers gained access to ESI in each month while 2.7 million workers lost access, leading to a net increase in ESI coverage of just over 100,000 workers each month.
- Extreme churn after February 2020 has led to very large losses in ESI coverage. In March and April, for example, new hiring led to 2.4 million workers gaining ESI coverage each month, but historically large layoffs led to 5.6 million workers losing coverage each month. This rate of lost coverage—over 3 million workers—dwarfs a similar calculation for the number of workers losing coverage each month during the biggest job-losing period of the Great Recession (September 2008–March 2009).
- While the data documenting labor market churn data are useful, they do not provide the best estimates of ESI losses because they are not the most timely data, nor do they provide the best net measure of employment changes.
- Since the onset of the COVID-19 shock to the economy, roughly 6.2 million workers have lost access to health insurance that they previously got through their employer, according to the best measure of net employment change. Our analysis using the monthly, high-quality measure of the total number of jobs in the economy from the Current Employment Statistics (CES) program of the Bureau of Labor Statistics (BLS) is consistent with 9 million workers having lost access to ESI in March and April 2020 but 2.9 million workers having gained coverage between April and July 2020.
- Not every worker who loses ESI loses health insurance coverage. Public health insurance rolls are expanding to absorb the enormous ESI coverage losses of recent months. However, they have not expanded enough to absorb everybody who lost job-based coverage. A new government survey measuring the economic consequences of the COVID-19 shock in real time indicates that for every 100 workers who were covered by ESI before losing their job, about 85 retained access to some form of health insurance in the week after they lost their job.
- It is likely the case that Medicaid is the dominant alternative source of coverage when people have lost ESI in the COVID-19 shock, as Medicaid rolls have likely expanded by more than 4 million since the COVID-19 shock began.
From the Conclusion:
The inefficiencies and problems caused by the U.S. system of tying access to health insurance to specific jobs is well known. The downsides of employer-based health insurance access have been made spectacularly visible by the COVID-19 shock—a shock that has cost millions of Americans their jobs and their access to health care in the midst of a public health catastrophe.
Delinking access to health insurance from specific jobs should be a top policy priority for the long term. The most ambitious and transformational way to sever this link is to make the federal government the payer of first resort for all health care expenses—a “single-payer” plan. The federal government already is the primary insurer for all Americans over the age of 65 and for households with incomes low enough to qualify for Medicaid. The advantages of a single-payer system are large, both in ensuring consistent access to medical providers that households prefer and in restraining the often-rapid growth of health care costs.
By Don McCanne, M.D.
Although the data on changes in employment status and employer-sponsored health insurance due to the COVID-19 pandemic are still preliminary, we do have enough information to know that the impact has been catastrophic. We have long known that tying health insurance to employment has serious unintended consequences, and the experience during this pandemic adds indubitably to the conclusion that it is a bad idea.
The authors conclude, “Delinking access to health insurance from specific jobs should be a top policy priority.” Further, “The most ambitious and transformational way to sever this link is to make the federal government the payer of first resort for all health care expenses — a ‘single-payer’ plan.” They are absolutely right on target.
They further conclude, “Absent a once-and-for-all switch to a single-payer system, policymakers can take smaller steps…” Uh-oh, incrementalism, in this case suggesting perhaps lowering the age of Medicare eligibility, or raising income thresholds for Medicaid eligibility, or adding a public option to the ACA exchanges, perhaps with employer play or pay, etc. These incremental measures increase costs, perpetuate inequities, perpetuate profound administrative waste, and still leave millions uninsured or underinsured.
So ignore their optional incremental steps and go for the real thing: the single payer model of an improved Medicare for All. Anything less simply perpetuates far too many of the dysfunctions of our current health care financing system. We’ve had enough of that.
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