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March 30, 2020

Millions of people are losing their jobs. What will happen to their health insurance?

Daily Briefing

    The United States saw a record number of unemployment claims last week, indicating that millions of Americans could be at risk of losing their employer-sponsored health coverage during the new coronavirus epidemic.

    COVID-19 weekly webinar: What health care leaders need to know

    Millions file for unemployment

    The new coronavirus' spread in the United States and throughout the world has had severe economic effects, causing volatility in global stock markets and several countries to shut down businesses and implement strict lockdowns aimed at containing the virus' spread. In the United States, many states and localities have ordered bars and dining establishments to restrict their services to carry-out and delivery and have ordered entertainment, recreational, and retail facilities to close down completely. Several states have ordered all non-essential businesses to close.

    On Thursday, the Department of Labor (DOL) announced that U.S. unemployment claims reached a record high of 3.28 million last week—and market analysts are expecting a similar number of claims when DOL releases its next report on Thursday. 

    Americans face losing health coverage as layoffs surge

    The surge of unemployment means many Americans are also at risk of losing their employer-sponsored health coverage.

    According to the Kaiser Family Foundation (KFF), almost 50% of Americans have health insurance through their employer, meaning the mass layoffs could cause millions to lose health coverage.

    The unemployment surge also impacts private insurers, who are facing a sudden loss of customers, according to Bloomberg. America's Health Insurance Plans and the Blue Cross Blue Shield Association last week sent recommendations to Congress which requested that the government cover some of the insurers' costs.

    ACA could become 'safety net' during epidemic

    Experts say Americans who lose health coverage during the epidemic have a few options.

    Some people could elect to stay enrolled in their plans for up to 18 months through COBRA–though COBRA is often too expensive for employees who have to pay the entire premium without a subsidy from their employer, Politico reports.

    Some people who lost coverage may be eligible for Medicaid. Larry Levitt, who oversees health policy for KFF, said the number of uninsured people resulting from unemployment will likely be worse in the states that didn't expand Medicaid.

    People may also choose to enroll in short-term limited duration plans, if they don't qualify for public insurance or premium subsidies under the ACA. However, those plans are generally less comprehensive than marketplace plans—and some states have restricted and even banned them, Politico reports.

    But for many people facing a sudden loss of coverage, the Affordable Care Act (ACA) could provide a "critical safety net," Politico reports. The ACA allows people to purchase coverage if they experience an event, such as job loss, that interrupted their coverage, which Politico projects will cause a surge in enrollment over the coming weeks.

    "This was what the Affordable Care Act is here for," said Sabrina Corlette, leader of Georgetown University’s Center on Health Insurance Reforms. "The individual market is a true safety net, and that is what it was designed to do—to catch people in this situation."

    CMS said it is considering temporarily reopening the federal exchange's enrollment period, which would give even more uninsured adults the opportunity to regain coverage during the epidemic. Insurers said the administration could relaunch as soon as Friday, Politico reports. At least 11 states and the District of Columbia, which oversee their own health insurance exchanges under the ACA, have already taken the measure.

    Michael Marchand, spokesperson for the Washington state exchange, said as of Thursday, 1,300 people have signed up for health care coverage and another 3,100 have started the process. Marchand said that is a high level of enrollment activity compared to previous special enrollment periods.

    ACA "navigators," people who help adults enroll in health coverage, have also noted a spike in enrollment. Mark Van Arnam, director of North Carolina's navigator program, said his program is seeing 45 to 55 requests for assistance per day, compared to the 15 to 20 requests they usually get outside of the regular enrollment period (LaVito, Bloomberg, 3/26; Luthi, Politico, 3/26; Casselman et al., New York Times, 3/26).

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