Friday, March 20, 2020

The ACA as recession insurance, revisited

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Almost a year ago, I noted that the ACA marketplace has never operated in a shrinking employment market -- job growth has been steady since the marketplace launched in January 2014.  That's created a (fortunate) headwind for enrollment, and
Conversely, the marketplace -- along with the ACA Medicaid expansion -- stands in reserve as a shock absorber when the next recession or financial crisis hits.
That's now. Goldman Sachs projects that after a 30% spike in jobless claims last week, to 281,000, new claims will hit 2.25 million this week -- an unprecedented surge. Mnuchin, Trump's Treasury Secretary, warned Republican senators this week that unemployment could go to 20%, a level not seen since the Great Depression. In the Great Recession of 2008-9, 9 million people lost their jobs; losses this time around could far exceed that total.

Millions of people are going to lose access to employer-sponsored insurance. The ACA machinery to get them insured is knobbly, but functional and funded. I have a post at healthinsurance.org to help the newly uninsured navigate their options. The basics:

People who lose access to employer-sponsored insurance are eligible for a Special Enrollment Period in the ACA marketplace, with subsidies proportionate to their estimated income for the year. If their monthly income drops to zero, or below 138% of the Federal Poverty Level  ($1,468 for an individual, $3,013 for a family of four), they qualify for Medicaid in the 36 states plus D.C. that have opted to enact the ACA Medicaid expansion. If they're already insured through the marketplace, and their income drops, they can report a life change and get a bigger subsidy.

How many people may be newly insured through the ACA in coming months? The main engine may be Medicaid. Last August Edwin Park, a Georgetown professor who focuses on public insurance programs, offered a partial yardstick:
Pre-Medicaid expansion, rule of thumb was about 1m Medicaid enrollment increase for every 1pt increase in unemployment rate. Likely significantly higher with many more parents and other adults potentially eligible in expansion states.
If that old rule of thumb holds, Medicaid expansion could increase by 10 million or more, to a bit over 80 million. The marketplace, currently subsidizing insurance for about 8 million, will probably see somewhat less of an enrollment increase.

It's barbaric that 14 states, including Texas and Florida, have refused to enact the ACA Medicaid expansion, leaving those with incomes below 138% with no help. It's depraved that a third lawsuit seeking to void the ACA is pending before the Supreme Court. It's sadistic that Trump's CMS cut funding for ACA-mandated nonprofit enrollment assistance in the 38 states using the federal exchange by 84%. As my healthinsurance.org how-to will illustrate, navigating the marketplace and Medicaid is often not a simple pushbutton affair. There are disjuncts between marketplace and Medicaid eligibility, and the system is particularly tricky to navigate when income has to be estimated.

All those laments notwithstanding, it's a minor miracle that the ACA's core programs are intact and at the ready, having survived a half-dozen Republican attempts to kill them via the courts or legislation. Thank the individuals and advocacy groups that flooded town halls, Congressional offices and social media in 2017 to stave off repeal -- groups like the Little Lobbyists (defending medically frail children), Families USA, ADAPT (disability advocates), Indivisible, and probably a thousand others. Thank also all those who canvased, called and otherwise worked to win the House for Democrats in 2018, staving off further repeal efforts.

And encourage anyone you know who loses health insurance to seek coverage through the marketplace or Medicaid.  Borrowing from the healthinsurance.org post, the key online starting points are below.

  • Seek ACA marketplace coverage: HealthCare.gov (for 38 states) OR                                                                                                                                                                      one of 13 state-based exchanges
  • Apply for Medicaid:                        State Medicaid websites
  • ACA Medicaid expansion states:   Medicaid expansion map


6 comments:

  1. On my mind:

    A. Unless something changes legislatively, it seems to me that Medicaid or ACA remains very much superior to COBRA for the newly unemployed, as you pointed out in blog posts in 2014. But one piece of COVID-shock stimulus will likely be COBRA premium support as was done in 2009. Do you foresee any subgroup for whom COBRA might be the better choice in that world?

    B. There's a push for expansion in the 14 barbaric states. But then there's that tension for the 100% to 138% FPL who, as you have blogged before, may well be losers under expansion. How is that tradeoff likely to change in light of possible COVID shock legislation that might separately relieve costs COVID-treatment costs or if "Barbaric State Expansion" has a two year limit before red states return to the barbaric status quo?

    Sad how many who lose jobs in the 14 non-expansion states are likely to slide down the income scale right past the "benefits bitter-sweet spot" of 100% FPL to 135% FPL.


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  2. Thanks, Ratman - I was not aware of COBRA subsidization. Here's info about it: https://www.benefits.gov/benefit/4727

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    1. P.S. Insurance broker and one-woman health insurance encyclopedia Louise Norris was on it in 2009, as I might have guessed. Sounds poorly designed and ineffectual, like the homeowners' aid programs. https://www.healthinsurancecolorado.net/many-laid-off-workers-not-getting-cobra-assistance/

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  3. Two efforts to subsidize laid-off workers have failed: ARRA COBRA subsidies and the Health Coverage Tax Credit program passed in 2002. Many problems, but one that remains: laid-off workers are a very hard group to reach. The only time a program reached them was when labor unions and state agencies provided INTENSE, individualized application assistance. https://www.urban.org/sites/default/files/publication/50981/411390-take-up-of-health-coverage-tax-credits.pdf

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    1. Thanks for the cautionary tale. One thing I worry about is the disjunct between the marketplace's yearly income basis and Medicaid's monthly...people who have worked a few months and earned a lot may qualify for Medicaid if their monthly income going forward is minimal, but the marketplace will disqualify them. Applications should be through state Medicaid offices/websites, and those can be very slow, especially if they're overwhelmed, as they well might be.

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    2. FYI, House Covid-simulus bill has COBRA continuation with what appears to be 0% premium share from employee.

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