UI effect? ACA marketplace enrollment soared at low incomes in nonexpansion states in 2021

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Back in March 2020,  you may have read here that the emergency supplemental unemployment insurance provided by the CARES Act -- $600 per week for up to 4 months -- would likely lift some uninsured people in states that had refused to expand Medicaid out of the so-called "coverage gap." That is, the extra UI income would raise some low income people over the income threshold for marketplace subsidy eligibility in nonexpansion states: 100% of the Federal Poverty Level (FPL).

Back in December, you may have read here that as of the end of Open Enrollment for 2021, marketplace enrollment was indeed up 10% over 2020 levels in nonexpansion states, but flat in expansion states.

This month, you may have read here that takeup of marketplace coverage at incomes just over the subsidy eligibility threshold in nonexpansion states -- 100-138% FPL -- has historically been weak -- under 50% in of these states states.

More detailed data about 2021 enrollment was released by CMS on April 21. I don't think it's an exaggeration to say that enrollment at the lowest subsidy-eligible income levels in nonexpansion states exploded this year. 

In a crisis, Democrats bench the ACA marketplace

As tens of millions of American file for unemployment insurance, about half of those who lose job-based health insurance will be eligible for Medicaid and another 25-30% for ACA marketplace subsidies, according to estimates by the Urban Institute and Kaiser Family Foundation.

The lower percentage potentially picked up by the marketplace is not in itself a knock on that program.  In the U.S., regular unemployment insurance income is very low, and normally accessed only by a minority of the unemployed. In the 35 states that have enacted the ACA Medicaid expansion, those with incomes up to 138% of the Federal Poverty Level (FPL) are eligible for Medicaid. People whose current monthly income is below that threshold are expected to make up a large percentage of those losing job-based coverage.  The $600-per-week extra unemployment insurance (UI) benefit provided for up to four months by the CARES Act does not count toward Medicaid eligibility.

That said, the marketplace has always been a leaky vessel for those who need insurance and qualify for its subsidies (let alone those who need insurance and don't qualify for subsidies, a group that abandoned marketplace coverage in droves in response to the premium runups of 2017-18). A bit less than half of those who qualify for subsidies enroll, according to the Kaiser Family Foundation's 2019 estimate (which I suspect is a tad low). Takeup of Medicaid is much higher. The Kaiser Family Foundation's 2018 estimate of the uninsured who are eligible for Medicaid (6.7 million) is less than 10% of total Medicaid enrollment (73 million in 2018).

Covering the newly uninsured in New York: The BHP advantage

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My last post noted that Medicaid enrollment in New York spiked 2.6% in May and is up 4.2% since March. That's about mid-range among states for Medicaid enrollment growth since Covid-19 triggered mass layoffs.   Total enrollment in New York's mainstream managed Medicaid programs (about two thirds of total Medicaid enrollment in the state) increased by 177,858 from March to May, to 4,363,873.

New York's unemployment rate hit 14.5% in April. At 15% unemployment, the Urban Institute calculates that Medicaid enrollment in New York should eventually increase by between 641,000 and 1.1 million from pre-crisis levels, an increase of about 11-20%.  If a 4% increase as of May seems like a slow start, a new report by the United Hospital Fund analyzing Medicaid enrollment in New York during the Great Recession provides important context. 

From December 2007 to November 2009, as unemployment in New York more or less doubled from 4.8% to 8.9%, Medicaid enrollment increased by 10%, or 400,000. But Medicaid enrollment growth lagged behind job loss: "the fastest average increases in enrollment occurred approximately seven months after the fastest average increases in unemployment."*  

While Medicaid enrollment growth in New York so far seem modest compared to growth in Kentucky and Minnesota, the UHC report, citing growth in March and April, notes, "as the pandemic accelerated, Medicaid’s average monthly growth rate was four times as large as the average monthly growth rate during the Great Recession’s first twelve months."

Medicaid, moreover, is not the whole story. The Urban Institute estimates that approximately half as many of those who lose job-based insurance will find coverage in the ACA marketplace as in Medicaid. New York may do better than that, thanks to its Basic Health Program, the Essential Plan.

Insuring the newly uninsured: COBRA or ACA?

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So what about fully funding COBRA for the millions or tens of millions of Americans who lose job-based coverage? That is, bail out everyone -- insurers, employers large and small, employees, and hospitals and doctors, who depend on the commercial insurance gravy train?

It's the most expensive way to keep the ranks of the uninsured from ballooning. It's also the least disruptive way.  Families USA, hardly a corporate water-carrying outfit, supports it.

Thought bubbles:

CMS answers a $600 question

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While CMS has declined to open an emergency Special Enrollment Period for all comers on HealthCare.gov, the agency is taking steps to smooth the enrollment path for the newly uninsured. Here's a roundup of some constructive moves, some of which I've noted in recent posts:

• The $600/week extra unemployment benefit provided in the CARES Act is income that counts toward the level of subsidy eligibility in the ACA marketplace but does not count toward Medicaid and CHIP eligibility. That seems a recipe for potential enrollment confusion on a platform that enrolls people in both programs. In response to a query, however, CMS tells me, "HealthCare.gov will be updated to apply logic to ensure federal pandemic UC is counted correctly and unemployed consumers receive the accurate eligibility determination." That is, applicants should report their full UI income in the application, and HealthCare.gov will be able to discount it for the purposes of determining Medicaid eligibility. That's good news, if the "logic" holds up as intended. [Update, 4/24: just to highlight the verb tense above, CMS says that they will add this capability, which means that it's not yet operative.]


• CMS also says that if an applicant's year-to-date income or projected full-year income exceeds the Medicaid eligibility threshold, but current monthly income is below the monthly threshold ($1468 for an individual, $3013 for a family of four), HealthCare.gov will recognize Medicaid eligibility and "transfer the consumer’s information to the state Medicaid or CHIP agency as appropriate." As I've noted in prior posts, in this situation navigators generally prefer to apply directly to state agencies for Medicaid. But whether or not it's difficult in practice to report both annual (or projected annual) and current monthly income on hc.gov and get the right result if one is over and the other is under the threshold, it's possible.


• As noted in my last post, those who apply for a Special Enrollment Period on grounds that they recently lost health coverage (usually after job loss) will not have to document the loss of coverage -- only attest to it. I am not sure whether that is true for other SEP causes, such as marriage.

Smooth the path to Medicaid enrollment for the newly uninsured

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As tens of millions of Americans lose job-based health insurance, the heavyweight in reducing the ranks of the newly uninsured is going to be Medicaid -- at least, in the 36 states that have enacted the Medicaid expansion  (and if Democrats don't push through a 100% COBRA subsidy). Medicaid will far outweigh the ACA marketplace for several reasons:

• Medicaid eligibility is based on monthly income, whereas marketplace subsidy eligibility is based on annual income. Mid-year, marketplace subsidies are therefore weakened by income earned year-to-date.
• The average normal unemployment benefit nationally is $378 per week* -- close to the Medicaid eligibility threshold in expansion states for a single person ($1468/month) and well below the threshold for any larger family. 
• The extra $600/week UI benefit provided for up to 4 months by the CARES Act does not count as income for Medicaid eligibility purposes, but it does count toward subsidy eligibility in the ACA marketplace. 

Squinting at likely new Medicaid and marketplace enrollment as job losses accelerate

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Charles Gaba has used early enrollment data from state-based ACA marketplaces that have opened up emergency Special Enrollment Periods to hazard an estimate: If HealthCare.gov, the federal exchange that handles ACA marketplace enrollment for 38 states, were to open a no-strings attached emergency SEP for sixty days, about a million more people than usual would enroll in marketplace plans in those two months.

That's based on a rough quadrupling of normal off-season enrollment in 3 states (Maryland, Colorado, Minnesota) that have opened emergency SEPs that enable applicants to complete an application online, more or less as they would during the yearly Open Enrollment season. (In 3 states that require emergency SEP applicants to initiate the application with a phone call (Connecticut, Washington, Nevada), enrollment is up just 22-35%.) As of 2015, about 6,000 people per day were enrolling via HealthCare.gov in nine months outside of Open Enrollment season. An extra 18,000/day for 60 days (assuming an easy, wide open SEP) would come to 1,080,000 additional new enrollees.

A few further observations:

• Process matters: The difference in states that enable online applications vs. those that require a phone call to begin the process appears dramatic, though data is scarce at this point (12 SBEs, including California and New York, have opened emergency SEPs; just six have released any data).  That said, HealthCare.gov, for which CMS refused to open an emergency SEP, requires those who lose job-based coverage to verify the date they lost coverage in writing before they can enroll in a marketplace plan.  With 10 million newly unemployed in a two-week period, that could cause an administrative train wreck.


• More than two months? While an emergency Special Enrollment Period must maintain the perception that enrollment isn't open year-round, so that people don't wait until they get sick to enroll, a continuing crisis is likely to lead to continuing extensions, as has already happened in many states.


• Early days yet: Shelli Quenga, Director of Programs at the Palmetto Project in North Charleston, South Carolina, said last week that her agency was so far busiest helping people get food stamps: "people have to eat every day, so they think more about their food benefits than they do about their health benefits." That's a typical sequence of concerns, according to Quenga.


• Early days, Part B: While enrollment from the 10-odd million newly unemployed as of April 2 hasn't fully gotten going, the tidal wave of job losses probably hasn't peaked yet.


• Medicaid will matter more: Gaba reports that in Maryland, SEP enrollment from March 16 through April 6 totaled 8,454 in Medicaid (which is open year-round) and 5,735 in the marketplace. [Update, 4/23/20: MNSure, the Minnesota ACA exchange, announced SEP enrollment numbers yesterday that showed a similar percentage of users, 60%, applying for either Medicaid or MinnesotaCare, a Medicaid-like "basic health program' available to applicants in the 139-200% FPL income range.] The CARES Act, signed into law on March 27, will likely further skew enrollment toward Medicaid. As I've noted previously, the $600/week extra unemployment benefit the new law provides for up to four months counts as income for the purpose of calculating ACA marketplace subsidies, but not toward Medicaid eligibility. Up to $10,200 of extra income will disqualify many marketplace applicants for secondary Cost Sharing Reduction subsidies and render others ineligible for premium subsidies, or else will sharply reduce those subsidies. 

One widely circulated projection, from Health Management Associates, foresees up to 35 million Americans losing job-based coverage, with a mid-range estimate of 23 million, which comes to an unemployment rate of 17.5%.  Health Management foresees enrollment in ACA-compliant private plans remaining more or less flat, as some marketplace enrollees switch to Medicaid. In the mid-range estimate, Medicaid enrollment grows by some 17 million as the uninsured population rises from 29 million to 34-35 million.

I had missed the likelihood of people shifting from marketplace to Medicaid. The differing tax treatment should accelerate that too. At the same time, the unemployment income boost should newly qualify some people in states that have refused the ACA Medicaid expansion for marketplace coverage by raising their countable household income over 100 % FPL.

Related:
ACA enrollment train wreck coming
Our emerging public option: Medicaid
CARES Act may reduce coverage gap in states that refused to expand Medicaid
Enhanced unemployment benefit will skew marketplace enrollment
Emergency special enrollment periods in 12 states: How easy?
How about an emergency Special Enrollment Period for the ACA marketplace?

Our emerging public option: Medicaid

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Axios's Bob Herman notes that "Medicaid will be a lifeline for droves of Americans affected by the coronavirus pandemic."

The program will pick up many people who lost their income and their health insurance together, as well as people who lost jobs that didn't provide health insurance, and potentially some people who are still working and need medical care but aren't insured.

Indeed it will. As of early this year, about 72 million Americans were enrolled in Medicaid's various programs. Based on an old rule of thumb from Georgetown's Edwin Park that I've cited before, enrollment (including CHIP)  could reach 85 million or more by the time the pandemic subsides:

CARES Act may reduce ACA "coverage gap" in states that refused Medicaid expansion

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The enhanced unemployment benefits provided by the CARES Act, the emergency COVID-19 relief bill signed into law on March 27, count as income for those seeking subsidized health insurance in the ACA marketplace (the income does not count in consideration of Medicaid/CHIP eligibility).

As I noted last week, that's going to vastly reduce premium subsidies and likely wipe out Cost Sharing Reduction subsidies for many newly unemployed people who seek coverage.  On the plus side, however, the rush of temporary income should also narrow the "coverage gap" in states that have refused to enact the ACA Medicaid expansion, including Florida and Texas.

Enhanced unemployment benefit will skew ACA marketplace/Medicaid enrollment

The enhanced unemployment benefits provided in the CARES Act, the massive COVID-19 response bill that passed the Senate 96-0 last night, looks likely to create some strange incentives for the newly uninsured seeking health insurance.

For anyone who qualifies for unemployment insurance, the bill adds an extra $600 week to the normal benefit for four months. That's more than $10,000 for anyone who stays unemployed for that long (as millions likely will: a staggering 3.3 million new jobless claims were entered this week).  For the first time, UI benefits are available to the "self-employed, independent contractors, those with limited work history, and others who are unable to work as a direct result of the coronavirus public health emergency."

As noted last night by the Brookings Institute's Loren Adler, the extra $600 per week will not be counted for the purposes of determining eligibility for Medicaid and CHIP, but will be counted for determining subsidy eligibility for private plans in the ACA marketplace. If that holds, some fairly high earners will likely end up eligible for Medicaid but not for subsidized marketplace coverage.  That's all the more likely because while Medicaid eligibility is determined on a monthly basis, marketplace subsidies are determined on the basis of annual income -- so income earned up to the time of layoff counts along with the enhanced UI benefit.*

Others may be eligible both for Medicaid and for weak marketplace subsidies. In that case, Medicaid should be the clear choice for most. Let's look at the math.