Virus-Fueled Recession May Drive More to ACA Plans, Medicaid
March 23, 2020
Reprinted with permission of AIS Health from the March 23, 220 edition of Health Plan Weekly
The COVID-19 pandemic is shaping up to be a stress-test for the post-Affordable Care Act insurance market, which has not yet faced a recession. The crisis has already caused mass layoffs, especially in the restaurant and retail industries, and experts say the individual health insurance exchanges and Medicaid could see record enrollment in the coming months as a result.
In the cities that have been hardest-hit so far, like Seattle and Boston, dozens of restaurants and stores have laid off workers or closed as residents practice social distancing. A March 17 NPR/PBS NewsHour/Marist Poll found that “18% of employed Americans say they have been let go or have had their work hours reduced because of coronavirus.”
Philadelphia NPR affiliate WHYY reported New Jersey’s unemployment insurance website crashed after receiving at least 15,000 applications on March 16. According to the Boston Globe, more than 20,000 Massachusetts residents filed for unemployment on March 16. The Minneapolis Star-Tribune tallied 31,000 unemployment filings across Minnesota on March 16 and 17. In Pennsylvania, March 16 and 17 both saw over 50,000 filings each, the Pittsburgh Post-Gazette reported.
CRISIS MAY SHIFT ENROLLMENT
“This would be the first recession since the Affordable Care Act went into effect, so we are in somewhat uncharted territory in terms of what might happen in a recession under both the ACA marketplace and the Medicaid expansion,” Larry Levitt, executive vice president for health policy at the Kaiser Family Foundation, said during a March 18 conference call with reporters regarding the coronavirus pandemic.
Levitt said the ACA marketplace is likely to see rapid growth in enrollment as workers lose jobs or hours, making them eligible for special enrollment periods in some cases.
ACA RISK POOL COULD BENEFIT
“The one thing that we do know about the ACA marketplace is that enrollment tends to be concentrated among the lowest-income groups who get the biggest subsidies, and that’s even more true in states that haven’t expanded Medicaid, where people between 100% and 138% of the federal poverty level are eligible for marketplace subsidies,” Levitt said. “So as people lose jobs or have their work hours cut, household income is going to tend to fall, and that will put more people into that lowest income category with the broadest enrollment in the ACA marketplace.”
That influx of enrollees, he added, “has the potential to improve the risk pool in the ACA marketplace and shouldn’t, by itself, have a big effect on premiums.”
David Anderson, a health policy researcher at Duke University’s Margolis Center for Health Policy, has drawn similar conclusions. “Most of the individuals who are currently uninsured and qualify for subsidies are younger than average. If they sign up for insurance, even for only seven months of coverage, eight months of coverage, they’re unlikely to have serious COVID-19 expenses due to the demographics,” Anderson tells AIS Health. So far, COVID-19 has been most acute to older patients.
“But [younger enrollees are] paying premiums into the pool to help cover the folks who do have very expensive COVID-19 comorbidities. The folks that are currently uninsured and under the age of 45, as a class, are fairly healthy and fairly low utilizers [of treatment] in normal times. So getting them into the pool because they have a legitimate fear of COVID-19 probably improves the pool compared to what it otherwise would have been,” Anderson says.
Enrollment growth won’t be limited to the newly underemployed and underemployed. Some states, including Connecticut, Maryland, Massachusetts, Nevada and Washington, launched special enrollment periods to get as many uninsured residents enrolled as possible. California had a special enrollment period underway before the COVID-19 crisis began. Stakeholders including New Hampshire Gov. Chris Sununu (R), a group of 25 U.S. senators, America’s Health Insurance Plans and the Blue Cross Blue Shield Association have asked the Trump administration to enact a nationwide special enrollment period for people to enroll in individual market coverage (see brief, p. 7).
ADVERSE SELECTION MAY NOT BE A CONCERN
Anderson says the public health crisis means the normal rules of enrollment don’t apply, and payers won’t suffer undue risk.
“With COVID-19, no one knows what the future looks like, so there’s no adverse selection,” Anderson tells AIS Health. “People can’t say, ‘I’m very confident I’m going to get sick, I’m very confident I won’t get sick.’ No one can say that.”
MEDICAID EXPANSION MAY COME IN HANDY
“As people lose their jobs and their incomes fall below 138% of poverty in those states that have expanded Medicaid, we’re likely to see growth in Medicaid enrollment — as we typically do during recessions,” Levitt said during the briefing with reporters.
Medicaid will play an important role in responding to the pandemic itself and stimulating the economy, experts say.
“Medicaid traditionally has been countercyclical. When times are good, people aren’t on Medicaid all that much,” Anderson says. “When times are bad, a lot of people go to Medicaid. It’s an economic balancer. In 2009 [during the last economic recession], the federal government raised the federal payment rate — the federal share of Medicaid — by 6.2 points. What that did is it gave states breathing room in their budget, because state budgets are going to get hammered: as restaurants are closing, gas stations are closing — everything’s closing — there’s no sales tax to collect. That extra federal share takes a little bit of pressure off the rest of the state budget.”
To that end, President Donald Trump on March 18 signed the Families First Coronavirus Response Act, which, among a host of other provisions, temporarily increased the Medicaid federal medical assistance percentage by 6.2 points.
At the point of care, Medicaid will play a crucial role for low-income patients — even those who haven’t enrolled. The ACA allows hospitals to unilaterally enroll qualified patients in Medicaid retroactively through a policy called presumptive eligibility. That helps ensure that unemployed, uninsured COVID-19 patients won’t face a crushing hospital bill after they’re released.
Jerry Vitti, founder and CEO of Healthcare Financial, Inc., a Boston-area company that connects low-income, elderly and disabled populations with public benefit programs, says getting COVID-19 patients covered by Medicaid is crucial for public health. “It’s imperative that state Medicaid programs find creative ways to enroll and keep people on Medicaid,” Vitti tells AIS Health.
Vitti praised governors for making proactive attempts to get uninsured people enrolled, and says states that have not expanded Medicaid should reconsider their posture in light of the coronavirus pandemic.
“If you’re a non-expansion state, [you] need to figure out plans to do more advocacy around the uninsured. Those folks are not covered by the Medicaid program. The infrastructure isn’t there, unfortunately, to address the population of uninsured in the same way it is for the people who are already enrolled in Medicaid,” Vitti says. “In the non-expansion states…there are a lot of older Americans who have chronic conditions, including a lot of folks with mental health and substance use issues, who are not able to access coverage. But they need a lot of care. It’s a sicker population, generally, the uncovered folks, than the typical moms and kids that [qualify for] the Medicaid program.”
“It’s costly,” Vitti says, “but I think it’s more costly to let people be uninsured, be sicker and [infect] other people because they can’t get basic health care.”
by Peter Johnson