Study Suggests More Than 25 Million Could Lose Employer-Based Health Insurance In Recession

Sarasota, FL (WorkersCompensation.com) – The rising unemployment rate is expected to radically change the insurance environment and have far-reaching effects as employers lay off workers or go out of business, and as suddenly uninsured employees enroll in state backed Medicaid plans or Affordable Care Act (ACA) marketplace plans.

In a recent Reuters survey, economists polled from the Federal Reserve Bank of Chicago estimated the unemployment rate to hit between 25.1 and 34.6 percent, somewhat higher than the average 16 to 20 percent that most are predicting. If the unemployment rate reaches 20 percent, as conservative estimates are predicting, between 25 to 43 million could lose their employer-based health insurance, according to a new report from the Urban Institute.

In March, it is estimated that 160 million people under the age of 65 had insurance through an employer. From March 15^th to April 25^th, 30 million of those insured workers – roughly 18.7 percent – filed for unemployment.

According to the Urban Institute analysis, in those states that expanded their Medicaid coverage under the ACA, more than half of the unemployed can obtain insurance coverage. In the 15 states that did not expand their Medicaid coverage, only a third of the unemployed will have access to coverage.  The analysis estimates that less than a quarter of the unemployed workers and their families will not have coverage in the expanded states. By comparison, in the states with no expansion, around 40 percent of the unemployed population will be uninsured.

The researchers suggested several options to address the lack of coverage, such as temporarily expanding Medicaid coverage in non-expanded states. Other options included subsidies to help pay COBRA, increasing the income requirements on subsidies for premiums, and enhancing Medicaid matching rates.

With such a large number of workers losing coverage and transferring that financial burden over to the states, one has to wonder what are the long-term effects for the insurance industry as a whole, and how the increased financial burden will potentially influence other state-run programs; such as, the impact on those carriers that offer health insurance and workers compensation, the impact be on state workers’ compensation programs, and the effect on those providers whose business is largely workers’ compensation.

In an April report from NCCI, the most common side effects seen so far for the workers’ compensation industry have been reduced premiums, challenges in access to care, and outcomes due to delayed treatment.

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