Unemployment, Health Insurance, and the COVID-19 Recession

Abstract

The sharp reduction in US economic activity associated with public health efforts to slow the spread of the COVID-19 virus will likely result in millions of Americans losing their jobs, at least temporarily. Adding insult to injury, many Americans who lose their jobs could also lose their health insurance. In this paper, we examine the kinds of health insurance unemployed workers have and how coverage patterns have shifted under the Affordable Care Act (ACA). As the ACA’s coverage provisions took effect, the likelihood of unemployed adults being uninsured dropped by 35 percent, driven by a rise in Medicaid and Marketplace/other private coverage. The reduction in uninsurance rates among unemployed adults was greater in states that expanded Medicaid eligibility under the ACA than in states that did not expand Medicaid, and the difference owes to a larger increase in Medicaid coverage in expansion states. Joblessness will likely increase uninsurance rates throughout the country in the coming months, and states that did not expand Medicaid under the ACA will likely see larger increases. Given that unemployment rates may reach unprecedented heights during the COVID-19 crisis, steep increases in Medicaid coverage will strain state budgets, restricting already limited resources in the very communities hardest hit by the pandemic. Increasing the federal Medicaid matching rate, beyond the increase already mandated under the recently passed Families First Coronavirus Response Act, could help provide the critical resources needed to protect the states most in need.

Keywords: unemployment, health insurance, health coverage, recession, coronavirus, COVID-19, COVID19

JEL Classification: I10, I11, J01, J08, J20