As the second-order effects of the Covid-19 virus have become more apparent, so too has the nexus between Covid-19 and the Affordable Care Act. In particular, the staggering weekly unemployment numbers have emphasized the ACA’s measures to increase coverage.
From the onset of the pandemic through April 30, a reported 30.3 million Americans filed for unemployment. For many, the loss of their livelihood has coincided with the near-immediate loss of health coverage.
One irony of the ACA is the fact that, despite providing coverage to millions by expanding Medicaid eligibility and establishing health insurance marketplaces, most nonelderly adults before and after ACA enactment obtain coverage through an employer rather than Medicaid or the marketplaces.
As of 2018, 57.1% of Americans ages 18-64 (153 million) had employer-sponsored coverage. Based on one initial estimate, the number of people receiving employer-sponsored coverage could decline by between 12 million to 35 million due to Covid-19.
Employers typically cover the majority of premium payments under employer-sponsored arrangements, and while federal law allows workers to continue their employer-sponsored coverage after being laid off, individuals are then responsible for the entire premium, making such coverage often unaffordable.
Uninsured Rate Poses Serious Risks
A growing uninsured rate poses serious risk during the midst of a public health emergency requiring accurate data about the number of infected and rapid treatment/quarantining. People without coverage are less likely to seek access to required care, even when the period of being uninsured is relatively short, and when they seek Covid-19 care, out-of-pocket costs can become astronomical.
Even during normal times, however, the U.S. uninsured rate has historically been higher relative to other similar post-industrial countries, and the effect of this on the health and finances of the uninsured, and to the health system generally, has been a subject of concern for policymakers for decades.
The fundamental goal of the ACA was to address this problem by expanding Medicaid coverage for nonelderly adults, requiring individuals to have health-care coverage and large employers to provide it for their employees, and establishing health insurance marketplaces where individuals and small employers can purchase subsidized health coverage.
The ACA’s Medicaid expansion and health insurance marketplaces will likely serve as a backstop for increasing number of uninsured. As enacted, the Medicaid expansion provision required states to expand Medicaid eligibility to nonelderly adults up to 133% of the federal poverty line. States choosing not to expand would no longer be able to participate in the Medicaid program, which is jointly funded by the federal government and states.
A subsequent Supreme Court ruling, however, made the Medicaid expansion voluntary for states, and predictably, whether a state is controlled by Republicans or Democrats has been highly deterministic as to whether it has expanded.
Despite this fact, 14.7 million obtained coverage through the Medicaid expansion between July-September 2013 and April 2019, representing a 26.1% increase over pre-ACA baseline estimates. While few Republican-controlled states expanded Medicaid initially, several of these states have expanded since President Trump’s election using the 1115 Waiver process, which allows HHS to grant waivers from certain Medicaid requirements.
New Pressure to Expand Medicaid
For the 14 states that have yet to expand, however, the Covid-19 pandemic may create additional political pressure to expand. In limited ways, Covid-19 has already paused some of the broader ideological fights over Medicaid. Notably, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), enacted with bipartisan support, allows state Medicaid programs to offer uninsured individuals Covid-19 tests and testing-related services.
The marketplaces created by the ACA, which allow individuals and small employers to purchase coverage, and provides means-tested subsidies for individuals and families up to 400% of the Federal Poverty Level, will also likely see increased enrollment. In response to Covid-19, most states administering their own marketplaces have opened up special enrollment periods (SEPs), allowing the recently uninsured to enroll immediately rather than during the typical year-end enrollment period.
Although the Trump administration initially appeared to agree to implement a SEP for the federally administered marketplaces, the president and Congress ultimately concluded not to include an SEP provision in the CARES Act, which would have applied for the nearly two-thirds of states that are federally-administered.
It is too early to tell how the extent of the strain the uninsured Covid-19 surge will impact state budgets and administrative capacities, or determine whether the virus will have a lasting impact on the debate over the ACA, and health-care reform generally.
For some, Covid-19 will highlight the necessity of ACA’s coverage provisions, or even stronger reforms such as Medicare-for-All. For others, however, it will drive home the reality that for all the ways in which the ACA transformed U.S. health care, it still sits atop a system heavily reliant on employer-sponsored coverage.
This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.
Thomas Crane is a member at Mintz and practices in the Health Law Section and firm’s Health Care Enforcement Defense practice group in both its Boston and Washington, D.C., offices. He is nationally recognized for his experience with fraud and abuse.
Xavier Hardy is an associate at Mintz in Washington, D.C. He focuses his practice on a variety of health-care regulatory and fraud and abuse matters as well as Medicare and Medicaid reimbursement issues in health-care transactions and business arrangements.