ACA helps mitigate insurance loss after job loss, study finds

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Ingrid Stiver Senior Manager, Health Research Institute, PwC US October 01, 2020

The Affordable Care Act (ACA) is key to stemming health insurance losses following job loss, according to a study published in The New England Journal of Medicine. The study authors found that, by a margin of 6 percentage points, fewer nonelderly adults lost insurance coverage after a job loss between 2014 and 2016, after most major provisions of the Affordable Care Act (ACA) took effect, compared with 2011 to 2013, before major provisions of the 2010 law kicked in.

The study, which examined 2011-2016 health insurance and employment data, found significant gains in Medicaid coverage and modest gains in ACA-compliant individual (marketplace) coverage after a job loss in the period covered by the ACA compared with the pre-ACA period. These coverage gains almost entirely offset the reduction in employer-sponsored insurance for individuals who had left or lost their jobs.

The ACA also substantially reduced uninsured rates of Black and Latinx populations, with Black Americans seeing a 7-percentage-point reduction in loss of coverage after a job loss in the period covered by the ACA compared with the pre-ACA period, and Latinx Americans experiencing a 13.9% reduction in coverage loss, although disparities for these populations still persist. Beyond health coverage, the pandemic has disproportionately affected racial minority groups.

HRI impact analysis

The pandemic has brought renewed focus to the ACA. Between March and May, over 40 million people filed for unemployment insurance. HRI estimates that 18 million individuals may lose employer-based coverage in 2020, or roughly 10.5% of people who had such coverage before the pandemic. The Kaiser Family Foundation (KFF) estimated that as of May 2, almost 27 million people could lose employer-sponsored insurance, of whom nearly half (12.7 million) would be eligible for Medicaid, and an additional third (8.4 million) would be eligible for marketplace subsidies.

Twelve states have yet to adopt Medicaid expansion, while some expansion states that adopted and implemented Medicaid, such as Ohio and Colorado, substantially cut funding because of steep drops in tax revenue during the pandemic. As a result, people may increasingly turn to the exchanges to buy ACA-compliant individual plans, which offer subsidies to households with incomes up to 400% of the federal poverty level. According to CMS, enrollments for coverage on HealthCare.gov among individuals who lost other health insurance spiked by 139% in April relative to the prior year.

Notwithstanding the pandemic, the rate of uninsured individuals will increase if the U.S. Supreme Court strikes down the ACA and no replacement legislation exists. At the heart of the original court case is the ACA’s individual mandate penalty, which was reduced to $0 on Jan. 1, 2019, by the Tax Cuts and Jobs Act of 2017. In 2017, HRI modeled the outcome of repealing the ACA. Fully implemented, President Donald Trump’s “repeal” scenario would leave 32 million more Americans uninsured in 2025 than under the ACA.

Striking down the ACA during a pandemic could have devastating consequences for the health industry and patients, particularly for people with preexisting conditions. President Trump released a healthcare executive order last week in which he promised to protect individuals with preexisting conditions.

Numerous experts say the order has no legal effect and does nothing to protect preexisting conditions, as only Congress has the power to do so at the federal level. Healthcare remains top of mind for Americans in the upcoming election: 41% of consumers surveyed by HRI in September said they were likely to vote for a candidate based on their healthcare policies, aside from COVID-19 policies, alone.

Read our research

Contact us

Trine K. Tsouderos

HRI Regulatory Center Leader, PwC US

Tel: +1 (312) 241 3824

Ingrid Stiver

Senior Manager, Health Research Institute, PwC US

Erin McCallister

Senior Manager, Health Research Institute, PwC US

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