COVID-19, Unemployment Compensation, and State Medicaid Expansion Decisions

Some Workers Losing Jobs and Health Insurance Remain Ineligible for Subsidized Coverage

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People who have lost jobs due to COVID-19 and live in states that haven’t expanded Medicaid are at a disadvantage when it comes to accessing affordable health insurance coverage.

The Issue

More than 70 percent of the 7.4 million workers with pre-pandemic employer-based insurance through industries now vulnerable to high rates of unemployment were found to be eligible for some assistance with health insurance (Medicaid or marketplace subsidies) if they lost their jobs. However, eligibility differs significantly between workers in states that have and have not expanded Medicaid.

Authors expand upon earlier work to show how varied levels of unemployment insurance provided through the Federal Pandemic Unemployment Compensation program affects eligibility for subsidized coverage.

Key Findings

Authors find that whether unemployment compensation is included in determining eligibility for Medicaid and Affordable Care Act (ACA) marketplace subsidies affects workers living in states that expanded Medicaid differently than those living in states that do not.

  • If the additional federal unemployment compensation was not used to determine eligibility for health insurance assistance, 78 percent of expansion state workers in the most vulnerable industries would be eligible for assistance compared to 59 percent of their counterparts in the 15 nonexpansion states.

  • Under current law, more than 70 percent of expansion and nonexpansion state workers with pre-pandemic employer-based insurance through industries now vulnerable to high rates of unemployment would be eligible for some assistance with health insurance if they lost their jobs.

Conclusion

The current limits on marketplace subsidies mean that fewer workers are likely to be eligible for financial assistance in getting or maintaining health insurance coverage. At the same time, additional funds could help them meet other pressing needs. This research suggests that eligibility for financial assistance above 400 percent of the federal poverty level under current rules would address this problem.

About the Urban Institute

The nonprofit Urban Institute is dedicated to elevating the debate on social and economic policy. For nearly five decades, Urban scholars have conducted research and offered evidence-based solutions that improve lives and strengthen communities across a rapidly urbanizing world. Their objective research helps expand opportunities for all, reduce hardship among the most vulnerable, and strengthen the effectiveness of the public sector. Visit the Urban Institute’s Health Policy Center for more information specific to its staff and its recent research.