Pandemic lessons signal clear path on Medicaid and ACA

As the legislative roller coaster on the social programs bill continues, proposed expansions of Medicaid and the Affordable Care Act (ACA) should not get derailed.

The pandemic yielded critical health insurance lessons, and ongoing labor force disruptions argue powerfully for alternatives to job-based coverage.

As the economy cratered in 2020, millions of workers lost health insurance.  That’s well known. Less well known is that the vast majority of those workers found refuge in Medicaid and the ACA insurance marketplaces. It was the first serious test of the ACA and that law’s expansion of Medicaid in an abrupt and deep economic crisis.

It passed with flying colors. Here are the numbers. An estimated 4 million to 5 million people lost coverage between March 2020 and March 2021. The number was not larger, studies indicate, because many who lost their job or were laid off — predominately low-income people — didn’t have coverage to begin with. 

In May 2020, a rush to Medicaid began. By January 2021, enrollment soared by almost 10 million, from 64 million to 73.7 million — unprecedented in such a short period. During that same period, 800,000 to 1 million people newly enrolled in an ACA plan, most when the 15 states that manage their own ACA marketplaces opened them to all comers.

The shift of people into both programs was driven in part by fear. People suddenly losing coverage — as well as those who lacked it before the pandemic — didn’t want to be uninsured as a deadly virus stalked the nation.

Congress and the Biden administration also helped. Measures in the initial bipartisan pandemic emergency response bills in 2020 barred states from dropping Medicaid enrollees. In February 2021, the new Biden administration opened ACA enrollment to all. Democrats then temporarily increased ACA subsidies in the American Rescue Plan in March, with no Republican votes. 

As COVID-19 surged last winter, the coverage gains continued. By April 2021 Medicaid enrollment stood at 75.4 million — 1 in 4 Americans. And, by August, some 3 million people had newly enrolled in an ACA plan, pushing total enrollment in that program to 12.2 million, the highest since the program began in 2014.

Shifts in the economy accelerated by the pandemic provide further impetus to expand alternatives to job-based coverage. Hordes of workers are on the move — to gig and contract work and self-employment; to part-time work; and, for the moment, to non-work. Some 6 million workers have dropped out of the labor force or given up looking for work during the pandemic. And although Department of Labor data show 10.4 million job openings nationwide, that’s 5 million fewer jobs than in February 2020. 

At the same time, job-based coverage has been slowly eroding for years. About 58 percent of workers have coverage through work now, down from 67 percent in 1998. As a result, the number of Americans covered through public or government-subsidized insurance — some 150 million — draws ever closer to the 157 million with private coverage. Between 28 million and 30 million Americans are uninsured on any given day — the majority in the 12 Republican-controlled states that have not yet expanded Medicaid.   

Related, the long-running debate over whether public or private insurance works best for the U.S. has missed the fact that we essentially now have a hybrid system. Medicare and Medicaid are huge government programs, but they increasingly rely on the private sector. About 40 percent of Medicare beneficiaries now opt for private-system Medicare Advantage plans, for example. Likewise, about 70 percent of Medicaid enrollees are in managed care plans run by private insurers. 

By the same token, job-based health insurance either wouldn’t exist or be far less generous without the federal government’s $300 billion a year in tax exemption for that employee benefit. The ACA was designed to extend similar government help to people who did not have access to health insurance at work. It was also designed as a hybrid; all ACA enrollees are in plans offered through private insurers.  

What Biden and the Democrats want to do now is further fortify and extend Medicaid and the ACA. The ongoing pandemic and evolving economic shifts make this path obvious — on moral and practical grounds. The approach is targeted and, if Congress adopts Biden’s latest framework, time limited to lower the budget impact and see how things play out.

The White House estimates that the measures could reduce the number of uninsured people by up to 7 million and reduce premiums for another 9 million over the next four years. Those estimates may be high but there’s no doubt we’ll be moving in the right direction, further testing ways to lower the embarrassing number of Americans who don’t have ready access to affordable health care.

Steven Findlay, MPH, is an independent health policy analyst and journalist. He previously worked as a senior health policy analyst at Consumers Union, as well as director of research and policy at the National Institute for Health Care Management.