Uninsurance Rate Rises as More Attain Employer-Sponsored Coverage
Employer-sponsored insurance’s gains in coverage could not offset the rise in uninsurance, which was prevalent in states that did not expand Medicaid under the ACA.
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- Between 2016 to 2017, 700,000 more individuals became uninsured, a recent study by the Robert Wood Johnson (RWJ) Foundation found. This rise in uninsurance comes at a time when the economy is thriving, incomes are rising, and employer-sponsored insurance rates are increasing.
“Losses of Medicaid/CHIP and private nongroup coverage increased uninsurance rates,” the report explained. “Medicaid/CHIP coverage losses likely reflect increasing incomes and more workers, as well as fewer new Medicaid expansion states than in prior years (only Louisiana newly expanded Medicaid over this period). Private nongroup coverage losses may reflect various factors, including reduced subsidies because of increasing incomes, higher premiums in the subsidized and non-subsidized nongroup markets, insurer market exits, and lower spending on outreach and enrollment.”
However, the researchers found that the rise in employer-sponsored insurance did not offset the coverage losses sustained by Medicaid, Children’s Health Insurance Program, and the Affordable Care Act (ACA) marketplace. Furthermore, they determined that the losses sustained were greatest in non-expansion states.
Employer-sponsored insurance enrollment rose by over two million more beneficiaries between 2016 and 2017. During that timeframe, median household income rose 2.36 percent from $60,309 to $61,732 and two million nonelderly adults joined the job market, indicators of a thriving economy.
Meanwhile, poverty rates dropped from 12.7 percent to 12.3 percent. Unemployment fell from 4.4 to 3.9 percent. The number of families living under 138 percent of the federal poverty level (FPL) declined by 3.6 million people.
“These improvements in national and household economic circumstances alone would be expected to somewhat reduce uninsurance, because more families gain employment and insurance benefits via those jobs,” the report stated.
Nevertheless, the report found that between 2016 and 2017 the country saw a 0.2 percent rise in uninsurance during an otherwise prosperous time.
To identify the causes of this conundrum, the study looked at differences in uninsurance rates based on age and income, state Medicaid expansion status, race and ethnicity, education, industry and worker status, and region.
Nonelderly individuals with an income between 138 and 400 percent of the FPL were most affected by this change, with an uninsured rate increase of 0.6 percentage points, or 600,000 individuals. The main drivers were lower rates of employer-sponsored insurance and private nongroup coverage.
In its discussion of the data, the researchers homed in on Medicaid expansion status as playing a pivotal role in states’ insurance levels.
For states that expanded their Medicaid programs under the Affordable Care Act, uninsurance stayed at 7.6 percent, although for families with incomes between 138 and 400 percent of the FPL uninsurance rose by 0.3 percent.
Non-expansion states, in contrast, saw a 0.5 percentage point increase in uninsurance. Private nongroup coverage, Mediciad and CHIP coverage for those below 138 percent of the FPL, and those between 138 and 400 percent of the FPL with employer-sponsored insurance all saw a rise in uninsurance.
The researchers cited a variety of causes driving these shifts.
For unsubsidized plans in non-expansion states, beneficiaries absorb more of the effects of changing premiums and other market factors.
For subsidized plans in non-expansion states, subsidy-eligible members must put the subsidy funds toward a private, nongroup health plan, not Medicaid or CHIP. As a result, subsidized members must find a health plan that fits their subsidy budget and is available.
Non-expansion states may also have been particularly affected by the policy changes of 2018 and 2019. These policies impacted short-term, limited duration (SLTD) plans, abbreviated the enrollment period for the marketplace, and cut cost-sharing subsidy funds for the marketplace.
Lastly, in a move that experts say has threatened the entire ACA, the tax penalty for failure to get health insurance was eliminated in 2019. Without the individual mandate, individuals can forego insurance entirely without a penalty.
There was some turbulence in the market as insurers exited due to the uncertain conditions. Medicaid also spent less on outreach and enrollment this year. The exits could have caused more members to leave.
