Uninsured Texans: Many More Lose Coverage In Pandemic

The lack of health insurance keeps many from seeking health care services and preventive care. But aside from the personal toll, a high uninsured rate has economic implications for the state as well, due to factors such as increased spending by doctors, hospitals, and local governments for uncompensated care and the rising cost of health care services and insurance premiums.

Access to health insurance allows spending that would have gone to health care to be spent on other things, such as consumer goods and debt reduction. In addition, a workforce with access to health care can help increase productivity and economic output.

Impact on the Texas Economy

A 2019 study (PDF) by the Texas Alliance for Health Care (TAHC) warned that Texas’ high uninsured rate could cause long-term damage to the state’s economy. It can lead to worse health among the uninsured, limiting their earning power.

It affects employers by increasing absenteeism and sidelining skilled workers — and has a negative impact on communities that become saddled with rising costs for uncompensated health care.

The TAHC study predicted that the number of uninsured Texans could rise to 6.1 million by 2040.

Without a change in policy, the study projects that costs for hospitals and physicians who provide unsubsidized and uncompensated care will rise from $3.5 billion in 2016 to $12.4 billion in 2040, while the impact of lost earnings and poor health will rise from $57 billion in 2016 to $178.5 billion in 2040.

Pandemic Effects

Texas, along with the rest of the nation, has experienced an unprecedented number of job losses in a short time due to the COVID-19 pandemic — the direct result of businesses reducing or closing operations to adhere to social distancing requirements. For many, however, the loss of a job brings about additional hardship: the loss of health insurance coverage.

In the U.S., the largest source of health coverage is insurance provided by employers, also known as employer-sponsored insurance (ESI).

According to the Urban Institute (PDF), in both Texas (PDF) and the U.S., about 80 percent of full-time employees were eligible for ESI from their own employers in 2018. The share, however, was much smaller for those working for small businesses (fewer than 50 employees), at 46.9 percent in Texas, and 51.2 percent nationally.

But the COVID-19 pandemic is disrupting the link between employment and health insurance coverage and may exacerbate Texas’ already high uninsured rate.

FamiliesUSA, a nonpartisan health care advocacy group, has used data from the U.S. Bureau of Labor Statistics to estimate that 21.9 million American workers (PDF) lost their jobs or otherwise left employment between February and May 2020.

The increase in unemployment during this three-month period was significantly higher than any annual increase ever recorded nationwide, including the 3.9 million increase recorded between 2008 and 2009, during the Great Recession.

In Texas, more than 3.7 million initial unemployment claims have been filed since March.

FamiliesUSA also estimates that 5.4 million U.S. adults under the age of 65 lost health insurance coverage between February and May 2020.

In Texas, the organization estimates that 659,000 adults lost health insurance coverage in the same period, marking a 15 percent increase from the number of uninsured adults in 2018.

Among states, Texas ranked second — slightly below first-ranked California (689,000) — in its number of persons recently uninsured due to job loss (Exhibit 1).

Notes: Estimates are from May 2020 and may change depending on new employment, the future impacts of COVID-19, and any federal legislation adopted to address those impacts.

Uninsured estimates do not take into account unemployed workers who retained coverage through a spousal employer, Medicaid, or the individual insurance market or family members of the recently unemployed and uninsured, many of whom also lost health insurance coverage.

Definitive coverage data will not be available until 2021 when the U.S. Census Bureau’s American Community Survey publishes health insurance estimates for 2020.

Source: FamiliesUSA

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The Kaiser Family Foundation (KFF), a nonprofit focused on national health issues, projected even greater impacts of COVID-19 on uninsured rates.

KFF estimated that 27 million Americans and 1.6 million Texans could lose coverage after losing their jobs between early March and early May 2020. KFF’s estimates included people of all ages as well as the family members of recently uninsured.

Note, however, that neither of these estimates accounts for the significant employment gains seen in recent months. As of August, Texas had regained about 614,000 jobs since the recession’s trough in April, about 44 percent of those lost since February.

Before the Pandemic

According to U.S. Census data, 18.4 percent of Texas residents had no health coverage in 2019, although the rate has come down a bit from the 23.7 percent registered 10 years ago (Exhibit 2).

The federal Affordable Care Act (ACA), which extended Medicaid coverage to many low-income individuals and provided insurance marketplace subsidies to those under 400 percent of federal poverty guidelines, reduced the number of uninsured residents in Texas and other states after its major provisions went into effect in 2014.

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The increase in coverage, however, occurred unevenly among the states, with those that chose to expand Medicaid eligibility experiencing the largest decreases in their uninsured rates.

Texas is among the states that have not expanded eligibility, opposing what Gov. Greg Abbott called “a massive expansion of an already broken and bloated Medicaid program.”

In addition, state leaders expressed concern about the cost to Texas taxpayers; the nonprofit Foundation for Government Accountability estimates (PDF) that per-person costs for Medicaid expansion have exceeded original estimates by 76 percent, leading to cost overruns of 157 percent.

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Coverage Options for the Recently Uninsured

Recently unemployed persons who lost employer-sponsored insurance have several coverage options, with eligibility depending on income, family status, and state of residence, including:

• continuation of health coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA), which allows workers who lose health insurance coverage due to certain qualifying events, most notably loss of employment, to continue coverage provided by their group health plan. COBRA benefits generally last for 18 months, with extensions for certain circumstances. Its coverage, however, is too expensive for many unemployed workers, since recipients must pay the full premium plus a 2 percent administration fee.
• short-term plans that offer health insurance coverage with limited benefits at lower premiums for a period of up to one year, depending on the state.
• health insurance coverage as a dependent under a spouse’s or parent’s ESI.

What To Do?

Uninsured Texans are demographically and geographically diverse, making a “one-size-fits-all” solution unrealistic. When considering policies to address the state’s high uninsured rate, a variety of strategies should be considered.

Additional investments in outreach and enrollment assistance for public insurance programs and market-based insurance coverage could help increase the number of Texans with health coverage.

Digital health solutions, including telemedicine and remote patient monitoring, also can help expand the capacity of our current health care system, which — plagued as it is by doctor shortages and high costs — often fails to reach Texas’ neediest families.

To reduce the number of uninsured resulting from the pandemic, of course, any actions that keep people employed can help.

Earlier this year, Congress created the Paycheck Protection Program, which incentivized small businesses to retain workers through 1 percent loans that are forgiven entirely if the funds are used for approved purposes; at least 60 percent of the loans must be used for employee payroll.

According to the U.S. Small Business Administration, small businesses received more than $525 billion in these loans (PDF) through the program’s close on Aug. 8, 2020. Texas businesses received $41.3 billion of this amount.

Some have proposed public-private solutions to address increases in the uninsured. Earlier in the year, the Texas Public Policy Foundation (TPPF) proposed a federal Workforce Recovery Act in response to the pandemic; it would include a national “business-interruption” insurance plan based on precedents such as the federal Terrorism Risk Insurance Program, which provides a mix of public and private compensation for losses resulting from acts of terrorism.

TPPF’s plan would provide coverage for payroll, operating costs, and rent and debt payments.

Although the pandemic is exacerbating the problem, Texas’ uninsured rate is an ongoing issue that will continue to grow if not addressed.

Source: Texas Comptroller