Federal and State Action Can Prevent Millions of Laid-Off Workers From Becoming Uninsured

The Affordable Care Act (ACA) has helped the country achieve remarkable strides reducing the number of uninsured from 48 million in 2010, when the law passed, to 28 million today.

One important frontier for continued progress involves workers and their families for whom a job loss means the termination of health insurance. One of the few groups not to experience a major increase in coverage under the ACA was people who lose employer-sponsored insurance because a job ends – a group with numerous young adults, whose presence in insurance risk pools would lower premiums and stabilize markets.

Altogether, more than 30 million people become uninsured at some point during the year because of job loss or other life changes that qualify for mid-year enrollment in ACA marketplaces. Fewer than 5 percent take advantage of those opportunities to sign up for coverage, however.

It is no surprise that so few enroll. Carriers do not market individual insurance outside the ACA’s time-limited open enrollment periods. Some insurers even refuse to pay commissions to agents and brokers for customers they sign up mid-year.

A study published in Health Affairs this week helps explain these patterns. Based on research my colleagues and I conducted when I was a senior fellow at the Urban Institute, our study found that the federal risk-adjustment methodology used to determine carrier compensation misses many of the distinctive health care costs associated with mid-year enrollees. Recent years have seen the Center for Consumer Information and Insurance Oversight (CCIIO) make important progress, but our report found that CCIIO has made up for just half of historic underpayment for mid-year enrollees. Further improvements in federal risk adjustment are needed to give carriers a strong incentive to sign up consumers when job loss leads to a termination of health coverage.

State-level innovations could also help. In the past, highly proactive, hands-on assistance has been the key ingredient in helping laid-off workers enroll into subsidized coverage. State advocates and officials interested in providing such assistance could explore using the service infrastructure that workforce agencies already extend to laid-off workers as a context for implementing renewed, intensive efforts to sign up the newly unemployed and their families for health coverage.

According to public opinion research, one of the most highly-valued aspects of the ACAis that “if you lose a job, become pregnant, get married, or have another life-changing event, you can get health insurance right away without waiting.”  Mid-year enrollment permitted by the law offers the potential to address one of the fundamental gaps plaguing our country’s primarily employment-based health coverage system: how do people get affordable health insurance when they are between jobs? Our Health Affairs study serves as a reminder that vigorous federal and state action can use the tools created by the ACA to fill this gap for millions of underserved families in America.