Medicaid Enrollment among the Unemployed During the COVID-19 Pandemic and Beyond

Medicaid is the nation’s single largest health insurance program, and Medicaid enrollment has grown since the start of the COVID-19 pandemic. Early in the pandemic marked what many described as one the most severe economic downturns in United States (US) history. The pandemic-induced recession looked different from historical recessions in a number of ways and was the first downturn with the Affordable Care Act’s (ACA) coverage expansions in place. Of the newly unemployed, many were projected to enroll in Medicaid or take up exchange-based health insurance coverage (though many also were temporarily furloughed and had their employer-sponsored health benefits continued). While the job market has recovered substantially, there have been large layoffs recently at high-profile companies and there are fears that another recession could be on the horizon. This brief reviews what we know about Medicaid enrollment changes during economic downturns, examines unemployment-linked Medicaid enrollments early on in the COVID-19 pandemic, and considers the implications for the unwinding of the national public health emergency (PHE).

How does Medicaid enrollment change during economic downturns?

Medicaid enrollment typically increases during economic downturns. Medicaid is a counter-cyclical program, meaning that more people become eligible and enroll during economic downturns; at the same time, states may face declines in revenues that make it difficult to fund the state share of funding for the program. Historically, increases in the national unemployment rate have been associated with increases in Medicaid enrollment. Medicaid enrollment increased sharply following both the 2001-2002 recession and the Great Recession, and enrollment growth has been a primary driver of total Medicaid spending over the past decade. In the 2007-2009 Great Recession, before the passage of the ACA and expanded Medicaid eligibility for low-income adults, Medicaid enrollment increased by 21% (2.6 million), from 6.8% in 2007 to 8.1% in 2009 among working aged (19-64) adults. Further, rising unemployment during the Great Recession was associated with declining private coverage and increased Medicaid enrollment among persons with private coverage in the previous year.

During the Great Recession, Medicaid enrollment was concentrated in states with more expansive eligibility guidelines based on an analysis that created an index and relied on state upper income limits and categorical eligibility rules. States with more expansive guidelines also experienced smaller increases in cost-related barriers to care associated with rising unemployment in the Great Recession because a larger share of people losing private coverage due to job loss were able to transition to Medicaid. Prior to the implementation of the ACA Medicaid expansion, Medicaid eligibility levels for parents were low (national median eligibility level for parents was 64% of the federal poverty level (FPL) in 2013) and only a small group of states had coverage for childless adults through Section 1115 waivers. Unlike the recent pandemic-induced recession, the MOE requirements tied to the fiscal relief during the Great Recession did not include a continuous enrollment requirement, though states could not make eligibility or enrollment processes more restrictive. The Great Recession also predated the passage of the ACA, which expanded Medicaid eligibility and established tax credits for people buying individual insurance through the ACA marketplace.

How did the ACA and expanding Medicaid make it easier for the unemployed to enroll in Medicaid?

The ACA created new coverage pathways in Medicaid and streamlined Medicaid enrollment  processes, making it easier for the unemployed to enroll in Medicaid. State adoption of the ACA’s Medicaid expansion expanded Medicaid eligibility for nearly all adults up to 138% FPL ($23,030 for a family of three in 2022). The expanded eligibility guidelines made it easier for more people who lost their jobs to qualify for Medicaid because categorical requirements such as parental status were no longer a part of eligibility determination. Following the ACA’s Medicaid expansion, Medicaid enrollment among the unemployed in states that adopted Medicaid expansion increased from 23.5% in 2013 to 44.2% in 2017 (Figure 1). After states expanded Medicaid, becoming unemployed was less of a risk factor for becoming uninsured. According to the Bureau of Labor Statistics, an individual is classified as unemployed if they are currently jobless but are available to work and have actively looked for work in the past 4 weeks.

How did Medicaid enrollment change early in the COVID-19 pandemic?

Medicaid enrollment has increased to record highs during the current COVID-19 PHE. To provide broad fiscal relief to states while preventing coverage losses during the pandemic, Congress passed the Families First Coronavirus Response Act (FFCRA) early in the pandemic to provide a 6.2 percentage point increase in the federal Medicaid match rate (“FMAP”) for states that meet certain “maintenance of eligibility” (MOE) requirements, including a continuous enrollment requirement. The COVID-19 recession had different implications for Medicaid enrollment compared to the Great Recession due to its unique health implications, the MOE continuous enrollment requirement, and the passage of the ACA. While Medicaid enrollment is higher in states that have expanded Medicaid under the ACA, the continuous enrollment requirement during the PHE has resulted in substantial enrollment increases in all states.

Medicaid enrollment increases were concentrated in states with expanded eligibility guidelines in place at the start of the pandemic. An analysis of the Current Population Survey’s Annual Social and Economic Supplement (CPS ASEC) examined coverage trends among adult workers that were employed in 2019 and became newly unemployed in 2020, the first year of the pandemic, compared to workers who were employed in 2019 and remained employed in 2020. Among newly unemployed workers, Medicaid enrollment increased 3.1 percentage points overall, with a larger increase in expansion states (from 17.0% in 2019 to 20.6% in 2020) compared to non-expansion states (from 7.3% in 2019 to 8.9% in 2020) (Figure 2). In addition, uninsurance increased by 1.3 percentage points (from 7.6% in 2019 to 8.9% in 2020) in Medicaid expansion states but increased by 8.4 percentage points (from 17.0% in 2019 to 25.4% in 2020) in non-expansion states among newly unemployed workers. Workers that became unemployed—including temporary layoffs and furloughs—in Medicaid expansion states during the pandemic year were 70% less likely to become uninsured compared to workers that became unemployed in states that did not expand Medicaid.

What to watch looking ahead?

While the PHE end date remains uncertain, it is expected to have significant implications for Medicaid enrollment. Following the end of the PHE and continuous enrollment requirement, Medicaid redeterminations will resume, and individuals may lose Medicaid coverage if they are no longer eligible or are unable to navigate administrative barriers despite remaining eligible. Some individuals who gained Medicaid when they became unemployed may have gained new employment and now have income too high to qualify for Medicaid. They may have access to employer-based health insurance (or already be enrolled in such coverage), or now be eligible for ACA Marketplace coverage with premium assistance. Other individuals may have regained employment but may still qualify for Medicaid if they are employed in a low-wage job. Some individuals may also no longer be in the labor force because of the longer-run effects of COVID-19 infections like long-COVID as well as additional caretaking or childcare responsibilities. To avoid becoming uninsured, individuals will need to transition to other available coverage if they are no longer eligible for Medicaid or renew Medicaid coverage.

While state fiscal conditions have vastly improved since the pandemic began, recent economic developments have raised concerns and heightened uncertainty. States’ longer-term fiscal outlooks remain uncertain due to recent economic turmoil, including rising inflation, the Russian invasion of Ukraine, supply chain issues, along with tapering federal fiscal relief. There have also been warning signs signaling the US could be headed for another recession. The findings described here suggest, in the event of future employment losses, Medicaid can serve as an important safety net to prevent coverage loss following unemployment, and that the safety net is stronger in those states that have expanded Medicaid under the ACA.