Pandemic, aging population lead to historic high health coverage rates

By Susan Rupe

The COVID-19 pandemic combined with the Affordable Care Act resulted in a historic high percentage of Americans having health coverage. What’s behind this historic high? Two experts from Manatt Health looked at trends in access to care through Medicare, Medicaid and the commercial health insurance market at a webinar on Thursday.

Between 2011 and 2021, the percentage of Americans with coverage increased by 7.4% to 91.7% of the population, said Julian Polaris, Manatt Health associate. More than half of Americans receive health insurance through an employer, with the rates of employer coverage fluctuating between 54% and 57% from 2010 and 2021. When unemployment increases, the number of people who have employer-based coverage usually falls. However, in 2021, the American Rescue Plan Act subsidized COBRA coverage for those who left or lost their jobs, enabling more people to remain insured.

Although more people have coverage, “the quality of that coverage has eroded over time, with out-of-pocket costs rising steadily.”
— Julian Polaris, Manatt Health associate

Although more people have coverage, Polaris said, “the quality of that coverage has eroded over time, with out-of-pocket costs rising steadily.”

From 2011 to 2021, the average annual family premium – the employer and the employee contribution toward health insurance – rose nearly 50%, from $15,000 to more than $22,000. Since 2009, the percentage of covered workers with an annual deductible greater than $2,000 has quadrupled, from 7% to 29%. Nearly half of employees of small firms have an annual deductible in that range.

ACA enrollment rises sharply

After rising during the Obama administration and falling during the Trump administration, the number of Americans covered under Affordable Care Act marketplace plans rose sharply during the pandemic, Polaris said. As of 2021, 3.5% of Americans – about 14 million people – were enrolled in ACA coverage.

When ARPA was enacted in March 2021, the law significantly enhanced subsidies on the ACA marketplace by eliminating premiums for people with incomes between 100% and 150% of the Federal Poverty Level and by enhancing subsidies for people with incomes greater than 400% of Federal Poverty Level.

These subsidies supported increased ACA enrollment during the pandemic. Other factors that led to increased enrollment included the rising unemployment rate and associated loss of employer health coverage, as well as policies such as special enrollment periods that were meant to promote ACA enrollment.

The Inflation Reduction Act, passed in August, extended the enhanced subsidies though 2025 and it is unknown whether Congress will extend them further.

Medicare: An aging population leads to increased enrollment

The rate of Medicare coverage is increasing as the U.S. population ages, Polaris said. Over the past decade, the number of Americans aged 65 and older has grown 12 times faster than the number of Americans younger than 65. During that time, the proportion of Americans covered by Medicare has risen 4 percentage points. In 2021, Medicare covered 60.2 million Americans, or 18.4% of the total population.

Although the 2020 Democratic presidential primary featured discussion on “Medicare for All,” there currently are no active legislative proposals to expand Medicare eligibility, he added.

Medicaid/CHIP shows trend toward broader eligibility

Medicaid enrollment has risen steadily over time, due to expanding eligibility parameters, said Kinda Serafi, Manatt Health partner. Most recently, under ARPA, Congress authorized states to extend postpartum coverage for Medicaid recipients from 60 days to one year.

As of June, Medicaid and the Children’s Health Insurance Program covered more than 89 million people, or more than 27% of all Americans. Of those, 82.3 million were covered by Medicaid and 7.1 million were enrolled in CHIP.

These are historically high levels, Serafi said. She noted that more than half the children in the U.S. are covered by CHIP or Medicaid, and Medicaid covers more than 40% of U.S. births.

One Medicaid trend Serafi noted is that the majority of Medicaid recipients now receive services through privately operated managed care organizations.

Medicaid is a key driver of health equity, she said, with Medicaid enrollees more likely than the general population to have a low income, be people of color, or have a disability or special health care need.

During the COVID-19 pandemic, Medicaid enrollment increased steadily in part because the Families First Coronavirus Response Act gave states a temporary boost to federal Medicaid funding. That funding is subject to compliance with protection to Medicaid beneficiaries, including a requirement to maintain enrollment for nearly all Medicaid enrollees during the COVID-19 public health emergency.

The requirement to maintain continuous coverage under Medicaid is one reason why Medicaid enrollment climbed 25% since the beginning of the pandemic, Serafi said. Other factors include reduced household incomes as a result of pandemic-related economic factors.

When the public health emergency ends, states must redetermine eligibility for nearly all Medicaid enrollees, which Serafi described as “a significant undertaking.”

States must develop an operational plan for what has been called “the great unwinding.” If an individual is determined to longer be eligible for Medicaid, the state must assess that person’s eligibility for other coverage, such as ACA coverage, and facilitate their transition to that coverage.

Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [email protected]. Follow her on Twitter @INNsusan.