Introduction

While the COVID-19 pandemic is a global crisis, it may have greater implications for people who utilize long-term supports and services (LTSS), including seniors and people with disabilities & chronic illnesses. As the primary payer for LTSS for millions of low-income Americans, Medicaid is poised to play an important role in the nation’s COVID-19 response for vulnerable populations. There is limited coverage for LTSS under Medicare and few affordable options in the private insurance market. State Medicaid programs must cover LTSS in nursing homes, while most home and community-based services (HCBS) are optional and covered through waivers that may target specific populations. This issue brief presents state-level data and explores key issues and potential state and federal policy responses for Medicaid LTSS users in light of the COVID-19 pandemic.

Populations at Risk and Key Issues

People who need LTSS are in both institutional and home or other community-based settings and have a range of conditions and needs. LTSS needs arise from a range of conditions, such as cognitive disabilities, like dementia or Down syndrome; physical disabilities, like multiple sclerosis or spinal cord injury; mental health disabilities, like depression or schizophrenia; and disabling chronic conditions, like cancer or HIV/AIDS. While COVID-19 has been shown to primarily impact adults, some children with special health care needs can be at risk of severe infection should they contract the virus, given that many of them have conditions that make them susceptible to compromised immune systems. Children with special health care needs may have asthma, depression, cerebral palsy, cystic fibrosis, diabetes, muscular dystrophy, brain injury, heart conditions, and epilepsy. Appendix Table 1 shows the distribution of LTSS users across institutional and community based settings. In 2016, Medicaid spending on HCBS was 57% of total Medicaid LTSS expenditures, exemplifying states’ gradual shifts away from institutional care over the last two decades.

People receiving LTSS in institutions are at increased risk for adverse health outcomes if infected with coronavirus due to old age, chronic health conditions, and high rates of occupancy density. Institutional LTSS include care provided in nursing homes, intermediate care facilities for people with intellectual and developmental disabilities (I/DD), and institutions for “metal disease.” As of April 10, nearly 2,500 long-term care facilities are battling coronavirus infections, a 522% increase from the 400 facilities reported by the CDC on March 30. There have also been reports of other types of institutions with COVID-19 outbreaks, including a facility in Texas that serves people with intellectual and developmental disabilities. The high rates of infection in these facilities can be attributed to a number of factors, including high rates of occupancy density, which is as high as 90% in some states.¹ 

Nursing home residents may have high levels of need, ranging from respiratory issues to cognitive and behavioral health needs, which contribute to their increased risk due to coronavirus. Sixteen percent of nursing home residents underwent respiratory treatment in 2017, which can be provided through respirators/ventilators, oxygen, or inhalation therapy. Given the implications of this virus on respiratory systems, these residents could be at higher risk of severe outcomes if they were to become infected. Nursing homes’ capacity to care for high-need patients, such as those with coronavirus, varies. Residents in nursing facilities are also at risk of being diagnosed with psychiatric disorders, with nearly 40 percent having experienced symptoms of depression.²  Visitor restrictions in nursing facilities, which are currently being implemented to lower the risk of exposure, may have negative impacts on residents’ mental health and increase the incidence of depressive symptoms. These health problems may be further exacerbated by fear, worry, or social isolation due to COVID-19.

Individuals receiving HCBS may also be at increased risk for adverse health outcomes if infected with coronavirus. HCBS encompass many different types of care, such as home health services, personal care services, and private duty nursing. Some people receive HCBS at home, while others may receive services elsewhere in the community, such as assisted living facilities, adult day health centers, and Program of All-Inclusive Care for the Elderly (PACE) centers, which provide integrated care for people dually eligible for Medicare and Medicaid. HCBS programs serve a range of populations, all of whom have varying levels of need. These include people with I/DD; people with physical disabilities, such as cerebral palsy or multiple sclerosis; seniors with Alzheimer’s disease and physical functional limitations associated with the aging process; and people with chronic illness such as HIV/AIDS. People who receive HCBS in settings with others are at greater risk for coronavirus infection, as there have been reports of outbreaks in settings such as assisted living facilities. Given that some community-based settings share similar characteristics to institutions, including issues related to occupancy density, outbreaks may occur.

LTSS users receiving care in the home and/or community rely on caregivers to help with daily self-care and household activities. LTSS provide assistance with self-care tasks (such as eating, bathing, and dressing), and household activities (such as meal preparation, medication management, and housekeeping). These services are essential to meet LTSS beneficiaries’ daily needs, many of whom often have substantial medical needs as well. In the U.S., the majority of LTSS is provided by unpaid caregivers – relatives and friends – at home.

LTSS may be restricted as caregivers take precautions to limit coronavirus exposure to the individuals they serve. The spread of coronavirus presents three major issues with regards to the LTSS caregiver workforce. First, if LTSS caregivers begin to get ill and are unable to provide care, there may be a severe shortage of LTSS available for those who need it. Secondly, evidence is growing that some people may be unknowingly infected with coronavirus and capable of transmitting the disease to others, while asymptomatic. Therefore, screening of direct care workers, who often must be in close contact with their patients, is important to containing the spread of the virus. This is especially true, given that many people who receive LTSS have chronic conditions and compromised immune systems, placing them at high risk for severe outcomes if infected. The third major issue is that LTSS depend on medical supplies that are currently in short supply. Healthcare settings across the country are running low on critical medical supplies, and healthcare providers are resorting to reusing gloves, gowns, and masks. Those receiving and providing LTSS are at risk from interruptions in access to medical supplies, which can interfere with the ability to manage daily health needs as well as prevent coronavirus infections.

State Policy Options Under Existing Authorities

States can adopt a variety of policy options to increase and support access to Medicaid LTSS during public health emergencies such as COVID-19. Examples of options under the major authorities are described below, and a detailed list is provided in Appendix Table 2. The state examples below are not an exhaustive list, and additional state approvals are regularly updated in our Medicaid emergency authorities tracker.

Section 1915 (c) waiver Appendix K enables states to modify policies to expand HCBS eligibility and services and support providers in emergencies (Figure 2). As noted above, most HCBS are provided through waivers. CMS has clarified that Appendix K also can be adopted by states with Section 1115 waivers that authorize HCBS, without an accompanying Section 1915 (c) waiver. Appendix K approvals can be retroactive to HHS’s January 2020 public health emergency declaration and effective for one year.

States can use Appendix K to expand waiver eligibility to a wider population and to offer additional services. For example, a waiver serving individuals with Alzheimer’s disease may be expanded to offer services to a broader aged population to forestall institutionalization in emergencies. States also are adjusting the amount, duration, or scope of regularly covered services to account for increased needs during an emergency.

States can use Appendix K to ensure uninterrupted access to HCBS during an emergency by extending waiver level of care renewals for up to 12 months, temporarily suspending prior authorization requirements, and extending medical necessity authorizations. States also can take steps to ensure that waiver enrollees continue to receive services if their usual setting is disrupted during an emergency. For example, states can temporarily modifying provider requirements to allow for day program services in individual homes if day centers are closed due to outbreak of contagious illness. States can temporarily allow payment for waiver services, such as communication supports and intensive personal care, for enrollees during an acute care hospital or short-term institutional stay.

States can address provider shortages during an emergency by allowing payment to family caregivers or legally responsible relatives and temporarily modifying minimum provider qualifications to allow neighbors or acquaintances to be service providers during the emergency. States also can support providers by temporarily increasing payment rates to attract more providers and/or to account for costs such as personal protective equipment (PPE) for home care workers and temporarily paying retainers to personal care assistants when enrollees are institutionalized up to 30 days.

Section 1135 and Section 1115 waivers may provide additional authorities to states in emergencies. Section 1135 authority is tailored to addressing emergency needs, such as sufficient health care items and services. For example, states can use Section 1135 waivers to expand access to HCBS in times of provider shortages caused by emergencies by temporarily suspending requirements for home health and hospice aide supervision by registered nurses or streamlining provider enrollment requirement for HCBS provided in the state plan benefit package. Section 1135 waivers also can allow states to waive fee-for-service prior authorization requirements and extend appeal deadlines for enrollees. On March 28, 2020, CMS issued blanket Section 1135 waivers, which apply throughout the U.S. healthcare system during the emergency that temporarily suspend some nursing facility certification requirements to provide additional surge capacity, free up inpatient hospital beds, and provide space for isolation and treatment of those with coronavirus. The blanket waivers also allow long-term care facilities to transfer residents to separate those with and without COVID-19 to provide care while limiting the spread of infection. Section 1115 waivers have been used in emergencies to expand eligibility for Medicaid LTSS by waiving the 30 day institutional stay requirement or asset transfer rules.

States also can adopt a variety of policies to respond to an emergency without the need for CMS approval. Existing Medicaid regulations allow states to streamline Medicaid enrollment, such as accepting self-attestation to establish spend down eligibility, and to extend renewal timeframes to preserve continuity of coverage. States also can use telehealth instead of in-person meetings for needs assessments for state plan HCBS, such as home health, personal care, or Community First Choice attendant services. States delivering services through MLTSS can use their authority to regulate health plans to ensure that enrollees have access to needed services during an emergency by directing plans to temporarily suspend out of network rules or expedite new prior authorization requests.

New Federal Policy Options and Guidance

Recently enacted federal legislation includes some provisions that can support state responses to the COVID-19 emergency. The Families First Coronavirus Response Act authorizes 6.2% enhanced federal Medicaid matching funds, provided that states meet certain requirements, such as maintaining eligibility standards and enrollment and covering coronavirus related testing and treatment without cost sharing. This enhanced federal funding may help states finance some of the policy options described above to expand HCBS eligibility and services during the emergency. The Coronavirus Aid, Relief, and Economic Security (CARES) Act allows certain providers other than physicians to certify the need for Medicaid home health services.³  The CARES Act also provides additional funding for Money Follows the Person demonstrations that support Medicaid beneficiaries moving from institutions to the community and extends the ACA requirement that states apply the institutional care spousal impoverishment rules when determining Medicaid HCBS eligibility through November 2020. The CARES Act also requires that at least $100,000,000 of a $200,000,000 appropriation to CMS be spent on nursing facility inspection programs, with priority for facilities in localities with community transmission of coronavirus.

CMS has taken several actions to address the impact of COVID-19 in institutional LTSS facilities. On March 13, 2020, CMS issued a memo to State Survey Agency Directors that provided guidance on infection control and prevention of COVID-19 in nursing homes.⁴  This guidance included measures that restricted all visitors (with exceptions for compassionate care), volunteers and other nonessential personnel, and implemented active screening of residents and staff for fever and respiratory symptoms. On March 23, 2020, CMS announced that it is temporarily postponing all routine nursing facility inspections to focus solely on infection control and “Immediate Jeopardy” situations, which are situations in which a patient’s safety is placed in imminent danger. CMS also is recommending that 1) facilities administer their own self-assessments to determine whether they are prepared for an outbreak, and 2) residents and families ask facilities for results of the self-assessments. This guidance is based on CMS’s preliminary findings from its inspection of the Kirkland, Washington nursing home, the site of a COVID-19 outbreak affecting many residents and staff.⁵  CMS released further guidance on April 2^nd, 2020 that includes recommendations to implement coronavirus symptom screening for all staff, residents, and visitors; use appropriate PPE when interacting with patients and residents, to the extent that it is available and used within the guidance of PPE conservation; and designate separate facilities for coronavirus negative residents from coronavirus positive residents and individuals with unknown coronavirus status.⁶  Notably, CMS has not provided guidance to nursing homes about reporting cases and deaths attributed to coronavirus in their facilities, which has led to a lack of reliable data and an inability to capture the extent of the issue.

Another high-risk population that the federal government has sought to address with new guidance are those in PACE programs. Nearly 50,000 people dually eligible for Medicare and Medicaid receive integrated care through a PACE organization (Appendix Table 1), prompting CMS to issue guidance on March 17, 2020 that all PACE organizations establish, implement, and maintain a documented infection control plan, and personnel be given and trained on the use of personal protective equipment (PPE).⁷ 

CMS also has encouraged and expanded the use of telehealth instead of in-person visits. CMS guidance on how states can use their Medicaid programs to cover telehealth services highlights that states have significant flexibility to deliver covered services through telehealth and provides policy options for states to reimburse Medicaid providers that provide telehealth services.⁸  On March 13, 2020, CMS also expanded Medicare’s telehealth benefits under Section 1135 waiver authority and as required by the Coronavirus Preparedness and Response Supplemental Appropriations Act to allow beneficiaries to receive healthcare services without having to travel to a healthcare facility. The changes apply to those receiving skilled nursing facility services, home health, and hospice. This expansion of benefits will also allow Medicare beneficiaries to receive care for various services, including common office visits, mental health counseling, and preventive health screenings.⁹ 

Looking Ahead

State and federal policymakers are responding to a rapidly changing environment as the COVID-19 emergency progresses. Looking ahead, state budget pressures and a looming recession will present additional financial challenges and pressures for states. In the days and weeks ahead, nursing home capacity also will be challenged to care for patients discharged from hospitals, freeing acute care beds for subsequent patients in need of care while also striving to control the spread of infection. Ongoing challenges likely will result from COVID-19’s impact on direct care workers, which in turn may limit seniors and people with disabilities and chronic illnesses’ ability to receive services on which they depend to meet daily self-care and independent living needs. Greater access to coronavirus testing would allow for the identification of LTSS workers and others who may be asymptomatic but at risk of spreading the virus to vulnerable populations. Additionally, interruptions in access to medical supplies as a result of the COVID-19 emergency can interfere with people with disabilities’ ability to manage their daily health needs. As the pandemic continues, there will be a particular focus on people who need LTSS services — given their heightened risk and high rate of infection, severe illness, and mortality – and on policies to protect them and their caregivers.

1. KFF, Data Note: How Might Coronavirus Affect Residents in Nursing Facilities (March 2020), https://modern.kff.org/medicaid/issue-brief/data-note-how-might-coronavirus-affect-residents-in-nursing-facilities/ ↩︎
2. KFF, Data Note: How Might Coronavirus Affect Residents in Nursing Facilities (March 2020), https://modern.kff.org/medicaid/issue-brief/data-note-how-might-coronavirus-affect-residents-in-nursing-facilities/ ↩︎
3. Coronavirus Aid, Relief, and Economic Security Act (CARES Act), S.3548, 116th Congress (2020), https://www.congress.gov/bill/116th-congress/senate-bill/3548 ↩︎
4. CMS, Guidance for Infection Control and Prevention of Coronavirus Disease 2019 (COVID-19) in Nursing Homes (March 13th, 2020), https://www.cms.gov/files/document/3-13-2020-nursing-home-guidance-covid-19.pdf ↩︎
5. CMS, Prioritization of Survey Activities (March 23rd, 2020), https://www.cms.gov/files/document/qso-20-20-all.pdf ↩︎
6. CMS, COVID-19 Long-Term Care Facility Guidance (April 2nd, 2020), https://www.cms.gov/files/document/4220-covid-19-long-term-care-facility-guidance.pdf ↩︎
7. CMS, Information for PACE Organizations Regarding Infection Control and Prevention of Coronavirus Disease 2019 (COVID-19) (March 17th, 2020), https://www.cms.gov/files/document/covid-19-pace-memo-3-17-20.pdf ↩︎
8. CMS, Medicaid State Plan Fee-for-Service Payments for Services Delivered Via Telehealth, https://www.medicaid.gov/medicaid/benefits/downloads/medicaid-telehealth-services.pdf ↩︎
9. CMS, Medicare Telemedicine Health Care Provider Fact Sheet (March 17th, 2020), https://www.cms.gov/newsroom/fact-sheets/medicare-telemedicine-health-care-provider-fact-sheet ↩︎

With millions expected to be hospitalized during the COVID-19 pandemic, the U.S. health care system will be tested as it never has been before. In response, Congress has passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which allocates $100 billion in assistance for hospitals and other health care providers. The Trump administration has signaled that it will use some of these funds to reimburse hospitals for treating uninsured COVID-19 patients at Medicare payment rates, which the CARES act also increased by 20% for COVID-19 treatment during the crisis. However, some have raised concerns that even these increased Medicare rates may not be sufficient.

Prior to the outbreak, national and state-level policymakers were already debating several proposals that would build on Medicare’s payment structure – including Medicare-for-All and various public option proposals – to establish standardized rates for hospitals, physicians, and other health care providers. While supporters point to potential coverage gains and reductions in national health spending, critics contend that bringing private insurer payments closer to Medicare rates could threaten providers’ financial viability. Once the U.S. overcomes the immediate public health emergency, attention will likely return to underlying questions regarding provider payments, as well as their impact on health expenditures and out-of-pocket costs. To inform both discussions, this issue brief reviews the findings of 19 recent studies comparing Medicare and private health insurance payment rates for hospital care and physician services.

Key Findings

• Private insurers paid nearly double Medicare rates for all hospital services (199% of Medicare rates, on average), ranging from 141% to 259% of Medicare rates across the reviewed studies.
• The difference between private and Medicare rates was greater for outpatient than inpatient hospital services, which averaged 264% and 189% of Medicare rates overall, respectively.
• For physician services, private insurance paid 143% of Medicare rates, on average, ranging from 118% to 179% of Medicare rates across studies.

Across all studies, payments from private insurers are much higher than Medicare payments for both hospital and physician services, although the magnitude of the difference varies (ES Figure 1). Differences across studies may be due to a number of factors, including the representativeness of hospitals, physicians, and insurers used in the analysis, the data collection period, and the characteristics of the markets examined by each study, with some studies focusing on highly consolidated health care markets where providers have stronger negotiating leverage over insurers. (For study descriptions, see the Appendix Table).

Policymakers and analysts continue to debate whether relatively high payments from private payers are necessary to compensate for lower Medicare payments, and the extent to which providers could operate more efficiently to reduce costs. If provider payments were phased down closer to Medicare levels, providers would have stronger incentives to become more efficient, which could help make health coverage and care more affordable for patients and employers. However, even some relatively efficient providers appear to have been be losing money on Medicare patients over the past few years, prompting some leading public option and Medicare for all proposals to set hospital payments somewhat above current Medicare rates. While providers may be able to operate more efficiently than they do today, a transition period may be needed to give providers and payers time to adapt to lower payments, and to assess the potential implications for the quality and accessibility of care.

Background

Health care spending in the United States is high and growing faster than the economy. In 2018, health expenditures accounted for 17.7% of the national gross domestic product (GDP), and are projected to grow to a fifth of the national GDP by 2027.¹  Several recent health reform proposals aim to reduce future spending on health care while also expanding coverage to the nearly 28 million Americans who remain uninsured, and providing a more affordable source of coverage for people who struggle to pay their premiums.²  Some have argued that these goals can be achieved by aligning provider payments more closely with Medicare rates, whether in a public program, like Medicare-for-All, a national or state-based public option, or through state rate-setting initiatives.^{3 ,4 ,5 ,6 ,7 ,8  9 ,10 ,11} 

Moreover, the global COVID-19 pandemic has heightened the urgency surrounding Medicare provider payments. In response to rising financial strain on hospitals during the crisis, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which allocates $100 billion to assist hospitals and other providers. The Trump administration has signaled that it will use some of this funding to reimburse hospitals for treating uninsured COVID-19 patients at Medicare payment rates. Additionally, the CARES Act temporarily suspended 2% Medicare payment reductions that had been mandated under federal sequestration, and increased Medicare rates for COVID-19 hospitalizations by 20% during the legislation’s emergency period.¹²  However, some have raised concerns that even these payments may not be sufficient, and that hospitals’ financial viability will become increasingly tenuous throughout the crisis.¹³  Thus, these two debates over the adequacy of Medicare’s payment structure – to meet the needs of the pandemic response in the short term, and to serve as a basis for broader national or state-level health reform in the long term – merit a close look at how Medicare provider payments fit into the broader U.S. health insurance system.

Private insurers currently play a dominant role in the U.S. In 2018, private insurance accounted for more than 40% of expenditures on both hospital care and physician services. In comparison, Medicare accounted for about one quarter of these expenditures in the same year.¹⁴  Consequently, adjustments to private insurers’ provider payment rates could have a profound impact on providers’ revenues, employers’ and privately insured Americans’ health spending, and national health spending overall.

Over the years, Medicare has adopted a number of payment systems to manage Medicare spending and encourage providers to operate more efficiently, which in turn has helped slow the growth in premiums and other costs for beneficiaries. For example, Medicare adopted its prospective payment system in 1983, which sets payment rates for hospitals in advance based on categories of hospital services known as diagnosis-related groups (DRGs). These payments are updated periodically to account for changes in providers’ operating costs, and are adjusted for factors such as direct and indirect expenses for graduate medical education (DGME and IME payments) and whether a disproportionate share of a hospitals’ patients are Medicare beneficiaries (DSH payments).¹⁵  Since then, policymakers have made numerous modifications to this methodology, including a change adopted by the ACA in 2010 that adjusts annual updates in Medicare payments to hospitals for assumed productivity increases, resulting in lower payment rates and significant savings for Medicare.¹⁶  Medicare has also adopted a number of specific payment systems for virtually every type of health care provider, building in incentives for providers to become more financially efficient.

By contrast, private insurers’ payment rates are typically determined through negotiations with providers, and so vary depending on market conditions, such as the bargaining power of individual providers relative to insurers in a community. Accordingly, Medicare has been able to limit growth in expenditures per enrollee more effectively than private insurers at several points in recent decades.^17 ,18 

Proponents of proposals to broaden the use of Medicare rates, or to use a multiplier of Medicare rates as a benchmark, say that such an approach would help make expanding coverage more affordable and reduce excess costs in the U.S. health care system. In an effort to broaden coverage through an affordable public option, Washington State recently adopted a proposal to establish a public option that would set payments at 160% of Medicare rates, and other states – most notably Colorado, which is also considering a public option with payments set at a percentage of Medicare rates – may soon follow Washington’s lead.^19 ,20  Rate-setting programs in Maryland and Vermont do not tie provider payments to an explicit percentage of Medicare rates, but rather their “all-payer” programs allow their respective state governments to set payment rates for hospitals (in Maryland) and for providers in participating Accountable Care Organizations (in Vermont), and have achieved savings on state-level health expenditures by some measures.²¹ 

However, some have raised concerns that Medicare payments are not keeping pace with provider costs. For example, following the enactment of productivity adjustments to hospital payments in the ACA of 2010, and further reductions under the Budget Control Act of 2011, the Department of Health and Human Services (HHS) actuaries warned that the reductions in payments could eventually make it difficult for hospitals to operate profitably – a concern amplified by the hospital industry.^22 ,23  Similar red flags were raised with respect to the formula set in law for physician payments, known as the Sustainable Growth Rate, or SGR, which Congress modified repeatedly to avoid annual reductions in Medicare payments. The SGR was ultimately repealed, but left in its wake some concern that future payments would not keep pace with practice costs.²⁴  Citing these issues, some have argued that the financial strain imposed by lower payment rates may render many hospitals and physician practices unsustainable, jeopardizing patient care.^25 ,26  Ultimately, the capacity of providers to operate successfully would likely depend on the magnitude of the gap between private and Medicare rates, and other factors such as how effectively and quickly they are able to respond to reduced payments by improving their efficiency.

To bring together available evidence on these issues, this brief first reviews recent studies comparing private insurers’ and Medicare’s provider payment rates, focusing on studies that examine hospital services and physician services over the period from 2010 to 2017. We summarize the results of studies examining payments for hospital and physician services, and explore methodological factors that may explain variation in estimates across studies. Finally, we review available literature comparing hospitals’ and physician practices’ costs to Medicare payments, and discuss the potential implications of bringing provider payments closer to Medicare rates.

Medicare vs. Private Insurance Rates: Literature Review

This brief reviews findings from studies that compare Medicare and private insurance rates for hospital and physician services. We include studies with data from 2010 onward to reflect changes to Medicare provider payment rates established by the Affordable Care Act, and subsequent policy adjustments over the past decade.  We identified 19 relevant studies through keyword searches of academic search engines, as well as the websites of governmental, research, and policy organizations that publish work related to health care and health economics. These studies analyze data reported by the Centers for Medicare and Medicaid Services, private insurers, hospitals, and physician practices.

 Of these 19 studies, 14 addressed payments to hospitals, eight of which addressed payments for inpatient hospital services, five addressed payments for outpatient services, and seven reported relative payment rates for both types of hospital services combined, with some overlap across studies. Eight studies addressed payment rates for physician services. The full search methodology is described in the Methods section.

To compare findings across multiple studies, we focus on private insurance payments as a percentage of corresponding Medicare payment rates reported by each study. We calculate the average across all studies, by provider category, such as inpatient hospital care. Due to the relatively small number of studies available, our calculation of an overall average gives each study equal weight, recognizing that each varies substantially in methods, data sources, the number and representativeness of providers and payers examined, and geographic focus (e.g., some studies are based on national data while others are state-specific).

For studies that report private-to-Medicare payment rate ratios for multiple years, we calculate an average across years to create one estimate used for the cross-study average. These included studies by the American Hospital Association (AHA), the Colorado Department of Health Care Policy and Financing (DHCPF), White and Whaley’s 2019 study, and two studies by Selden and colleagues published in 2015 and 2020, respectively. This approach prevents disproportionate weighting of results from studies that reported rates for multiple years. Moreover, we do not weight studies differently based on factors such as their geographic scope; studies that examined nationwide provider markets are given equal weight to those that focused on rates for provider in selected states or smaller markets, which may skew overall averages toward the prevailing private-to-Medicare payment ratios in these particular markets. (See the Appendix Table for methodological details for each study).

INPATIENT AND OUTPATIENT HOSPITAL SERVICES (COMBINED)

Of the eleven studies that examined differences between Medicare and private insurance rates for hospitals, seven did not distinguish between inpatient and outpatient hospital services. Across these seven studies, private insurance rates for inpatient and outpatient hospital services averaged 199% of Medicare rates, but the results varied widely, ranging from 141% (Wallace and Song, using nationwide data) to 259% (Ge and Anderson, using data specific to hospitals in Florida, which the authors note are disproportionately private, for-profit hospitals) of Medicare levels (Figure 2). However, the variation within studies was often substantially wider, as the ratio of private-to-Medicare rates often differed dramatically across markets, services, and even individual hospitals. The greatest variation was observed in Ge and Anderson’s study of Florida hospitals, which found private insurance payments ranging from 170% to over 1400% across Hospital Referral Regions (HRRs) in the state. White and Whaley’s multi-state analysis also found notably large variation at the level of individual hospitals, ranging from approximately 150% to 450% of Medicare rates for the composite of inpatient and outpatient services. These findings suggest that, even within a given health care market, some individual hospitals may be outliers in that they can command extremely high private reimbursements.

INPATIENT HOSPITAL SERVICES

Eight studies compared private insurance and Medicare payment rates for inpatient hospital services. Private insurance payment rates for inpatient hospital services averaged 189% of Medicare rates across studies, ranging from 150% (White and colleagues, 2013 analysis) to 222% (Cooper and colleagues, 2018) (Figure 3). Within studies, the greatest variation was seen in White and Whaley’s analysis, which reported private-to-Medicare payment ratios for inpatient hospital services ranging from 34% to 581% across individual hospital systems. This range was comparable to the variation seen across specific inpatient services in Cooper and colleagues’ study, which ranged from 161% for vaginal deliveries to 400% for lower extremity MRI, as well as the range of 84% to 484% across markets reported by Ginsburg.

As with the analysis combining inpatient and outpatient services, we averaged estimates for each year in studies that present multiple years of results based on the same methodology and data source. In keeping with this approach, we also averaged results from the 2015 and 2020 studies published by Selden and colleagues, as both studies intentionally used the same data source and methodology.

There is notably less variation in the ratio of private-to-Medicare payments among studies of inpatient hospital payments than studies that examine rates for all hospital services combined, as may be expected since the range of services represented is narrower.

OUTPATIENT HOSPITAL SERVICES

Five of the reviewed studies examined the difference between private insurance rates and Medicare rates for outpatient hospital services. Across these studies, the ratio of private-to-Medicare payment rates fluctuated more than they did for combined hospital services or for inpatient hospital services. Results ranged from a low of 150% of Medicare rates in the final year of Selden’s 2020 study of hospitals nationwide to a high of 358% in White’s 2017 study of Indiana hospitals (Figure 4), averaging 264% of Medicare rates overall. Within studies, the greatest variation was seen in White and Whaley’s analysis, in which private-to-Medicare payment ratios for outpatient services ranged from 50% to as high as 2958%. Notably, Ginsburg also reported a wide range across major metropolitan markets from 158% to 718% of Medicare rates, and Cooper reported a range of 171% to 496% across specific outpatient services.

The relatively high private-to-Medicare payment ratio reported by White’s 2017 study (358%) is partly attributable to the fact that the analysis was limited to hospitals in Indiana, which, according to White and Whaley in their 2019 multi-state follow-up study, has exceptionally high degree of hospital consolidation compared to other state hospital markets. If this one study is excluded, the overall average for outpatient hospital services drops from 264% to 240% of Medicare payment rates.

FACTORS ASSOCIATED WITH VARIATION ACROSS STUDIES OF HOSPITAL RATES

Several factors may contribute to variations in estimates across studies, including: the representativeness of hospitals and private insurers; the relative market power of hospitals and insurers in the markets included in the analysis; the types of hospital services examined; the components of private insurance and Medicare payments used to calculate their respective payment rates; and the treatment of out-of-network payments. These factors are described in greater detail below and in the Appendix Table.

• Hospital and Insurer Market Power. The gap between Medicare and private insurance rates in a given market is a function of the market power of hospitals relative to that of local insurers, as hospitals or hospital systems with more negotiating leverage can generally obtain higher payment rates from insurers.^{27 ,28 ,29 ,30 ,31}  Studies using data from markets in which hospitals exhibited a relatively high degree of market concentration tended to report higher private insurance payment rates relative to Medicare rates, such as White’s 2017 analysis of hospitals in Indiana, which White and Whaley attribute to the statewide dominance of six large hospital systems in their multi-state follow-up study.^32 ,33  A similar pattern was observed in studies that looked at several different hospital markets. Ginsburg notes that the private-to-Medicare payment ratio was highest in cities with greater hospital concentration (e.g., San Francisco and Richmond) for both inpatient and outpatient hospital services, and White and Whaley report a similar trend across state-level hospital markets.^34 ,35 .Conversely, studies in which private insurers had greater market power tended to report lower private insurance payment rates relative to Medicare rates. For example, the 2013 analysis by White and colleagues was limited to hospitals in Michigan, which White and Whaley found to have the lowest average hospital prices across all services among the states included in their 2019 analysis. The authors attribute this to the outsized market share of Blue Cross Blue Shield of Michigan in the statewide insurance market, which, according to the authors, gives this insurer exceptionally strong negotiating power over Michigan hospitals.^36 ,37 
• Hospital Type. The reviewed studies differ in the extent to which they are representative of all hospitals, which is likely to affect the ratio of private payments to Medicare rates. For example, Ge and Anderson limit their analysis to private, short-term hospitals in Florida, which the authors note has an exceptionally high proportion of for-profit hospitals compared to the national average, potentially contributing to relatively high private insurance payments relative to Medicare rates.³⁸  In contrast, the American Hospital Association (AHA) analyses are based on a data reported by over six thousand hospitals nationwide, including academic medical centers, community hospitals, and non-profit hospitals, which may explain the lower estimates of the private-to-Medicare hospital payment ratio than for-profit hospitals.³⁹ 
• Selection of Insurers. Without comparable, nationally representative private insurance payment data to compare to Medicare payment rates, some researchers have relied on convenience samples to compare the rates paid by private insurers and Medicare. Several studies, for example, use data from only a few large private insurers, which captures payments for a large share of private patients, but excludes payment rates from other insurers who may have less market power. Studies by Baker and colleagues, Cooper and colleagues, and Maeda and Nelson analyze claims provided by the Health Care Cost Institute (HCCI) for three large private insurers (UnitedHealthcare, Humana, and Aetna), and Ginsburg uses data from four payers.^40 ,41 ,42 .In contrast, Wallace and Song use a claims database in which over 300 private payers are represented, reflecting a more diverse array of insurance markets across the U.S.⁴³  Other authors use data from state all-payer claims databases or state hospital financial reports, which encompass private payments for hospital care across all commercial insurers and other private plans.
• Types of Hospital Services. The types of hospital services examined by each study may also affect the ratio of private insurance to Medicare payment rates, particularly when either procedural services or routine evaluation and management services are disproportionately represented. For example, Wallace and Song limit their analysis to services for which cost-sharing components for patients are roughly comparable across both Medicare and private insurers, leading them to focus on imaging services and surgical procedures.⁴⁴  Given the concern of the Medicare Payment Advisory Commission (MedPAC) that these services are reimbursed at disproportionally higher rates by Medicare than routine evaluation and management services, this approach may skew estimated Medicare rates upward and reduce the ratio of private-to-Medicare payments.⁴⁵  In contrast, studies such as White and Whaley’s analysis that include a higher proportion of claims for non-procedural services likely generate lower estimates of Medicare rates.
• Payment Components. While nearly all of the studies calculate private insurance and Medicare payment rates directly from claim reimbursement or hospital payment amounts, studies varied in the types of payments that were included in these amounts. This is particularly important in the estimation of Medicare payment rates due to the variety of hospital payments allowed under the Medicare Prospective Payment System, such as those for hospitals with IME expenses or DSH status.^46 ,47  Baker and colleagues include the majority of these categories of additional Medicare payments, including outlier case payments and one-time payments for capital, which are excluded in most other studies, which as might be expected, contributes to a relatively low ratio of private-to-Medicare payment rates.⁴⁸ .By contrast, the analysis by Kronick and Neyaz relies on cost and charge data reported at the level of specific hospital units (e.g., diagnostic radiology, surgical intensive care, labor and delivery, etc.), and so excludes Medicare payments that cannot be solely attributed to them, such as those for IME.⁴⁹  Other studies simulate the amounts that Medicare would have paid for the same hospital services reflected in their private claims data. When actual Medicare payment data are used, payment components that are associated with specific claims (such as those for direct medical education and geographic adjustments) are included in the reported rates, which may cause Medicare payments to appear higher relative to private insurance rates..Conversely, simulating Medicare rates based only on claim-level information may result in lower estimates of Medicare payments if some of these payment components are excluded (as in the Maeda and Nelson’s analysis, which excluded IME payments), though the three analyses by White and colleagues address this by simulating these additional payments as well.^{50 ,51 ,52 ,53} .The reviewed studies vary in the payments they incorporate into their calculations of private insurance rates as well. For example, the AHA estimates are based on payment-to-cost ratios for hospital stays for each payer category, which, for private payments, includes stays that were paid by patients out-of-pocket without contributions from insurers.⁵⁴  As Selden and colleagues note in their 2015 analysis, if hospitals do not ultimately collect as much from uninsured patients as they do from patients with private insurance, this approach would reduce estimates of average private payments, and could explain why the private-to-Medicare payment ratios derived from AHA data are lower than the overall average.⁵⁵ ..Selden and colleagues’ 2015 analysis and 2020 follow-up study incorporate some payments by Medicare Advantage plans in their calculation of Medicare rates.^56 ,57   However, available evidence suggests that Medicare Advantage payment rates are comparable to those paid by traditional Medicare for hospital services, so the effect of including these payments is likely minimal.^58 ,59 
• Out-of-Network Claims. The proportion of out-of-network claims included in each analysis may also affect private insurance rates, as payments for out-of-network services are typically much higher than in-network payments for the same services.⁶⁰  While the majority of the studies in this brief intentionally exclude out-of-network claims, White and Whaley note that the data used in their 2019 analysis did not contain enough information to reliably determine whether claims were out-of-network or in-network.⁶¹  While it is not clear what proportion of claims in this study were out-of-network, these payments may contribute to the relatively high private-to-Medicare ratio that the authors report.

PHYSICIAN SERVICES

Eight studies compared private insurance and Medicare payment rates for physician services. Private insurance rates averaged 143% of Medicare rates overall, ranging from 118% (Ginsburg, 2010) to 179% (Song, 2019) of Medicare levels across studies (Figure 5).  Estimates from each year of the MedPAC analysis were averaged to calculate the overall average across the studies. Within studies, the greatest variation was seen in Pelech’s analysis, which reported a range of private-to-Medicare payment ratios for specific physician services from less than 80% for established patient office visits to over 400% for the physician service component of brain MRI. Ginsburg also reported a significant range across major metropolitan markets, ranging from 82% to 251%.

Across all studies, private insurance rates for physician services are substantially closer to Medicare levels than private insurance rates for hospital services, which suggests that physician groups generally have less negotiating leverage relative to private insurers than hospital groups. Nonetheless, the reviewed studies still demonstrate pronounced variation overall.

FACTORS ASSOCIATED WITH VARIATION ACROSS STUDIES OF PHYSICIAN PAYMENTS

Much of the variation in reported physician payment rates may be explained by methodological differences, several of which echo those seen among the reviewed studies of hospital payments. The most significant of these include the relative market power of physicians and insurers in the markets being examined, the types of physician services used for the comparison, the components of private insurance and Medicare payments included in the calculation of their respective payment rates, and the authors’ treatment of out-of-network payments.

• Physician and Insurer Market Power. The results of the reviewed studies of physician payment rates appear to vary substantially due to differences in the market power of physician practices relative to private insurers. For example, Ginsburg’s analysis found: (1) lower private insurance rates relative to Medicare payments in major metropolitan areas, where physician practices face greater competition and hold less market power relative to insurers; (2) higher physician payment rates relative to Medicare in rural areas, where high demand for scarce physician services appears to give practices stronger negotiating leverage against insurers, and (3) lower private insurance payments for primary care specialties relative to Medicare, noting that specialty physician groups exhibited greater market consolidation than primary care groups in most of the markets studied.⁶² .Pelech’s analysis found substantial variation in the private-to-Medicare payment ratio across geographic markets throughout the U.S. Citing the substantial variation in physician practices’ degree of consolidation and integration with hospitals observed among these markets, Pelech suggests that regions with higher private insurance payments also reflect greater physician market power relative to local private insurers.⁶³ 
• Types of Physician Services. The reviewed studies also differ in the types of services examined, with some emphasizing resource-intensive procedural services such as surgery and imaging, and others focusing on more “cognitive” services such as office visits and routine examinations. The majority of physician services included in Pelech’s analysis are high-RVU procedures or imaging studies, and Pelech reports a substantially higher ratio of private insurance payments relative to Medicare.⁶⁴  In contrast, studies that limit their analysis to physician office visits (e.g., Biener and Selden, 2017) find relatively low ratios of private-to-Medicare rates compared to the overall average.⁶⁵  As described above, Ginsburg finds a similar trend by physician specialty across several markets, suggesting that much of the difference in the private-to-Medicare payment ratio across physician services may be better explained by the relative market power of the different physician specialties. Trish and colleagues attempt to address this issue by examining a wide variety of services across several physician specialties, and find private insurance rates very close to the cross-study average.⁶⁶ .Most of the reviewed studies do not distinguish between physician services delivered in non-hospital facilities and those delivered in hospital outpatient departments. Under current Medicare policy, payment rates for some procedures rendered in hospital outpatient departments are often much higher than payments for identical services rendered in physician offices, an approach that MedPAC has recommended against in recent years.⁶⁷  Consequently, Medicare rates may appear higher in areas where physicians have shifted much of their procedural care delivery to the hospital outpatient setting.
• Private Insurance Claims Data. As noted earlier, researchers are typically at a disadvantage without access to comprehensive private insurance payments from all insurers, or a sample that is representative of all private insurance claims to compare with publicly reported Medicare data. Studies that use data from larger insurers that have exceptionally strong market power relative to physicians in many markets, such as the Ginsburg 2010 study, may observe relatively low private payments.⁶⁸  A similar effect may be seen in the annual analyses conducted by MedPAC, which are based on claims data from only one large commercial PPO that operates nationwide.⁶⁹  In contrast, Song’s analysis makes use of data from the Truven MarketScan commercial claims database (now known as IBM MarketScan), which reflects over 300 private payers.⁷⁰  Compared to studies that use data only from a few large insurers, this dataset contains claims paid by several smaller insurers that do not have nationwide market penetration.
• Payment Components. As was seen for hospitals, the payment components included in each analysis may also have a modest effect on their reported physician payment rates. The Medicare Physician Fee Schedule allows for several additions to its base payments, such as geographic cost variation, health professional shortage areas, and participation in alternative payment models such as the Merit-Based Incentive Payment System established by the Medicare Access and CHIP Reauthorization Act of 2015.⁷¹  Studies that incorporate many of these additional payments (such as those by Trish and colleagues and MedPAC) may produce higher Medicare rates and lower private-to-Medicare ratios.^72 ,73  Studies that simulate how much Medicare would have paid based only on private claims that do not account for non-claim Medicare payment adjustments (such as Ginsburg’s and Song’s analyses) may produce lower estimates, although other studies simulate these additional non-claim payments as well (e.g., White and colleagues, 2013).^74 ,75  The Wallace and Song analysis does not account for any of these Medicare payment adjustments, though the possible effect of these exclusions appears minimal given that their reported ratio of private-to-Medicare rates is near the overall average.⁷⁶ .Finally, the reviewed studies vary in their treatment of non-claim private payments, such as those that reflect capitation payments from private insurers, or additional out-of-pocket payments for balance billing. While most analyses exclude payments made outside of the usual claims process, Biener and Selden’s analysis is based on physician office billing data, so these additional payments are reflected in their estimations of private insurance and Medicare payment rates.^{77 ,78 ,79 ,80 ,81 ,82 ,83 ,84} 
• Out-of-Network Claims. The inclusion and proportion of out-of-network claims may also contribute to the ratio of private-to-Medicare rates. For example, out-of-network claims make up a significant proportion of the total claims in Pelech’s analysis, as much as over 30% for some emergency services.⁸⁵  Inclusion of these payments likely inflates estimates of private insurance rates relative to Medicare levels, which may partially explain why this study’s results are higher than the overall average. In contrast, Ginsburg and other authors exclude out-of-network claims from the source data, which may partially explain why their reported private insurance rate relative to Medicare is lower compared to the overall average across studies.⁸⁶ 

Medicare Payments and Provider Costs

To assess the adequacy of Medicare’s hospital payment rates, MedPAC regularly compares the program’s payments to hospitals’ care delivery costs. Their findings show that, across all hospitals over the period from 2010 to 2018, costs for the treatment of Medicare beneficiaries have exceeded Medicare payments, resulting in negative and declining aggregate Medicare margins (Figure 6).⁸⁷    Both MedPAC and American Hospital Association analyses show aggregate all-payer hospital margins have remained positive between 6% and 8% during the same period due to the contribution of private payers.^88 ,89  Somehospital industry groups and researchers see these data as evidence that higher payment rates from private insurers are necessary to offset the financial strain of Medicare’s relatively low rates.⁹⁰ 

However, MedPAC and other researchers have argued that hospitals could do more to contain their costs.^{91 ,92 ,93 ,94 ,95 ,96 ,97 ,98 ,99 ,100 ,101 ,102 ,103}  They point to the nationwide trend of growing hospital consolidation through mergers and the acquisition of physician practices over the past several decades, which has given hospitals increasingly strong market power relative to insurers.^{104  105 ,106 ,107}  Consequently, these researchers argue that outsize market power allows hospitals to negotiate increasingly high payment rates from private insurers unrelated to how Medicare’s payments compare to costs, easing the financial pressure on these hospitals to cut costs or improve their efficiency. In this alternative explanation, providers’ costs may grow faster than Medicare payments, and financial losses on Medicare patients steepen over time.^{108 ,109 ,110 ,111 ,112 ,113 ,114}  In other words, they suggest that hospitals do not shift costs to private payers to make up for Medicare losses, but rather charge private payers what the market will bear.

Medicare payments have historically been adequate for many financially efficient providers, defined by  MedPAC has separately examined Medicare margins across hospitals it designates as “relatively efficient” (with costs below a defined threshold, among other metrics), finding a consistently positive overall Medicare margin for this subset of hospitals until about 2015. However, even this margin has also been slightly negative since 2016. MedPAC has recommended that previously planned Medicare payment updates should be increased to correct for this, though maintains the view that holding Medicare payments close to efficient hospitals’ costs is desirable because it places pressure on hospitals to improve their efficiency.¹¹⁵ 

Physician groups have also pointed out discrepancies between their practice costs and Medicare payments.^116 ,117  Because there is no required national cost reporting for physician practices as there is for hospitals, CMS and researchers rely on small, sporadic surveys of physicians and practice managers. These include the Physician Practice Information Survey (PPIS) conducted by the American Medical Association in 2007 and 2008. PPIS data are still used in the calculation of the Medicare Economic Index (MEI), which measures inflation in the prices of goods and services needed to operate a physician practice. CMS uses the MEI as a major factor in the determination of annual payment rate updates to the Medicare Physician Fee Schedule.¹¹⁸  For this reason, MedPAC also tracks changes in the MEI relative to changes in Medicare provider payments as an indirect measure of payment adequacy.

MedPAC analyses from 2010 to 2017 found that payment updates to Medicare’s Physician Fee Schedule increased cumulatively by 11% over that period, while the MEI increased cumulatively by 33%.¹¹⁹  To the extent that the MEI is a reliable indicator of the cost of providing care, this suggests Medicare’s payment updates may not have kept up with growing costs for some physicians. However, there has long been concern that the MEI does not accurately represent modern physician practices’ costs, given limitations in the original PPIS survey data and the fact that they are now over a decade old.^{120 ,121 ,122 ,123 ,124  125}  Physicians and researchers have called for CMS to update its methodology for estimating practice costs.^126 ,127  MedPAC has specifically recommended that CMS use data from a cohort of “relatively efficient” practices as it already does for hospitals, arguing that this would allow for a more accurate – and, likely, more favorable – determination of Medicare payment adequacy.¹²⁸  MedPAC has also proposed a number of Medicare payment adjustments that would boost payment rates for primary care physicians and increase the relative valuation of routine evaluation and management services, which would likely improve the adequacy of Medicare payments for many primary care practices.^129 ,130  However, as for hospitals, MedPAC maintains that holding Medicare payment rates close to practice costs incentivizes physician practices to become more efficient.¹³¹ 

Discussion

Based on the reviewed studies comparing Medicare and private insurance rates for hospital and physician services, this brief finds that private insurance payments are consistently greater, averaging 199% of Medicare rates for hospital services overall, 189% of Medicare rates for inpatient hospital services, 264% of Medicare rates for outpatient hospital services, and 143% of Medicare rates for physician services. However, there is wide variation across studies due to different market dynamics in different parts of the country and for different types of medical care as well as differences in the studies’ methodology and data sources. Private payment rates for hospitals averaged as high as 358% of Medicare rates in a study of a highly concentrated state-level hospital market, and as low as 151% of Medicare rates in a study of a market with one dominant private insurer, with individual studies demonstrating even greater variation across markets, services, and individual hospitals.

Some providers have argued that Medicare payment rates are too low to cover the reasonable cost of care, and that these shortfalls lead them to raise prices for private payers. However, much of the literature suggests that providers negotiate prices with private insurers irrespective of Medicare rates, and that providers with substantial market power are best positioned to command high prices, allowing them to evade financial pressure to become more efficient.

Moreover, the costs of operating a hospital or physician practice are not fixed, and fluctuate depending on factors such as available revenues. Currently, many hospitals are facing new costs associated with the infrastructure and resources needed to treat COVID-19 patients, which may require transitional funding increases such as those implemented by the CARES Act. However, once the pandemic has passed, an increased role for Medicare reimbursements could lead many hospitals and other health care providers to phase down their operating costs accordingly. Thus, predictions of widespread provider closures under Medicare-based reform proposals may be overstated, particularly for proposals that set rates higher than current Medicare rates. If private insurers’ payments were brought closer to Medicare levels, even providers whose market power has thus far protected them from financial pressure would have a strong incentive to constrain their costs, which may lead to substantial reductions in national health spending on hospital and physician services.

Proposals that would extend Medicare rates, or a multiplier of Medicare rates, to a broader population –such as Medicare-for-All and public option proposals – could also contribute to lower premiums, deductibles, and point-of-care costs for patients. Lower provider payments could lead to lower per capita spending, leading in turn to lower out-of-pocket costs. Employers could also realize savings under proposals that extend Medicare rates to private insurers, which could allow them to redirect some funds currently spent on employee health coverage, including toward wages. Particularly during the current pandemic, it is worth noting that many privately insured patients hospitalized with COVID-19 would have faced lower out-of-pocket costs if their treatment had been reimbursed at Medicare rates.

However, the fact that even some relatively efficient providers are now losing money on Medicare suggests that the capacity of providers to become more efficient will vary substantially. To address these concerns, some states are moving forward with proposals to establish rates that are higher than Medicare rates but lower than rates currently paid by private insurers, and the current Medicare program has increased payments for inpatient COVID-19 care to better meet the needs of the pandemic response. Even after overcoming the current crisis, federal and state policymakers will continue facing difficult choices as they seek to rein in health spending while safeguarding the accessibility and quality of care.

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With health centers playing an important role in the response to the coronavirus pandemic, findings from the KFF/Geiger Gibson 2019 Community Health Center Survey provide important information on health centers’ financial situation and their experiences in a changing policy environment. After years of growth following implementation of the Affordable Care Act (ACA), changes in Medicaid, public charge, and Title X family planning policies, among others, carry important implications for low-income patients as well as health center operations and revenue. While, overall, health center patient growth and revenue remain strong, some health centers had begun to feel the effects of these changes as they were being implemented across the nation. Federal legislation has directed additional resources to health centers in the wake of the current pandemic, but it is unclear what effect the current public health crisis will have on health centers. Findings from the survey include:

• Continuing trends following the ACA, most health centers reported patient coverage and patient care revenue remained stable or improved. One-third of health centers reported an increase in Medicaid patients, while 45% said the number had stayed the same in the past year. Similarly, three in ten health centers reported an increase in Medicaid revenue while nearly half reported no change.
• However, a growing share of health centers reported coverage and affordability challenges for their Medicaid and privately insured patients. One in five health centers (22%) reported that the number of Medicaid patients served has declined in the past year, and 44% saw an increase in the share of Medicaid/CHIP patients with a lapse in coverage. Nearly half (49%) reported an increase in the share of privately insured patients paying sliding scale fees in the past year in lieu of deductibles and other cost sharing required by their private plan, in effect forgoing use of their insurance. Mirroring the share of health centers reporting a decline in Medicaid patients, 23% reported a Medicaid revenue decrease in the past year, up from 15% in 2018.
• There is a great deal of confusion among health center staff about the status of Medicaid work requirement waivers—most of which are on hold pending legal challenges—and health centers perceive many barriers to work and to reporting work activity for their patients. One in five respondents in states with an approved or pending waiver incorrectly identified the status of the state’s waiver or indicated that they did not know if the state had or was considering a waiver. Perceived barriers to work for patients who are not currently working included caring for family members, lack of transportation, mental health or substance use conditions, and lack of skills and education, among others.
• Health centers reported limited capacity to expand family planning services as the Title X family planning program’s provider network constricts. Over three-quarters (77%) of health centers said they could increase the number of new family planning patients served by no more than 24%.
• The top three challenges facing health centers were workforce recruitment, increasing costs to operate the health center, and inadequate physical space. Health centers in non-expansion states also cited the high number of uninsured patients as a top challenge.

Introduction

Health centers are a significant source of care for low-income, medically underserved communities. They also serve as an essential part of the health care system’s response to public health emergencies and other disasters. They are playing an important role in responding to the current COVID-19 pandemic by providing COVID-19 testing as well as continuing to treat ongoing health needs of their patients. Federal legislation has provided emergency funding to support their response. Health centers experienced significant growth in service sites and patient care capacity following implementation of the ACA, which positions them well to respond to the current crisis; however, leading up to the current crisis, they had been facing more headwinds in their ability to serve patients because of recent federal policy changes.

As key providers of comprehensive primary care services in communities whose residents are more likely to experience poverty and its health effects, along with a shortage of accessible primary health care, health centers feel the effects of policies that limit benefits and services to low-income populations. As a result, changes to federal programs that provide health coverage and promote access to health care services for low-income populations can be expected to have a significant impact on health center patients and operations. Some of the policy changes that are having the biggest effects include: federal support for states interested in testing large-scale Medicaid eligibility and enrollment restrictions such as work requirements, premiums, and other policies; changes to “public charge” policies that expand the programs that can trigger public charge determinations for legal immigrants seeking to adjust to permanent legal status; and new constraints on providers that participate in the Title X family planning program.

This brief presents findings from the 2019 KFF/Geiger Gibson Community Health Center Survey on the experience of health centers in a changing policy environment. This survey was conducted before the current coronavirus crisis, and focused on changes in health center patient coverage and operations during the past year, as well as health centers’ experiences with Medicaid work requirements, and their responses to changes in the Title X program. Where appropriate, the brief also highlights differences in findings across health centers in Medicaid expansion and non-expansion states and those located in urban versus rural areas. The effects of the new public charge policy were described in an earlier brief.¹  While the findings do not relate specifically to the coronavirus pandemic, they provide important context for understanding the issues facing community health centers prior to the current crisis.

Health coverage, affordability, and revenue

Five years following the ACA coverage expansions, most health centers reported the number of Medicaid patients had increased or stayed the same over the past year. In contrast to national trends showing Medicaid enrollment declines, one-third of health centers said the number of Medicaid patients had increased in the past year while 45% said the number had stayed the same (Figure 1). Health centers serve as an important source of care for Medicaid patients and as they continue to expand their service capacity, some are likely attracting new Medicaid patients.

At the same time, one in five health centers said the number of Medicaid patients had declined. Health centers in non-expansion states were more likely to report their Medicaid patients had decreased (28% vs. 19% in Medicaid expansion states, data not shown). Among health centers reporting a decline, the most commonly reported reason for the decline (68%) was concerns among immigrant families about applying for or keeping Medicaid for themselves or their children. Nearly as common, six in ten health centers attributed the decline to changes in enrollment and renewal processes that make it more difficult for patients to obtain or keep Medicaid coverage, while three in ten cited an overall drop in the number of health center patients. The reasons cited for the decline differed by Medicaid expansion status and urban/rural status. Health centers in Medicaid expansion states were significantly more likely to attribute decreases in Medicaid patients to patients gaining jobs and losing Medicaid coverage due to increased income and/or employer-sponsored insurance (30% vs. 7% for non-expansion states, Appendix Table 1). Urban health centers were significantly more likely than rural health centers to report that concerns from patients in immigrant families about applying for or keeping Medicaid for themselves or their children explained the drop in Medicaid numbers (77% vs. 46%); while rural health centers were significantly more likely to cite declines in overall health center patient numbers (46% vs. 23% for urban) as a reason.

Health centers also reported an increase in coverage lapses among Medicaid and CHIP patients as well as those with private insurance. Over four in ten (44%) health centers reported an increase in coverage lapses for their Medicaid/CHIP patients, while a slightly smaller share of health centers (32%) reported coverage lapses among privately insured patients had increased (Figure 2). There are a number of reasons why people may experience a lapse or break in coverage. For Medicaid patients, the coverage lapses may stem from difficulties in renewing coverage. For privately insured patients, a break in coverage may reflect a change in employment and temporary loss of coverage or an inability to afford the monthly premium, among other reasons.

Health centers reported their privately insured patients face increasing challenges affording coverage. More than six in ten health centers (61%) reported an increase in the past year in the percentage of insured patients who are unable to pay their deductibles and cost-sharing payments, and nearly half (49%) reported an increase in privately insured patients paying sliding scale fees (Figure 3). Health center patients qualify for sliding fee scale payments based on their income. An increase in the number of patients with private insurance who pay the sliding fee scale in lieu of the health plan’s copayments or other cost sharing suggests those payments are unaffordable to the individual.

Health centers in non-expansion states were more likely to report affordability challenges for their privately insured patients. Health centers in non-expansion states were significantly more likely than health centers in Medicaid expansion states to report increases in the past year in patients’ inability to afford cost-sharing payments and in the percentage of privately insured patients paying sliding-scale fees (Figure 4). These differences may be explained, in part, by the higher rates of marketplace coverage among low-income patients in non-expansion states. In states that have not expanded Medicaid, low-income individuals with incomes above 100% of the poverty level may enroll in marketplace coverage, but will face cost sharing requirements that may be difficult for them to afford. Rural health centers were significantly more likely than urban health centers to report an increase in privately insured patients paying sliding scale fees (55% vs. 44%).

Health centers’ financial situation remains strong, with most reporting improved or stable financial factors in the past year; however, some health centers reported decreases in key revenue sources. Similar to findings on patient coverage, most health centers continue to benefit financially from the ACA coverage expansions and enhanced federal health center funding. Over half (51%) of health centers reported an increase in federal grant funding from annual appropriated funding, the Community Health Center Fund as well as from targeted grant funding, and three in ten reported an increase in Medicaid revenue (Figure 5). At the same time, a growing share of health centers reported a decrease in Medicaid revenue. In 2019, similar to the share of health centers reporting a drop in Medicaid patients, 23% of health centers reported a decline in Medicaid revenue compared to just 15% in 2018.²  As health centers’ single largest source of operating revenue (44% in 2018),³  Medicaid revenue declines may carry implications for health centers’ ability to add service sites, hire staff, and expand the scope of care they provide. Additionally, over three in ten health centers that received Title X grant funding reported a decrease in their funding in the past year.

Addressing social determinants of health

Health centers provide a range of social and supportive services aimed at addressing social determinants of health. Nearly all health centers reported providing insurance assistance services and case management services on-site (96% and 93%, respectively), and over six in ten health centers said they provided health literacy services (67%) and transportation services (61%) on-site (Figure 6). Nearly half (47%) reported providing healthy foods and veterans’ services. The provision of certain social and supportive services differed by Medicaid expansion status and between urban and rural health centers (Appendix Table 1). Health centers in non-expansion states were significantly more likely to provide veterans’, education, and agricultural worker support services on-site, while health centers in Medicaid expansion states were significantly more likely to provide insurance enrollment assistance services on-site. Urban health centers were significantly more likely to provide on-site transportation, SNAP, WIC, or other nutritional assistance, and refugee services, while rural health centers were significantly more likely to provide on-site agricultural worker support and veterans’ services (Appendix Table 1).

Potential implications of Medicaid work requirements

As of March 2020, the Centers for Medicare & Medicaid Services (CMS) had approved Medicaid Section 1115 waivers to implement work/community engagement requirements for ten states and ten state proposals are pending.⁴  At the same time, federal courts have set aside four approvals (Arkansas, Kentucky, Michigan, and New Hampshire) and work requirements in another four states with approved waivers—Arizona, Ohio, South Carolina, and Wisconsin—have not yet been implemented. Indiana, which has implemented work requirements, announced that it will temporarily suspend enforcement of the requirements pending the outcome of a legal challenge.⁵  A work demonstration was in effect and moving forward in Utah but was suspended on April 2, 2020 due to the COVID-19 pandemic.⁶  However, the future of these demonstrations may be in doubt following a ruling by a federal appeals court upholding a lower court’s decision striking down the work requirements in Arkansas. Before Arkansas’s work requirements program was halted by the court, over 18,000 Medicaid enrollees lost coverage; over 95% of those losing coverage either met the requirements or qualified for an exemption.⁷ 

Survey findings revealed a great deal of confusion and lack of information about the status of work requirement waivers and how those work requirements would be implemented. In states with an approved or pending waiver at the time of the survey, one in five respondents incorrectly identified the status of the state’s approved or pending waiver or indicated that they did not know if the state had or was considering a waiver. Among the survey respondents who correctly said that their state had an approved or pending waiver to implement Medicaid work/community engagement requirements or was considering developing a waiver, six in ten said their state had neither provided nor offered to provide training on the work requirements (Figure 7). Despite this lack of training from the state, nearly half (48%) of health centers reported they or their Primary Care Association (PCA) had provided or planned to provide training to their employees.

Most health centers indicated a desire to help patients with work reporting requirements and with obtaining exemptions; however, some health centers said they lacked the resources to do so. While over half (55%) of health centers in states with an approved or pending waiver said they were assisting or planned to assist patients with the new reporting requirements, more than three in ten (32%) said they were not providing or did not plan to provide the assistance (Figure 7). Most states include an exemption from work requirements for medically frail individuals; medical frailty determinations must be made by medical professionals. Although 52% of health center respondents reported state officials had not explained the process for determining patients as medically frail, 41% said they had the resources to conduct the determinations. However, reflecting the resource burden of making medical frailty determinations, six in ten (59%) said they did not have the resources or did not know if they had the resources to make these determinations.

Health centers perceive that their patients who are not currently working face many barriers to work. All health centers, regardless of their state’s waiver status, were asked about potential barriers to working among their adult, non-elderly, and non-disabled Medicaid patients who are not currently working. They reported a mix of health and mental health-related barriers as well as geographic and economic barriers to work. Over seven in ten health centers reported that many of their patients faced substance use disorders, acute or chronic mental health conditions, and acute or chronic physical health conditions (Appendix Table 1). Similar shares of health centers noted other barriers, such as child caring responsibilities, lack of transportation to jobs, or inadequate skills or education. Compared to health centers in rural areas, urban health centers were more likely to report as barriers preventing patients from working a mismatch between available jobs and patients’ skills and education and family caretaking responsibilities, while rural health centers were more likely than their urban counterparts to report a lack of jobs in the community, and the seasonal nature of many jobs.

Health centers also indicated their patients would likely face many barriers that would make it difficult for them to report work activity. In addition to confusion over reporting rules and deadlines, over half of health centers (57%) reported that lack of access to a computer would be a barrier for many patients and nearly half (47%) reported not having internet service would be a barrier for many patients, which would prevent them from being able to report work activity by phone or online, as required by several states (Appendix Table 2).

Participation in the Title X program and ability to accept new family planning patients

New rules governing the Title X family planning program went into effect on July 15, 2019, imposing new restrictions on grantee activities. These restrictions include blocking participation of program providers that also offer abortion services, barring staff from fully counseling pregnant patients about all options, and requiring mandatory referral of pregnant women for prenatal care regardless of patient choice. Before the restrictions took effect and as of June 2019, 4,008 Title X clinics were in operation. By December 20, 2019, all 410 Planned Parenthood health centers had withdrawn from the program, and an additional 631 Title X clinics, including some community health centers, were no longer participating in Title X.⁸  The decision to stop participating in Title X means the loss of funding to support family planning services at these clinics and health centers.

As of July 2019, a quarter of health centers reported participating in the Title X program, though that number may have changed following implementation of more restrictive rules. The share of health centers reporting receiving Title X funding was similar to the 26% who said they received Title X funding in 2017.⁹  Since the survey, which was conducted before the new rules went into effect, a significant number of health centers may have dropped their Title X participation, although a count is not available. Some health centers may perceive a conflict between the Title X counseling and referral ban and its physical and financial separation requirements and health centers’ patient care obligations under their funding authority (Section 330 of the Public Health Service Act).^10 ,11 

Health centers reported limited capacity to accept new family planning patients. With hundreds of clinics, including health centers, leaving the Title X program and their ability to serve family planning patients diminishing due to loss of funding, the need for alternative sources of care is expected to rise. Family planning services are part of the comprehensive primary care package that all health centers must furnish under Section 330.¹²  However, many health centers have limited capacity to expand these services. Over one-third (37%) of health centers reported either they could not expand patient load or they could expand by less than 10% with current staffing and clinic space; another 39% said they could increase the number of family planning patients by less than 25% (Figure 8). Despite limited capacity at some health centers, over one in five (23%) said they could expand capacity by 25% or more, including one in ten who said they could increase the number of family planning patients by 50% or more.

Challenges facing health centers

Despite ongoing policy challenges, health centers were more likely to report operational issues as top challenges. Over half of health centers (52%) cited workforce recruitment and increasing costs to operate their health center as top challenges, while three in ten (31%) cited inadequate physical space as a top challenge (Figure 9). A quarter of health centers reported workforce retention (25%) and high numbers of uninsured patients (24%) as major challenges. Health centers in Medicaid expansion states were more likely than health centers in non-expansion states to report workforce recruitment as a top-three challenge (55% vs. 43%), while health centers in non-expansion states were more likely than those in expansion states to report high numbers of uninsured patients as a top-three challenge (45% vs. 15%, Appendix Table 1). Rural health centers also face provider shortages and were significantly more likely to report workforce recruitment as a top-three challenge (60%) compared to urban health centers (45%). These ongoing challenges, particularly the workforce and financial challenges, are likely to be exacerbated during the current COVID-19 crisis as frontline workers get sick and others must take time off to care for children and other family members, and as health centers face potentially precipitous declines in patient care revenue.

Discussion

As federal policymakers turn to health centers during this time of crisis, they will play an important role in providing access to COVID-19 testing as well as ongoing primary care services for low-income, medically underserved communities. However, even as health centers continue their historic growth brought about by the ACA that may position them well to respond to the crisis, some have encountered limits on their ability to meet the needs of their patients because of recent policy changes, especially those that have resulted in recent declines in Medicaid coverage. While many states and the federal government have temporarily suspended some policies that create barriers to enrolling in Medicaid or to maintaining Medicaid coverage during the emergency, the reinstatement of these policies after the immediate emergency ends could make it harder for health centers to serve their communities in the longer term.

Through coronavirus response legislation, the federal government directed an initial $100 million to health centers¹³  and later directed over $1.3 billion in emergency grants to health centers to enable them to continue serving their patients during the crisis, and funded the Community Health Center Fund through November 2020.¹⁴  Yet, the economic upheaval from this pandemic is likely to persist long after the threat from the virus diminishes. While over half of health centers reported that federal grant funding had increased in the past year, the failure of Congress to pass a long-term extension of the Community Health Center Fund threatens to jeopardize the stable funding health centers have experienced for the past decade. The importance of stable future funding will be even greater in the aftermath of the pandemic as health centers seek to resume normal operations.

Appendix A

Appendix B

2019 Survey of Community Health Centers(Questions 1-7 request survey respondent contact information; questions 18–26 and 28 were released separately)

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Q8. Several states have received approval from the federal government to implement work/community engagement requirements in Medicaid and several others are considering such requirements. Is your health center in a state that has an approved or pending waiver or is considering developing a waiver request to require that Medicaid enrollees engage in work/community engagement activities as a condition of enrollment?

Yes, my state has an approved or pending waiver.Yes, my state is considering developing a waiver request.NoDon’t know

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Q9. Have state Medicaid officials provided or offered to provide training to health center employees about the new Medicaid work/community engagement requirements?

Yes, state officials have provided the training.Yes, state officials have offered to provide training.No, state officials have not provided nor offered to provide training.Don’t know.

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Q10. Has your health center or PCA provided, or does it provide, additional training to health center employees about the Medicaid work/community engagement requirements?

Yes, our health center or PCA has provided training.Yes, out health center or PCA plans to provide training.No, our health center would like to provide training but does not have the resources.No, our health center has not provided training and does not plan to provide training.Don’t know.

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Q11. Is your health center assisting or does it plan to assist patients with meeting reporting requirements related to the Medicaid work/community engagement requirements, including explaining the requirements, creating online accounts, reporting monthly work/community engagement activity, or seeking and reporting exemptions?

Yes, we are currently assisting patients.Yes, we plan to assist patients.No, we would like to assist patients but do not have the resources.No, we are not assisting patients and do not plan to assist patients.Don’t know.

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Q12. People deemed “medically frail” are excluded from Medicaid work/community engagement requirements. Has your state explained the process for designating patients with physical health conditions or mental health conditions/substance use disorders as medically frail?

Yes, state officials have explained the process.No, state officials have not explained the process.Don’t know.

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Q13. Does your health center have the resources to complete the clinician evaluation that is required as part of the medical frailty determination for patients with physical health conditions or mental health conditions/substance use disorders?

YesNoDon’t know

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Q14. If Medicaid enrollees were required to report work/community engagement activity online or by phone, please indicate whether the following factors would be a barrier for many patients, some patients, or not a barrier to meeting these reporting requirements among your Medicaid patients.

Do not have access to a computerDo not have access to internet serviceDo not have access to a phoneHave limited understanding of what they need to reportHave questions about how to report their activityAre unsure of reporting deadlines and/or how often they need to reportAre unsure of how to request an exemptionNeed translation servicesNeed help because of a disabilityLack confidence to report on their ownAre confused about whether the rules apply to themFace more pressing needsHave other barrier to reporting (specify)

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Q15. Among your health center’s adult Medicaid patients who are non-elderly and non-disabled and who are not currently working, what would you identify as the barriers, if any, that prevent them from working? (Check all that apply).

No barriers (if so, please do not select other options)Acute or chronic physical health conditionsAcute or chronic mental health conditionsSubstance use disordersLack of jobs in the communityLack of job training resourcesSkills and education do not meet requirements for available jobsLack of transportation to jobsCaring for children or other family membersConcerns about losing health coverage if they earn too much moneyMany jobs in our community are seasonalDon’t know

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Q16. Over the past year, has your health center noticed any of the following among your immigrant patients and their family members? Please indicate whether the following have been seen among many patients, some patients, a few patients, or no patients. Mark not applicable if these scenarios do not apply to your health center or don’t know if you are unsure.

Patients who refuse to enroll in Medicaid for themselvesPatients who refuse to enroll in Medicaid for their childrenPatients who disenroll or refuse to renew their own Medicaid coveragePatients who disenroll or refuse to renew Medicaid coverage for their childrenA reduction in the number of adult patients seeking care from the health centerA reduction in the number of patients seeking care for their children from the health center

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Q17. If your health center has noticed immigrant patients and their family members choosing not to enroll in Medicaid, disenrolling from or not renewing Medicaid, or not seeking care, do you think the following federal policies or actions are a factor?

Recent proposed changes that would permit officials to consider use of Medicaid, SNAP, or other non-cash programs in public charge determinationsEnhanced immigration enforcement activityChanging federal policy limiting immigration pathways (e.g., elimination of protected status for some groups, limiting entry from certain countries, etc.)Other factor (please specify)

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Q27. Please indicate whether your health center has experienced changes to the following financial factors in the past year. (Mark no change, increased, decreased, or not applicable for each option).Access to private capital

Federal grantsState and local grantsMedicaid revenuePrivate insurance revenueTitle X family planning grantsPercentage of Medicaid/CHIP patients who have a lapse or break in insurance coveragePercentage of private insurance patients who have a lapse or break in insurance coveragePercentage of insured patients who are unable to pay their deductibles and cost-sharing paymentsPercentage of privately insured patients who pay sliding scale feesFunding for community benefit activities from local hospitals and/or health plans

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Q29. Over the past year, would you say the number of patients enrolled in Medicaid at your health center has increased, decreased, or stayed about the same? (If you answer increased or stayed the same, please skip to question 31).

The number of Medicaid patients has increasedThe number of Medicaid patients has stayed about the sameThe number of Medicaid patients has decreased

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Q30. What would you say are the factors that likely account for the decrease in Medicaid patients at your health center? (Check all that apply).

Overall drop in health center patientsDo not contract with some or all Medicaid managed care plans that operate in our health center’s service areaSignificant changes in the demographic characteristics of the communities our health center servesPatients are gaining jobs and losing Medicaid coverage due to increased income and/or employer-covered insuranceConcerns from immigrant families about applying for or keeping Medicaid for themselves or their childrenEnrollment and renewal process changes have made it more difficult for patients to enroll in Medicaid or renew Medicaid coverageNew Medicaid eligibility requirements (e.g., work requirements, premium and copayment requirements) make it harder for patients to maintain Medicaid coverageFewer Medicaid covered services being offered

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Q31. Does your health center currently receive funding from the Title X Family Planning Program?

YesNoDon’t know

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Q32. In the next year, what it the estimated percentage increase in new family planning patients your health center could accept with current staffing and clinic space?

Not applicable, we do not currently have any family planning patientsNoneLess than 10%10-24%25-49%50-74%75-99%100% or more

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Q33. How do patients at your health center receive prescription medications? (Check all that apply).

Dispensed by providerThrough an on-site pharmacy (either in-house or contract pharmacy)Through an off-site contract pharmacyThrough an off-site, non-contract pharmacyDon’t know

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Q34. Which of the following types of social or support services does your health center provide on-site and/or through referrals to local organizations (Mark provide on-site, provide through referral, provide both on-site and through referral, or do not provide)?

Agricultural worker supportChild care/Head startCriminal justice/recidivismDomestic violenceEducationJob trainingJob search and placementHealthy foodsSNAP, WIC, or other nutritional assistance servicesHousing (includes housing assistance and quality)Health literacyInsurance enrollment assistancePhysical activity and exerciseRefugee servicesTransportationVeterans servicesCase management services

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Q35. Please identify the top 3 challenges facing your health center.

Patient confusion regarding eligibility for insurance programsChanges to Medicaid reimbursementChanges to Medicaid eligibility criteria, including work requirementsInsufficient grant fundingInsufficient insurance reimbursementContracting with insurersWorkforce recruitmentWorkforce retentionHigh number of uninsured patientsCompetition from other providersEfforts to integrate care provided by your health center with healthcare provided by other providersEfforts to integrate care with social services (e.g., housing, TANF, SNAP)Increased immigration enforcement and/or policy changes affecting immigrantsIncreased demand for family planning servicesInadequate physical spaceIncreasing costs to operate health centerOther challenge (please specify)

1. Tolbert, J., Artiga, S., & Pham, O. (2019). Impact of Shifting Immigration Policy on Medicaid Enrollment and Utilization of Care among Health Center Patients. Kaiser Family Foundation, https://modern.kff.org/report-section/impact-of-shifting-immigration-policy-on-medicaid-enrollment-and-utilization-of-care-among-health-center-patients-issue-brief/ ↩︎
2. Markus, A., Sharac, J., Tolbert, J., Rosenbaum, S., & Zur, J. (2018). Community Health Centers’ Experiences in a More Mature ACA Market. Kaiser Family Foundation. https://modern.kff.org/medicaid/issue-brief/community-health-centers-experiences-in-a-more-mature-aca-market/ ↩︎
3. Sharac, J., Shin, P., Rosenbaum, S., & Handarov, T. (2019). Community health centers continue steady growth, but challenges loom. Geiger Gibson/RCHN Community Health Foundation Research Collaborative, George Washington University. Policy Research Brief No. 60. https://www.rchnfoundation.org/?p=8436 ↩︎
4. Kaiser Family Foundation. (March 10, 2020). Medicaid Waiver Tracker: Approved and Pending Section 1115 Waivers by State. https://modern.kff.org/medicaid/issue-brief/medicaid-waiver-tracker-approved-and-pending-section-1115-waivers-by-state/ ↩︎
5. Indiana Family and Social Services Administration. (October 31, 2019). Pending resolution of federal lawsuit, FSSA will temporarily suspend Gateway to Work reporting requirements. https://www.in.gov/fssa/files/Gateway_to_Work_suspension_announcement.pdf ↩︎
6. Utah Department of Health. (April 3, 2020). Medicaid Expansion Community Engagement Requirement Suspended. https://medicaid.utah.gov/Documents/pdfs/4.3.20_NR_CEsuspension.pdf ↩︎
7. Sommers, B. D., Goldman, A. L., Blendon, R. J., Orav, E. J., & Epstein, A. M. (2019). Medicaid Work Requirements—Results from the First Year in Arkansas. New England Journal of Medicine, 381: 1073-1082. ↩︎
8. Kaiser Family Foundation. (December 20, 2019). The Status of Participation in the Title X Federal Family Planning Program. https://modern.kff.org/interactive/the-status-of-participation-in-the-title-x-federal-family-planning-program/ ↩︎
9. Wood, S.F., et. al. (2018). Community Health Centers and Family Planning in an Era of Policy Uncertainty. KFF. https://modern.kff.org/womens-health-policy/report/community-health-centers-and-family-planning-in-an-era-of-policy-uncertainty/ ↩︎
10. Rosenbaum, S., Wood, S.F., Strasser, J., Sharac, J., Wylie, J., Tran, T.C. (2018). The Title X Family Planning Proposed Rule: What’s at Stake for Community Health Centers? Health Affairs blog. https://www.healthaffairs.org/do/10.1377/hblog20180621.675764/full/ ↩︎
11. Sobel, L., Salganicoff, A., and Frederiksen, B. (2019). New Title X Regulations: Implications for Women and Family Planning Providers, Kaiser Family Foundation. https://modern.kff.org/womens-health-policy/issue-brief/new-title-x-regulations-implications-for-women-and-family-planning-providers/ ↩︎
12. https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title42-section254b&num=0&edition=prelim ↩︎
13. Department of Health and Human Services. (March 24, 2020). HHS Awards $100 Million to Health Centers for COVID-19 Response. https://www.hhs.gov/about/news/2020/03/24/hhs-awards-100-million-to-health-centers-for-covid-19-response.html ↩︎
14. National Association of Community Health Centers. (2020). Summary of Key CHC Provisions in the Coronavirus Aid, Relief, and Economic Security (CARES) Act as signed into law on March 27, 2020. https://wsd-nachc-sparkinfluence.s3.amazonaws.com/uploads/2020/03/CARES-Act-Summary-for-Health-Centers.pdf ↩︎
15. Medicaid expansion status was as of the time of the survey fielding period. Note that Utah and Idaho, which implemented the Medicaid expansion on January 1, 2020, and Nebraska, which has adopted but not yet implemented the expansion, were categorized as non-expansion states in this analysis. ↩︎

More than 16 million workers have already lost their jobs due to the economic disruption caused by COVID-19, and the numbers will continue to rise as the nation struggles to slow the spread of the virus.  In addition to the severe economic impacts on these workers and their families, the losses of employment and income affect their access to health coverage both through work as well as through the marketplaces and Medicaid.

As we will illustrate in the following scenarios, most people who are laid off and receive Unemployment Insurance (UI) benefits may become eligible for subsidized coverage either through the marketplace or Medicaid.  However, describing how coverage outcomes work is a bit like describing a game of three-dimensional chess.  Post-unemployment health coverage options will depend on (1) the worker’s coverage status prior to being laid off, (2) the unemployed worker’s level of state unemployment insurance (UI) benefits (which are counted in determining eligibility for Medicaid and marketplace subsidies) and federal supplemental UI benefits (which are counted in determining eligibility for marketplace subsidies but not Medicaid), and (3) whether the worker’s state has adopted the Affordable Care Act (ACA) Medicaid expansion option and/or has re-opened its marketplace open enrollment period.

• For many low-, moderate- and even higher-income families, the income reduction from unemployment can make parents newly eligible for Medicaid if they live in expansion states.
• In non-expansion states, some unemployed parents whose income falls well below the federal poverty level (FPL) may qualify for Medicaid through the pre-ACA eligibility pathway for parents of dependent children. However, in most non-expansion states, parents must have income well below 50% FPL to qualify,
• No matter where they live, children in unemployed families will likely be newly eligible for Medicaid or the Children’s Health Insurance Program (CHIP), which is open to children with family income at or well above 200% of FPL in nearly all states.
• People losing job-based coverage will qualify for a special enrollment period (SEP) in every state marketplace. If their unemployment income is between 100%-400% FPL they can also qualify for subsidies.
• People who were uninsured while working will not qualify for a SEP based on coverage loss. However, in most state-run marketplaces they will be able to sign up because their state has re-opened enrollment for all residents.
• People who lose job-based coverage who can sign up for marketplace plans generally will qualify for marketplace subsidies thanks to the $600 per week supplemental federal unemployment benefits, assuming they receive this supplement for most of the temporary period when it is offered.  Over 17 weeks, this supplement adds $10,200 in unemployment income to state UI benefits, and will generally leave individuals and families with income between 100% and 400% FPL.  However, because the federal $600/week supplement ends in July, for lower income families and individuals who lose jobs later in the year, earnings and state UI benefits may not be enough to qualify for marketplace subsidies, and they could find themselves with no affordable options in states that have not expanded Medicaid.
• Some very low-income uninsured individuals may become newly eligible for marketplace subsidies. Adults with income below poverty generally are not eligible for marketplace subsidies, and generally won’t qualify for Medicaid in non-expansion states (the so-called coverage gap).  However, new federal supplemental UI benefits recently enacted by Congress could lift some poor adults out of the coverage gap, making them newly eligible for Marketplace subsidies. As federal supplemental benefits end in July, this advantage will disappear.

The simplified scenarios shown in this brief do not reflect other variables that could affect health coverage opportunities for individuals.  For example, other state unemployment program characteristics may make unemployed workers eligible for lower state benefits or for a shorter period of time.  Backlogs at some state offices may delay or deter some unemployed workers from applying at all. Limited access to navigators in many federal marketplace states could also make it harder for some people to apply for health coverage options for which they are eligible.

The recently enacted CARES Act provides much needed help to the unemployed by increasing and supplementing state unemployment benefits with federal funds. In particular, the Act provides a $600 weekly federal supplement (available through July 31) to state unemployment benefits and extends the period for receiving unemployment benefits by up to 13 weeks. The Act also extends benefits to many types of workers (e.g., self-employed) not currently eligible for unemployment benefits under state laws.

The amounts available under the Act have a meaningful impact on family income and affect potential eligibility for premium tax credits for Affordable Care Act (ACA) marketplace coverage and for Medicaid. Unemployment benefits generally are considered income in determining eligibility for these programs. However, under the CARES Act, the $600 federal supplement is considered income for determining eligibility for premium tax credits for marketplace coverage but is not counted as income for determining Medicaid eligibility.  The federal Recovery Rebate of $1,200 per adult is not counted as income in determining eligibility for either program.

State unemployment programs vary in many ways; particularly important are differences in the maximum weekly benefits available and in the length of benefit period. We developed a simplified set of scenarios to look generally at how unemployment benefits, as supplemented by the Cares Act, affect family income and eligibility for premium tax credits for marketplace coverage and Medicaid.  These scenarios provide examples for families at different income levels, and we look at the impact of different state benefit levels. We address several coverage situations for families where a worker has recently become unemployed:

• Families that lost workplace health coverage when a worker lost their job
• Families that currently have marketplace coverage but experience a change in income
• Families that are currently uninsured

Access to health benefits will vary for some of these families depending on where they live – in particular, whether their state has expanded Medicaid to include all low-income people under the ACA, and whether their marketplace is state-administered or uses Healthcare.gov.  Nearly all state-based marketplaces have re-opened Open Enrollment to make it easier for any resident, including the uninsured, to sign up for coverage during the COVID-19 crisis. (Many of these states describe this period as a COVID-19 Special Enrollment Period.)  The Trump administration has authority to offer an open enrollment period in the federal marketplace for people who were already uninsured, but has not done so. Instead, in Healthcare.gov states, people are eligible to enroll in coverage only if they qualify for a special enrollment period (SEP).  Two qualifying events can trigger an SEP in these scenarios: (1) loss of prior job-based coverage, and (2) being uninsured and living in a non-expansion state and having a change in income from below poverty (i.e., the coverage gap) to above poverty.  Other mid-year income changes that make people newly eligible for marketplace subsidies only trigger an SEP if the person is already enrolled in a marketplace plan. (There are other SEPs that may be available for people experiencing other life events, but they are not triggered in these scenarios.)  Medicaid is open for enrollment year round.

Scenarios and Results

As noted, state unemployment programs vary considerably in detail, so we developed a generalized approach to estimate the impact on family incomes.  Our key assumptions are:

• The family has one worker who loses her job at the end of March, 2020. We vary the family composition between a three- person family (two dependents) and a single worker.
• The worker was employed continuously during the year prior to layoff in a job eligible for unemployment benefits.
• The family only has the worker’s earnings, and the annualized earnings in 2020 prior to losing her job were slightly higher (3.5%) than earnings during the prior year base period (the period used in states to determine weekly benefits).
• The worker is employed the first 12 weeks in 2020 before being laid off, and begins receiving unemployment benefits the week of April 5^th. Later we discuss how results would differ in cases where the worker continues to be employed until later in the year.
• The state unemployment program provides weekly benefit equal to 50% of the base period earnings, subject to maximum weekly benefit amounts. We looked at three maximum benefit amounts ($620, $450, $275) roughly reflecting the variation across states. In addition, we assume laid off workers receive the new federal supplemental benefit of $600 per week from April 5 through the end of July (17 weeks).
• The state UI benefit period is 26 weeks. Although some states have shorter periods, a few have already extended their periods during the COVID-19 emergency; in some other states benefit periods may be extended in times of high unemployment.
• Medicaid eligibility is determined based on monthly income, which is calculated by multiplying the weekly state unemployment benefit by 4.3. This is compared to the 2020 poverty level (divided by 12) to determine the Medicaid poverty level for current monthly income.  The $600 weekly federal supplement is not included in the calculation for Medicaid eligibility. In states that have expanded Medicaid under the ACA, people are eligible with income up to 138% of the poverty level.  Wisconsin Medicaid covers low-income adults up to 100% FPL.  In most other non-expansion states, parents can get Medicaid if income is less than 50% FPL.¹ 
• Marketplace subsidies are determined based on annual income, which is calculated by adding income earned in 2020 while employed, state weekly UI benefits multiplied by 39 weeks (the CARES Act provides federal financing for states to expand their UI benefit period by up to 13 weeks), and the federal supplemental UI benefit of $600 per week multiplied by 17 weeks. This total is compared to the 2019 federal poverty level, which is used to determine eligibility for marketplace subsidies in 2020. People are eligible for ACA marketplace subsidies if income is from 100% to 400% of the poverty level.  This calculator can be used to estimate eligibility for and amount of marketplace subsidies.

We begin by looking at a moderate-income three-person family with $50,000 in annualized earnings prior to layoff. We then show how the results vary for a higher income ($100,000) and a lower income ($23,000) family and for two single workers, one with lower income ($15,000) and one with poverty-level income ($12,000).

In every scenario, access to new health coverage will depend on coverage status prior to layoff.  It will also depend on where people live.  State UI programs provide different benefit levels, income-eligibility for adults and children varies across State Medicaid programs, and in most state marketplaces, people can only enroll in coverage now if they are eligible for a SEP.

Moderate Income Family

This scenario illustrates changes in income and eligibility for health coverage for a moderate-income family – a single parent with 2 children – with pre-unemployment annual income of $50,000 for 2020.

This family would have just over $11,500 in earnings for the 12 weeks of work before the job loss. Under our scenario, the family would begin receiving state unemployment benefits for weeks beginning April 5^th of $465, subject to state maximum benefit limits. The family would also receive an additional 13 weeks of the state benefit amount (the federal extension) as well as an additional $600 per week for the weeks starting April 5^th and ending with the week beginning July 28 (17 weeks).  Overall, the federally-supplemented unemployment benefits plus the worker’s prior earnings equal between 65% and 80% of the family’s prior earning level. The results are summarized in Table 1.

Access to Coverage

In this scenario, whether the moderate-income family lives in a state with high, moderate, or low state unemployment benefits, under Medicaid’s method of determining income, its new, reduced income would be less than 138% of FPL (and in very low UI benefit states, income could fall below the poverty level); while under the marketplace’s method of determining income, income would fall between 100% and 200% FPL.  This consistent result happens because the marketplace will always count the $600/week federal UI supplement and income earned earlier in the year, while Medicaid and CHIP will only consider state UI benefits earned in that month, which constitute half or less of the family’s pre-layoff earnings level.

Families Losing Job-Based Coverage.  At this new lower income, access to marketplace or Medicaid coverage for this family would vary across states:

• In 36 Medicaid expansion states and DC, the parent would become eligible for Medicaid.
• In non-expansion states, the parent generally would not qualify for Medicaid. Even if income falls to 65% FPL, it would still be too high to qualify under the pre-ACA eligibility pathway for parents in most non-expansion states.
• In 14 non-expansion states, the parent would be eligible for a special enrollment period in the marketplace coverage (due to loss of job-based coverage.) The parent would qualify for premium tax credits based on her new projected 2020 income, which would fall between 100% and 200% FPL in all states. The parent would also qualify for cost sharing subsidies delivered through CSR silver plans.
• Children in the family would be eligible for Medicaid or CHIP in every state, and would have been eligible in most states even pre-layoff.

Families with Marketplace Coverage When Employed.  Most marketplace participants today are self-employed or work in jobs that don’t offer them group health benefits.  Generally, people are eligible for marketplace subsidies if their 2020 family income is between 100% and 400% of the federal poverty level and if they are not eligible for other coverage, such as through an employer or Medicaid.  As a result, the laid-off mother in this scenario could have already been covered under a subsidized marketplace plan.

• In Medicaid expansion states, the mother would have earned too much to qualify for Medicaid while working, but once unemployed, would become eligible for Medicaid based on her new lower income.
• In most non-expansion states, the parent’s new lower income would not qualify for Medicaid even under the pre-ACA eligibility pathway for parents of dependent children because – even as low as 65% FPL – it would still be too high.
• In non-expansion states, her reduced income would make the mother eligible for higher premium tax credits, and she would now qualify for cost sharing subsidies. She would be eligible for a special enrollment period (SEP) of 60 days during which she could switch to a cost sharing reduction (CSR) plan with a lower deductible.  On average, silver plan deductibles in Healthcare.gov states are $4,544/person, but people with income 150%-200% FPL qualify for CSR plans with an average deductible of $762.
• Children in the family would be eligible for Medicaid or CHIP in every state, and even pre-layoff, children would have been eligible in most states.

Families Uninsured When Working.

• In Medicaid expansion states, the parent would become eligible for Medicaid and could enroll.
• In most non-expansion states, the parent’s new lower income would not qualify for Medicaid even under the pre-ACA eligibility pathway for parents of dependent children because – even as low as 65% FPL – it would still be too high.
• In non-expansion states, the already-uninsured parent would not be eligible for the coverage-loss SEP to enroll in marketplace coverage through Healthcare.gov.
• Children in this family would be eligible for Medicaid or CHIP in every state.

Higher Income Family

This scenario is the same as the previous one except that the pre-job loss annualized earnings for 2020 are increased to $100,000.

This family would have just under $23,100 in earnings for the 12 weeks of work before the job loss. Under our scenario, the family would begin receiving state unemployment benefits for weeks beginning April 5^th and would receive the maximum amount under all three iterations. The family would also receive an additional 13 weeks of the state benefit amount (the federal extension) as well as an additional $600 per week in federal supplemental UI benefits for the weeks starting April 5^th and ending with the week beginning July 28 (17 weeks).  Overall, the federally-supplemented unemployment benefits plus the worker’s prior earnings equal between 44% and 58% of the family’s prior earning level. The results are summarized in Table 2.

Access to Coverage

For higher income families, the income decline following layoff varies more depending on the state UI program benefits.  Considering only the state UI benefits, this family with a pre-layoff income of nearly 5 times the poverty level would see income fall dramatically, in some states to below the federal poverty level.  Adding in the federal supplemental UI benefits offsets income loss, however; the new post-layoff income falls between 2 and 3 times FPL.  Health coverage options will depend on where the family lives.

Families Losing Job-Based Coverage.  Access to marketplace or Medicaid coverage for this family would vary across states:

• In Medicaid expansion states, the mother would be eligible for Medicaid in the states with mid-range and low levels of maximum state UI benefits. Her monthly income would be too high to qualify for Medicaid in the state with the $620 weekly UI maximum benefit, but she would be eligible for a special enrollment period in the marketplace coverage (due to loss of job-based coverage) and could qualify for premium tax credits based on their new projected poverty level.
• In non-expansion states, the parent generally would not qualify for Medicaid even under the pre-ACA eligibility pathway for parents of dependent children; even if income fell to 65% FPL it would still be too high to qualify in most non-expansion states.
• In non-expansion states, the mother would be eligible for a special enrollment period in the marketplace coverage (due to loss of job-based coverage) and could qualify for premium tax credits based on their new projected poverty level.
• In all states, children in the family would become eligible for Medicaid or CHIP at this new lower household income.

Families with Marketplace Coverage When Employed. 

• In Medicaid expansion states, the mother would be eligible for Medicaid in states with lower maximum state UI benefits. Her monthly income would be too high to qualify for Medicaid in the state with the $620 weekly UI maximum benefit.
• In all states, the mother would be eligible for a different special enrollment period in the marketplace (due to loss of income, because she is already enrolled in a marketplace plan) and could qualify for premium tax credits based on the new projected poverty level.
• Children in this family would become newly eligible for Medicaid or CHIP in every state.

Families Uninsured When Working.

• In Medicaid expansion states, the mother would be eligible for Medicaid in states with lower maximum state UI benefits. Her monthly income would be too high to qualify for Medicaid in the state with the $620 weekly UI maximum benefit.
• In most non-expansion states, the mother would not qualify for Medicaid even under the pre-ACA eligibility pathway for parents of dependent children.
• In non-expansion states, all of which are also Healthcare.gov states, the mother would not be eligible for a special enrollment period in the marketplace.
• In all states, children in the family would become eligible for Medicaid or CHIP at this new lower household income.

Low Income Family

This scenario is the same as the previous ones except that the pre-job loss annualized earnings for 2020 are $23,000.

This family would have just under $5,308 in earnings for the 12 weeks of work before the job loss. Under our scenario, the family would begin receiving state unemployment benefits for weeks beginning April 5^th, and because pre-layoff wages were so low, we estimate state UI benefits would be $214 per week in each of the scenario states (assuming that UI replaces roughly 50% of wages).  The family would also receive an additional 13 weeks of the state benefit amount (the federal extension) as well as an additional $600 per week in federal supplemental UI benefits for the weeks starting April 5^th and ending with the week beginning July 28 (17 weeks).  Overall, the federally-supplemented unemployment benefits slightly increase income for this family.  The results are summarized in Table 3.

Access to Coverage

Whether this family lives in a state with high, moderate, or low state unemployment benefits, state UI benefits would only reach about half of pre-layoff earnings in each illustrated state.  As a result, the family’s Medicaid income would fall to 51% FPL in each illustrated state.  The family would also receive the federal supplemental UI benefit for 17 weeks in every state, which would slightly increase the family’s income for the year, from 108% FPL pre-layoff to 112% FPL in each state.

Families Losing Job-Based Coverage.  With this income change, access to marketplace or Medicaid coverage for this family would vary across states:

• In 36 Medicaid expansion states and DC, the parent would have been eligible for Medicaid prior to layoff and would continue to be eligible.
• In most of the non-expansion states, the mother would not be eligible for Medicaid because her new unemployment income of 51% FPL would still be too high.
• In the 14 non-expansion states, the mother would be eligible for a special enrollment period in the marketplace (due to loss of job-based coverage.) The parent would qualify for premium tax credits based on her new 2020 income of 112% FPL. The national average premium after tax credits for the benchmark silver plan is $41 per month at this income.  The parent would also qualify for a cost sharing reduction (CSR) with a national average deductible of $209.
• Children in the family would be eligible for Medicaid or CHIP in every state, as they would have been prior to layoff.

Families with Marketplace Coverage When Employed.  Generally, people are eligible for marketplace subsidies if their 2020 family income is between 100% and 400% of the federal poverty level and if they are not eligible for other subsidized minimum essential coverage, such as Medicaid.

• In Medicaid expansion states, the parent would have been eligible for Medicaid, and so not enrolled in marketplace coverage.
• In non-expansion states, the mother would have qualified for marketplace subsidies prior to layoff. With her slightly increased income, the mother could update her marketplace application to reduce the monthly premium tax credit paid on her behalf; otherwise, she may have to repay some of the excess tax credit when she files her 2020 income tax return next year.
• Children in the family would be eligible for Medicaid or CHIP in every state, and were prior to layoff.

Families Uninsured When Working.

• In Medicaid expansion states, the parent would have been eligible for Medicaid prior to layoff and still would be post-layoff.
• In most non-expansion states, the parent would not be eligible for Medicaid, even at her new income of 51% FPL.
• In non-expansion states, the already-uninsured parent would not be eligible for an SEP to enroll in marketplace coverage through Healthcare.gov.
• Children in this family would be eligible for CHIP in every state.

Low Income Single Person

This scenario differs from the previous one, showing a single worker with no dependents and with pre-job loss annualized earnings for 2020 of $15,000.

This worker would have $3,462 in earnings for the 12 weeks of work before job loss. Under our scenario, he would begin receiving state unemployment benefits for weeks beginning April 5^th, and because pre-layoff wages were so low, we estimate state UI benefits would be $139 per week in each of the scenario states, far below any state maximum benefit.  This worker would also receive an additional 13 weeks of the state benefit amount (the federal extension) as well as an additional $600 per week in federal supplemental UI benefits for the weeks starting April 5^th and ending with the week beginning July 28 (17 weeks).  Overall, the federally-supplemented unemployment benefits plus the worker’s prior earnings would result in a higher income than her pre-layoff income. Results are summarized in Table 4.

Access to Coverage

No matter the level of state maximum UI benefits, state UI benefits for this low income worker are assumed to be $139 per week in each scenario state.  As a result, his Medicaid income would fall to 56% FPL in each state.  He would also receive the federal supplemental UI benefit of $600 per week through July, which would raise his annual income to just over $19,000 for 2020, or from 120% FPL to 153% FPL.

Worker Losing Job-Based Coverage.  With this income change, access to marketplace subsidies and Medicaid coverage for this worker would vary across states:

• In 36 Medicaid expansion states and DC, this worker would have been eligible for Medicaid prior to layoff and would continue to be eligible while unemployed.
• In non-expansion states, the worker would not be eligible for Medicaid, except in Wisconsin, the only state that covers childless adults with income up to 100% FPL.
• This worker would be eligible for a special enrollment period in the marketplace (due to loss of job-based coverage) and he would qualify for marketplace subsidies with annual income over 100% FPL. The national average premium after tax credits for the benchmark silver plan would be $68 per month at this income level. He would also qualify for a cost sharing reduction (CSR) plan with a national average deductible of $762.

Worker with Marketplace Coverage When Employed.  This worker’s income change could change his eligibility for Medicaid or marketplace subsidies, depending on where he lives.

• In Medicaid expansion states, he would have been eligible for Medicaid prior to layoff, and so not enrolled in marketplace coverage.
• In non-expansion states, the worker would have qualified for marketplace subsidies prior to layoff. However, with unemployment benefits significantly increasing his income, he is not eligible for the same amount of subsidy.  At pre-layoff income of level of 120% FPL, he would have had to pay $26/month for the benchmark plan.  At 153% FPL, his required premium contribution rises to $63 per month.  At the higher income level he also qualifies for a less generous CSR plan.  If he does not update his marketplace application, he may have to repay up to $300 in excess premium tax credit when he files his 2020 federal tax return.  He would not be required to repay excess CSR subsidy.

Uninsured Worker When Employed

• In Medicaid expansion states this worker have been eligible for Medicaid prior to layoff and still would be post-layoff.
• In non-expansion states other than Wisconsin, the worker would not be eligible for Medicaid.
• In non-expansion states, the already-uninsured worker would not be eligible for an SEP to enroll in marketplace coverage through Healthcare.gov.

Low Income Single Person Below Poverty

This scenario is the same as the previous one, depicting a single worker with no dependents except the pre-job loss annualized earnings for 2020 is $12,000.

This worker would have $2,769 in earnings for the 12 weeks of work before job loss. Under our scenario, she would begin receiving state unemployment benefits for weeks beginning April 5^th, and in this case, we estimate she would receive a minimum State UI benefit of $50 per week in each of the scenario states. (In half of states, the minimum weekly benefit is a lower amount, ranging from $5 to $45 per week).  This worker would also receive an additional 13 weeks of the state benefit amount (the federal extension) as well as an additional $600 per week in federal supplemental UI benefits for the weeks starting April 5^th and ending with the week beginning July 28 (17 weeks).  Again in this scenario, the temporary federal supplemental UI benefit can raise this worker’s annual earnings from just below to just above the federal poverty level.   Results are summarized in Table 5.

Worker Losing Job-Based Coverage.

• In 36 Medicaid expansion states and DC, this worker would have been eligible for Medicaid prior to layoff and would continue to be eligible while unemployed.
• In non-expansion states other than Wisconsin, the worker would not be eligible for Medicaid.
• In non-expansion states, he would be eligible for a special enrollment period in the marketplace (due to loss of job-based coverage.) With income of 119% FPL, he would qualify for premium and cost sharing subsidies.  The national average premium after tax credits for the benchmark silver plan would be $68 per month at this income level.  He would also qualify for a cost sharing reduction (CSR) plan with an average deductible of $762.

Worker with Marketplace Coverage When Employed. 

• In Medicaid expansion states, he would have been eligible for Medicaid prior to layoff, and so not enrolled in marketplace coverage.
• In non-expansion states, the worker would not have qualified for marketplace subsidies prior to layoff because his income was below the poverty level, so he probably would not have been enrolled.

Uninsured Worker When Employed

• In Medicaid expansion states this worker have been eligible for Medicaid prior to layoff and still would be post-layoff.
• In non-expansion states other than Wisconsin, the worker would not be eligible for Medicaid.
• In non-expansion states, the uninsured worker would be eligible for an SEP to enroll in marketplace coverage through Healthcare.gov. This is because his higher unemployment income lifts him out of the Medicaid coverage gap and makes him newly eligible for marketplace subsidies.

What Happens to People Laid Off Later This Year?

Our scenarios look at simplified cases where people were laid off at the end of March and then qualify for unemployment benefits for the remainder of the year. The federal extension and supplement payments authorized under the CARES Act also help people who may have lost their job earlier or later in 2020, but because the $600 supplemental payment is available only through July 31, people losing their jobs later in 2020 may lose some or all of that additional stimulus.  For example, a worker who was employed until the end of June would receive at most 4 weeks of the $600 federal supplement.

Some people who lose jobs with job-based coverage later 2020 may have difficulties gaining access to affordable coverage in states that have not expanded Medicaid.  While those with sufficient incomes may be able to afford coverage through COBRA or the marketplace, some with lower incomes would see their projected annual income fall below the poverty level, which would mean that they are not eligible for premium tax credits to help them afford marketplace coverage.

To illustrate, consider the low income family shown above in Scenario 3, a single mother with 2 children working in a job that pays $23,000 per year, If she is laid off at the end of June instead of at the end of March, her pre-layoff earnings would be $11,058.  Her weekly state UI benefits would be the same once she begins receiving them, but she would only receive the federal $600 weekly supplement for 4 weeks. As a result, her 2020 income including earnings plus state and federal supplemental UI benefits would fall to just over $19,000.  See Table 6.

Access to Coverage

As we showed in an earlier scenario, this low income family would experience substantial income loss following layoff that occurs later in the year.  Throughout the year, Medicaid would consider only state UI benefits for this family and determine monthly income to be at 51% FPL.  With a layoff in late June, however, this family would only benefit from the supplemental federal UI benefit of $600/week for 4 weeks.  So total 2020 income would fall to 89% FPL.

Families Losing Job-Based Coverage.

• In 36 Medicaid expansion states and DC, the parent would have been eligible for Medicaid prior to layoff and continue to be eligible.
• In most of the 14 non-expansion states, the mother would not qualify for Medicaid under the pre-ACA eligibility pathway for parents of dependent children because, at 51% FPL, her income would still be too high.
• In non-expansion states, the mother would be eligible for a special enrollment period in the marketplace (due to loss of job-based coverage) but with estimated annual income of 89% FPL, she would not qualify for marketplace subsidies.
• Children in the family would be eligible for Medicaid or CHIP in every state, as they would have been prior to layoff.

Families with Marketplace Coverage When Employed. 

• In Medicaid expansion states, the entire family would have been eligible for Medicaid, and so not enrolled in marketplace coverage.
• In non-expansion states, the mother would have qualified for marketplace subsidies prior to layoff. Even though her projected annual income has fallen mid-year and will end up below poverty level, she can remain in her already-subsidized marketplace plan, and when she files her 2020 federal tax return next year, can claim additional credit that will be refunded to her.  This is an exception to the general rule that requires people receiving premium tax credit during the year are ineligible for credits if their income rises above 400% FPL, and must repay the entire amount of premium tax credit they received.
• Children in the family would be eligible for Medicaid or CHIP in every state, and were prior to layoff.

Uninsured Families When Employed.

• Families in Medicaid expansion states would have been eligible for Medicaid prior to layoff and still would be post-layoff.
• In non-expansion states, the already-uninsured parent would not be eligible for an SEP to enroll in marketplace coverage through Healthcare.gov.
• In most non-expansion states, the parent would not be eligible for Medicaid.
• Children in this family would be eligible for Medicaid or CHIP in every state.

Other Issues

These simplified scenarios do not show all of the possible variations across state unemployment insurance programs.   The maximum UI benefit in a given state may be higher or lower than amounts shown in our scenarios.  Our scenarios assume workers will be eligible for 26 weeks of regular state UI benefits; however in some states the benefit period is shorter.  Unemployed people whose prior work history was shorter than 12 months may qualify for lower state UI benefits than shown in these scenarios, or not qualify at all,

In addition, not all workers who lose their jobs will receive unemployment benefits.  State unemployment offices reportedly have been overwhelmed by the high volume of recent applications, and this could delay or deter some people from applying.

Further, people who lose eligibility for one source of health coverage may not be aware of alternative coverage sources or how to apply.  People whose eligibility shifts between Medicaid and marketplace subsidies may find the application process especially challenging for several reasons, including that these two programs treat new federal supplemental UI benefits differently in determining income eligibility.  Immigrants may also face challenges as their eligibility for Medicaid and CHIP and marketplace coverage and subsidies may be different than for citizens.

Finally, in Healthcare.gov states, funding for navigator enrollment assistance for the 2020 plan year was cut by more than 80% on average.  Navigators play a key role in helping consumers apply for marketplace plans as well as Medicaid.  Consumers who need help applying for new coverage or a change in financial assistance may have difficulty finding it, particularly in counties where no federal navigator funding was made available.

Discussion

Job loss during the coronavirus crisis can trigger substantial changes in income as well as loss of health insurance coverage.  The ACA greatly expanded coverage options for people losing coverage today.  Expanded Medicaid eligibility in most states will be newly available to many laid-off adults.  Medicaid is open for enrollment year round.  With few exceptions it does not charge monthly premiums and requires only modest copays for covered services.

ACA reforms in the non-group market make this coverage option available to many more people as well.  Applicants will not be denied or charged higher premiums based on health status and all plans must cover essential benefits.  The marketplace also subsidizes plans for people with income between 100% and 400% FPL.  As job loss reduces family incomes, marketplace subsidies will make coverage more affordable than it would have been prior to the ACA.

The temporary $600/week federal supplement to state UI benefits, enacted in the CARES Act, can help lift some very low income workers out of the Medicaid coverage gap, and make them newly eligible for marketplace subsidies.   Workers who are laid off closer to or after July, when temporary federal UI benefits stop, may not be helped in this way.

However, the $600/week UI supplement could create new challenges for others.  Low-wage workers who already had subsidized marketplace coverage prior to layoff, and whose income increases even somewhat during unemployment, should adjust their monthly premium tax credit; otherwise, they could be required to repay excess premium tax credit next year.

These scenarios illustrate not only the different outcomes and options people may face, but the challenge they may also face in identifying the coverage option for which they are eligible and correctly completing an application within any applicable deadlines.

1. Four states make parents of dependent children eligible for Medicaid at monthly income of 50% FPL or higher:u00a0 Wyoming (53% FPL), Nebraska (63% FPL), South Carolina (67% FPL) and Tennessee (94% FPL).u00a0 In addition, Wisconsinu2019s Medicaid program covers low-income parents and other adults up to 100% FPL. ↩︎