Millions of Uninsured Americans are Eligible for Free ACA Health Insurance

This year has brought millions of job losses due to the COVID-19 pandemic. As cases now spike again and some states reverse course to limit non-essential activities, the next couple of months could bring new, permanent employment losses. As difficult as the next few months will be, one bit of good news is that most uninsured people are eligible for financial assistance under the Affordable Care Act (ACA), and they can sign up now while ACA Open Enrollment for 2021 lasts through December 15, 2020.

.There is no reliable measure of the current uninsured rate, but we do know there were 29 million uninsured people in the United States as of 2019. That number has almost certainly grown in 2020 due to the COVID-19 pandemic and subsequent economic recession, but it will be months before we have reliable government surveys to measure the true impact.

As the chart below shows, most of the uninsured in a typical year are eligible for financial help to buy coverage, and of those, most are actually eligible for a free or nearly free plan. Before the pandemic, about one in four uninsured people were eligible for Medicaid and another third were eligible for financial assistance on the Marketplaces, meaning, in total, 57% of the uninsured could get financial help to access coverage. In fact, most of those eligible for help can get free (or nearly free) insurance coverage. The 24% of uninsured people who are eligible for Medicaid (6.7 million people) generally would pay no premium to sign up, and another 16% of the uninsured (4.5 million people) are eligible for a Bronze plan with a $0 premium.

In other words, 4 out of 10 uninsured people – about 11.2 million people in 2018 and likely at least that many now – in the U.S. can get virtually free insurance, largely under the ACA. (Another 17%, or 4.7 million, can get insurance for significantly reduced price, also under the ACA). As our earlier estimates have found that the vast majority of those losing job-based coverage in 2020 are eligible for ACA coverage, the number of uninsured eligible for free coverage is likely even larger now.

As shown above, about 4.5 million uninsured people are eligible for a zero-premium Bronze plan on the ACA Marketplace (ranging from 4.2 – 4.7 million in the last three years as premiums have held mostly flat). Deductibles in these plans are high, typically about $6,500 for a single person. However, many uninsured consumers who qualify for a zero-premium bronze plan are also eligible for cost sharing reductions, which bring down out-of-pocket costs for low-income enrollees who choose to enroll in a silver plan. Most people eligible for cost-sharing assistance would be best off signing up for a Silver plan with a monthly premium payment (which premium subsidies substantially reduce).

Nonetheless, if the options are to either remain uninsured or pay nothing to sign up for a Bronze plan, the choice would likely be clear to most people, if they were aware of it. Few people will ever reach a $6,500 deductible, so worst-case scenario, enrollees end up paying fully out-of-pocket for all of their health care, just as they would if they were uninsured (though they would at least benefit from lower negotiated rates from their insurer). Those who do have that high level of health spending are clearly sick enough that they would benefit greatly from the financial protection that comes with health insurance. Given that we are in the midst of a pandemic, most potential enrollees cannot predict whether they will be in that group that has high health spending. A typical hospital admission in the U.S. is $24,000 and an admission for COVID-19 treatment could be substantially more expensive. Incurring $6,500 of medical expenses before a plan’s full benefits kick in is a much better alternative to risking tens of thousands of dollars of medical debt, especially if there is no cost to sign up.

Like all ACA-compliant health plans, Bronze plans come with other valuable benefits. All plans must cover the full cost of a wide range of preventive care services for their enrollees, without applying a deductible or copayment. These services include many forms of health screenings and immunizations, as well as contraception. Additionally, some bronze plans voluntarily cover some primary care services before the deductible.

Unfortunately, a large share of the population is unaware that the ACA offers financial assistance to buy insurance. Many people who lost employer-based coverage during the pandemic may also be unfamiliar with these options, since they have never had a reason to interact with the Marketplaces or Medicaid. The Trump administration has also reduced funding for marketing and outreach activities by nearly 90% and cut funding for Navigator programs that help enroll people in coverage by 84%. President-elect Biden has vowed to reverse these actions, and may tie that outreach to an extended Open Enrollment or broader Special Enrollment opportunities. Under Trump Administration rules, the federal Open Enrollment period runs from November 1 through December 15, but it extends into January in most states that operate their own health insurance exchanges. There is no deadline to sign up for Medicaid.

Two weeks into the current Marketplace Open Enrollment period for 2021, signups in federal exchange states appear strong, but the vast majority of signups are from returning enrollees. We still are not seeing a surge of signups from new enrollees relative to past years, but many people who are uninsured may be surprised at what they find if they look at their options.

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