These estimates were updated on May 14, 2020. See the updated estimates.

We estimate that 3.5 million workers were at high risk of losing their employer-provided health insurance in the past two weeks. Because the United States is unique among rich countries in tying health insurance benefits to employment—roughly half of all U.S. workers receive health insurance through their own employer’s provided coverage—many of the newly unemployed will suddenly face prohibitively costly insurance options. The linkage between specific jobs and the availability of health insurance is a prime source of inefficiency and inequity in the U.S. health system. It is especially terrifying for workers to lose their health insurance as a result of, and during, an ongoing pandemic.

Background

Last week and this week saw a historically large number of workers filing initial claims for unemployment insurance (UI) benefits due to layoffs (or furloughs or hours reductions) connected to the economic impact of the coronavirus and associated “social distancing” measures. The 8.7 million (non-seasonally-adjusted) new claims over the past two weeks are about 5.9% of total employment over the last year, 2.5 times as large as any previous two-week period on record.

This scale of job loss will obviously cause huge distress for the affected workers and their families. One aspect of this distress will be the likely loss of employer-provided health insurance (EPHI). Most nonelderly people in the United States who have health insurance get it through their own employer or through the employer-sponsored plan that was available to somebody in their family. When jobs are lost, this primary source of health insurance coverage is also lost.

Using new UI claims by industry from the state of Washington—the epicenter of the coronavirus outbreak in the United States—we are able to provide a very rough estimate of the number of workers at high risk of losing health insurance they had through their own employer due to coronavirus-related layoffs (or furloughs or hours reductions). We can’t say exactly how many people will lose insurance coverage altogether for several reasons. For example, some workers who lose EPHI due to layoffs or hours reductions that trigger UI claims may be able to obtain coverage through health care exchanges set up by the Affordable Care Act (ACA) or through Medicaid. Some of this group may also be able to obtain continuing coverage through COBRA, paying out of pocket the full cost of their EPHI coverage. Some workers may be able to obtain coverage through other family members, or if only experiencing a temporary furlough or hours reduction, their employers might continue to pay for coverage. On the other hand, our calculations might understate the loss of health insurance coverage because they do not account for family members who are no longer covered because of the policyholder’s layoff. And because not all layoffs result in UI claims, we will underestimate the actual magnitude of job losses.

Those caveats aside, we find that 3.5 million workers were at high risk of losing EPHI due to coronavirus-related layoffs in the past two weeks. Most EPHI plans are monthly, so April 1 (yesterday) is likely the day the bulk of these losses would have happened. Policymakers should think hard about how to help these workers. A quick and minor fix that would provide some short-term help would be for the federal government to allow a special enrollment period for the Affordable Care Act (ACA) exchanges in the 38 states that rely on the federal government to administer their exchanges. Eleven of the 12 states who run their own exchanges (and the District of Columbia) have already allowed such a special enrollment period. The federal government (and Idaho, the lone holdout among state-run exchanges) should follow suit. This special enrollment period would make it easier for workers who have lost EPHI to enroll quickly in the ACA exchanges.

At a minimum, all COVID-19 related care should be covered by the federal government at no cost to patients. However, we should also think about how to hold harmless workers who lose EPHI due to COVID-19 and then find themselves facing expensive medical bills because of other health ailments that would have been covered by their previous employer plan. A bolder and comprehensive policy would be to extend Medicare and Medicaid to all those suffering job losses during the pandemic period, with the federal government funding this expansion. Finally, we should bolster overall measures to provide relief and spur economic recovery once the epidemic’s economic effects pass.

Below, we document how we made our estimate of 3.5 million workers at high risk of losing EPHI due to recent layoffs.

Methodology

To calculate potential losses of employer-provided health insurance, we first calculated national industry-specific shares of employer-provided health insurance coverage rates using data from the 2018 March Current Population Survey, limiting the sample to those who worked in the private sector or government during the previous year.

From the national industry-specific shares in Table 1, we assumed that if, say, there were 100 initial UI claims filed in a state’s “Utilities” sector, then that represents 100 job losses (or hours reductions—which can trigger UI claims in most but not all states)—and 77 of those workers lost their employer-provided health insurance, because the EPHI coverage rate in that sector is 77.1%.

To estimate UI initial claims by state and industry, we used industry-specific initial claims data from Washington state for the week ending March 21. Washington was hit early by the COVID-19 crisis and implemented several economic restrictions before March 21, including statewide bans on large gatherings and the closure of all sit-down restaurants.

Washington had a total of 133,478 initial UI claims for the week ending March 21. The industry-specific data provided by the state does not assign industries to every claim, so we proportionally scaled the available industry data to sum to the total number of initial claims in Washington. Table 2 combines the sector-specific UI claims in Washington with the national EPHI shares from Table 1 and provides total job losses and jobs lost with EPHI.

Table 2 also expresses total job losses in an industry as a share of that industry’s employment in Washington for the prior year, calculated using the most recent QCEW data for 2018Q4–2019Q3. To extend the analysis to other states, we apply this industry-specific job loss share to all other states’ industry-specific employment totals, and then proportionally scale these losses so that each state’s total job loss equals its statewide not-seasonally-adjusted total initial UI claims for the two weeks ending March 21 and March 28. These estimates therefore distribute state-specific UI claims to industries in a way that accounts for labor market data from the early and intense COVID-19 shock in Washington state and accounts for each state’s industry mix prior to the epidemic. Moreover, the calculation allows us to incorporate EPHI variation across industries when estimating the national share of workers at high risk of losing EPHI due to recent layoffs (Table 3).

Finally, we can do the same exercise of using the Washington UI claims by industry to allocate job losses to industries in each state, and then derive the likely number of workers losing EPHI (based on national shares of workers in each industry who receive EPHI). We display these results in Figure A. Unsurprisingly, the hardest-hit states are those with high shares of workers in accommodations and food services, such as Nevada.