A Changing Landscape

Over 40 million Americans have filed for unemployment insurance since mid-March. (1) While the weekly number of new unemployment insurance filings continues to decline, the total number of job losses across the United States has already reached unprecedented levels and the labor market outlook is far from certain.

The economic impact of job losses relating to COVID-19 will create a dramatic shift in how individuals access health insurance. Approximately one in two Americans is currently covered under an employer-sponsored health plan, signaling that significant job losses have already resulted in millions of Americans losing their health insurance. A recent Kaiser Family Foundation report estimated nearly 27 million Americans had lost employer-sponsored health insurance through May 2. (2) The next question to ask is how, and if, recently unemployed individuals will access the health insurance market going forward. As shown in Figure 1, individuals who lose their employer coverage will move into one of six coverage categories or decide to forego purchasing health insurance altogether.

On a national level, we anticipate the largest share of Americans who lose employer-provided health insurance will move to Medicaid. Assuming the individual is eligible based on his or her income, Medicaid plans will offer the lowest premium option in the market. Guy Carpenter-affiliate Oliver Wyman estimates nearly 16 million people may move from an employer-sponsored plan to Medicaid by late 2020 in a scenario where 20 percent of the national workforce is unemployed. However, there will be a significant discrepancy in Medicaid membership growth among states that have expanded Medicaid eligibility thresholds and those that have not. As noted by the Center on Budget Policy and Priorities, “In the 15 states that have not implemented the Affordable Care Act (ACA) Medicaid expansion (as of April 2020), adults over 21 are generally ineligible for Medicaid no matter how low their incomes are unless they are pregnant, caring for children, elderly or have a disability.” (3)

Guy Carpenter, in collaboration with our colleagues throughout Marsh & McLennan, is closely monitoring the direct and indirect impacts of the virus, including the potential ramifications of growing unemployment on the health insurance industry. We stand ready to help our clients answer this and other challenges presented by COVID-19.




A Changing Landscape