Health Insurance tied to jobs creates big problems with record unemployment

Posted at 5:26 PM, May 22, 2020
and last updated 2020-05-22 19:25:26-04

In early March, right before social distancing measures came to Ohio, Kyle Strowe started a job at a staffing company, helping other people find new positions.

Coronavirus made sure that was terrible timing.

A few weeks later, Ohio’s Stay At Home orders kept non-essential workers home, shut down businesses, and sparked record levels of unemployment.

As one of the most-recent employees hired, Strowe was one of the first to be let go. His health insurance coverage was set to expire at the end of April.

“It was scary knowing that I might not have insurance coverage for a little bit,” said Strowe.

Strowe’s situation fairly common across the United States but also in Ohio.

More than a million people have filed for unemployment in Ohio over the past two months and The Center for Community Solutions estimates 1.7 million Ohioans may lose employer-sponsored health insurance coverage because of coronavirus.

The Center for Community Solutions says the federal government should take similar steps to what it did during the Great Recession, where it increased federal money to state governments to bolster Medicaid programs.

“If [the federal government and Congress] do not act, and if policymakers in Ohio do not support this action, there will be dire consequences,” The Center for Community Solutions writes on its website. “Economically, the state budget will suffer, greatly, and Ohio’s most vulnerable communities and populations will be at risk.”

“The economy takes a downturn, people lose their jobs they might lose their employer sponsored-insurance, Medicaid is there to sort of help them maintain some level of coverage,” said Loren Anthes, The Center for Community Solutions William C. and Elizabeth M. Treuhaft Chair in Health Planning. “And so as more people enroll with Medicaid, that means that you may spend more so the federal government increased to states how much it contributes, and it helped the state, sort of weather the storm.”

See The Center for Community Solutions’ full report here.

Case Western Reserve University Professor of Banking and Finance JB Silvers says it’s mostly because health insurance is often closely tied to employment in the United States.

“Which works fine as long as you have a job,” said Silvers. “But when you don’t have a job, it creates a real problem.”

Silvers says the best option for what to do next depends on the situation.

Three steps you can take are:

Silvers says most people will qualify for the Affordable Care Act because losing a job is a qualifying event, allowing someone to apply for new coverage at any point during the year.

“For lower-income people, that’s almost certainly the way to go but you have to make that election within 60 days of the event,” said Silvers. “If you don’t do that, you’re out of luck.”

COBRA allows people to keep the same coverage they had through their employer normally for a year and a half. The catch is on COBRA, the health insurance plan isn’t partially covered by the employer anymore so the full cost falls on the person looking for insurance.

“Suddenly, your premiums might go up by a factor of three or our,” said Silvers.

Strowe chose a fourth option.

“[Not having health insurance] motivated me to really try to find a jobs as soon as possible,” said Strowe.

It might not be the best option for everyone, especially when leaving the house isn’t recommended for people at high risk for catching the coronavirus.

But it made sense for Strowe.

“Having to pay an arm and a leg for COBRA, I knew that was always an option but I didn’t want to pay as much if I could find a good company that provided benefits as well,” said Strowe.

A few days before Strowe’s health coverage would have expired, he started in a new job with new health insurance.