One thing is certain during these uncertain times: leaders and organizations need to plan and then plan some more. Such is the case with the public health emergency (PHE) surrounding COVID-19. The PHE was last extended in mid-April for 90 days until July 15. The Biden administration has repeatedly said it would give stakeholders 60 days’ notice before ending the PHE. No such announcement has come, so most industry observers expect the PHE to stay in place at least until October.
Still, an eventual end to the PHE will dramatically impact health coverage provisions that have been in place throughout the pandemic. We analyzed a couple of key areas where leaders need to prepare for changes: coverage for COVID-19 testing and a rise in the number of uninsured Americans. Our analysis shows that 5.1 million people could lose health coverage by 2024 due to the combined impact of two provisions that expanded access to coverage expiring, as described below.
Medicaid Redeterminations and ARPA Tax Credits:
In normal times, an estimated 10% of beneficiaries move in and out of Medicaid during a given year due to eligibility redeterminations. To sustain benefits during COVID-19, Congress provided a temporary increase in funding to states’ Federal Matching Assistance Percentage during the PHE so long as they maintained continuous coverage for people who were enrolled in Medicaid when the PHE began until it ends. At that point, states will revert to regularly reviewing eligibility for all enrollees.
We projected nationwide Medicaid enrollment, with actual enrollment through October 2021 (the most recent data available), and our estimates of how enrollment will continue to grow through the end of the PHE, which we assume here to occur in September 2022. We projected enrollment peaking in September 2022 at 91.3 million and dropping to 80.9 million by December 2023 due to the effect of states’ redetermination efforts. The effects of the reduction could be delayed if the PHE is extended past September.
Medicaid enrollment and the impact of end of prohibition on redeterminations
Affordable Care Act Enrollment:
Another step lawmakers took to sustain coverage during the pandemic was to offer more generous premium tax credits (PTCs) for individuals buying insurance on the ACA Exchanges. Among other things, the American Rescue Plan Act made PTCs available to those with household incomes greater than 400% of the federal poverty level. It also reduced enrollees’ out-of-pocket premium costs for those with incomes less than 400% of FPL. Barring reauthorization by Congress, the PTC provisions will sunset at the end of 2022.
Below we show the impact of ending the enhanced PTCs on annual premiums for individuals age 45 at various incomes. We used the median premium for a 45-year-old for the benchmark silver plan across all rating areas in the Healthcare.gov states in 2022. We project that the loss of the ARPA subsidies will increase the annual premium for someone age 45 from $0 to $793 at 150% of FPL (roughly $19,000 in income). At incomes just above 400% FPL (roughly $52,000 in income), the premium will increase from $4,339 to $6,079.
Annual premium after premium tax credits by income for single enrollee age 45
Combined, our modeling shows that the end of the enhanced tax credits and the Medicaid redetermination process will result in 5.1 million more individuals becoming uninsured by 2024. We provide more details of this analysis here, including assumptions about individuals accessing employer-sponsored insurance.
Health plans are currently required to cover the costs of PCR COVID-19 testing without any prior authorization or cost-sharing requirements to the insured population. And in January 2022, as the Omicron variant was rapidly spreading, a new mandate kicked in forcing insurers to fully reimburse consumers for rapid at-home tests. Both requirements will stay in place as long as the PHE is in effect.
Once mandated coverage of testing ends, insured patients may be subject to cost-sharing, which could count towards a deductible and coinsurance or a one-time copay. And because of the common lack of transparency in the total out-of-pocket cost prior to each visit, members may opt for the more convenient over-the-counter antigen tests since they can be taken at home at a fixed cost with the results available within minutes, even if they may no longer be covered by insurance at no member cost.
Insurers will likely need to assess changes in expected COVID-19 testing claims costs compared to their baseline claims experience due to several cost drivers, including:
- Limitation on coverage up to a negotiated price as opposed to an unlimited cash price
- Lower utilization in testing due to member cost-sharing and/or shift to non-covered at-home testing
- Lower insurer cost per test due to member cost-sharing
- Lower demand in testing in general if COVID-19 cases become more manageable and predictable
- To the extent that the baseline claims experience includes 2022 data for periods when OTC testing was covered, insurers may need to reflect that OTC “rapid” antigen tests may no longer be covered
Nothing is Certain
The history and course of this pandemic, both nationally and internationally, have been unpredictable and ever-changing. Future periods could change from what we’ve assumed here based on unexpected developments related to increased or decreased prevalence of COVID-19 cases, the continued effectiveness of vaccines in preventing hospitalization or death, responses from the federal or state governments, or the increased effectiveness of additional treatments to minimize the severity of COVID-19. We intend to monitor these developments as they take place and provide timely insights into the potential impacts of the next phase of this evolving pandemic.
End Notes: Our modeling work was prepared on behalf of the Blue Cross Blue Shield Association. The authors of this report are members of the American Academy of Actuaries and meet that body’s qualification standards for performing this work.