SEPTEMBER 2021 Issue Brief by Katherine Wilson, Wilson Analytics Unexpected Growth in California Health Insurance During COVID-19 Recession Medi-Cal and Individual Market Growth Led The impressive 2020 enrollment gains were driven mainly the Way, While Employer-Sponsored Coverage by growth in Medi-Cal managed care and to a lesser Dipped Only Slightly extent by increases in individual coverage and Medicare New data released by the state's Department of Managed managed care. State and federal policies designed to Health Care and the California Department of Insurance help people get and keep coverage during the pan- show that - despite job losses - total health insurance demic were important factors in the growth in both the enrollment in the pandemic year 2020 increased by over Medi-Cal and individual markets. Enrollment declines one million (3.3%) (see Figure 1).1 These findings, based among employer-sponsored insurance were smaller than on figures through December 2020, confirmed and job losses might have predicted. extended the midyear look at enrollment dynamics in Hanging On to Coverage? Detailed California enrollment resources, including a quick reference guide and a statewide California Health Insurance Enrollment data file, are available on the California Health Insurance Enrollment Almanac page. Figure 1. California Health Insurance Enrollment, by Market, 2019 vs. 2020 (in millions) Notes: Medicare and Medi-Cal enrollment reflect managed care only. ASO is administrative services only, provided to self-insured employers. Enrollment is as of December. Sources: Enrollment Summary Report (2019–20), Department of Managed Health Care (DMHC); and Health Insurance Covered Lives Report (2019–20), California Department of Insurance (CDI). Medi-Cal Managed Care Enrollment Surges Individual Enrollment Up Nearly 10%, Boosted as Feds and State Halt Medicaid Terminations by State Action on Premium Assistance and During Public Health Emergency Extended Enrollment Periods In contrast to 2018 and 2019 declines, data from state Reversing a four-year decline, individual market enroll- regulators show that Medi-Cal managed care expanded ment increased 9.7% (195,000) in 2020, to end the year in 2020 by 9.2% (927,300), reaching 11.0 million enrollees with 2.2 million enrollees (see Figure 3, page 3). (see Figure 2). The Medi-Cal surge was also documented in California Department of Health Care Services (DHCS) The growth in individual coverage was driven by a 19% reporting,2 which showed that Medi-Cal's 2020 growth enrollment increase (238,000) in Covered California, began in April, the first month following the declara- coinciding with three major developments. First, new tion of the COVID-19 public health emergency (PHE) on state-funded premium assistance came online, bringing March 16, 2020. aid to 45,000 middle-income enrollees (400% to 600% of poverty) for the first time and adding to existing federal The steady growth in Medi-Cal was not driven by an assistance for another half-million enrollees.6 Second, increase in new enrollments, as might be expected special enrollment periods linked to the pandemic, during an economic downturn. In fact, new Medi-Cal recession, and wildfires kept sign-ups open much of the enrollments in 2020 (PDF) were lower than in 2019.3 year, avoiding attrition during the year. Third, sign-ups by Instead, overall Medi-Cal enrollment expanded because people who had lost job-based insurance increased over federal and state policies halted annual eligibility rede- prepandemic levels.7 terminations during the PHE to ensure continuous Medicaid coverage.4 Ordinarily, in nonpandemic times, Individual enrollment outside Covered California (so- about 104,000 enrollees per month would lose Medi-Cal called "off-exchange" enrollment), continued its long coverage during the annual renewal process, according decline, decreasing by 5.7% (43,000) in 2020. Covered to state budget documents.5 With this process halted, California now accounts for about two-thirds of the indi- Medi-Cal enrollment climbed steadily during 2020. vidual market, and most Covered California enrollees (88%) receive a premium subsidy. Figure 2. California Health Insurance Enrollment Change, 2019 to 2020 (in thousands) Notes: Medicare and Medi-Cal enrollment reflect managed care only. ASO is administrative services only, provided to self-insured employers. Enrollment is as of December. See interactive chart for percentage changes. Sources: Enrollment Summary Report (2019–20), DMHC; and Health Insurance Covered Lives Report (2019–20), CDI. California Health Care Foundation www.chcf.org 2 Figure 3. Individual Market Enrollment, Covered California and Non-Covered California, 2014 to 2020 Notes: Non–Covered California individual enrollment is calculated as total individual market (from regulators) minus Covered California individual enrollment (from Covered California). Enrollment is as of December. See interactive chart for number and percentage changes. Sources: Enrollment Summary Report (2014–20), DMHC; Health Insurance Covered Lives Report (2014–20), CDI; and Active Member Profile (2014–20), Covered California. Job-Based Enrollment Declined, but Less Than Figure 4. J obs vs. Employer-Sponsored Insurance, California, 2020 Job Losses and Expectations Employer-sponsored insurance (ESI), which consists of small group, large group, and administrative services Job declines far exceeded employer-sponsored only (ASO) enrollment, declined 1.2% (213,000) to 17.8 (ESI) insurance declines. million in 2020. In that same period, nonfarm job losses were far greater, plunging 8.0% (1.4 million jobs) year over year (see Figure 4). Early predictions of massive ESI losses did not materialize, in part due to a tendency for job losses to have occurred among people who did not have health insurance through their job and for some employers to have extended health benefits to furloughed workers. For example, nationwide, among establishments receiving a coronavirus-related loan, 70% Sources: California Employment Development Department, press release, January 22, 2021; Enrollment Summary Report (2019–20), DMHC; and paid a portion of health insurance premiums for some Health Insurance Covered Lives Report (2019–20), CDI. or all employees in the summer of 2020. In addition, some losing ESI coverage may have enrolled in COBRA (Consolidated Omnibus Budget Reconciliation Act) or in job-based coverage through another employer.8 All components of ESI declined: large group (1.4%), small group (2.5%), and ASO provided to self-insured employ- ers (0.2%). The growth in individual coverage (195,000) nearly offset the declines in ESI. Unexpected Growth in California Health Insurance During COVID-19 Recession www.chcf.org 3 Medicare Managed Care Enrollment Impact of policies and new laws on the individual Continued Its Steady Climb market. The year 2020 showed that longer sign-up peri- Medicare managed care grew by 6.3% in 2020 to 2.9 mil- ods and additional special enrollment periods lead to lion enrollees. Consistent with recent years, it expanded steadier enrollment and coverage in the individual mar- due both to increases in the age 65+ population and ket. Given financial premium support and California's faster growth in Medicare Advantage than in fee-for-ser- coverage mandate, could extended sign-up periods vice Medicare. remain available in 2022 without excessive risk to insur- ers? In 2021, additional federal premium assistance for marketplace purchasers became available through the In Summary, Enrollment in the 2020 American Rescue Plan. This has already boosted early Pandemic Year 2021 Covered California enrollment, and should also The year 2020 finished with 1.1 million more California contribute to strong individual market performance in health insurance enrollees than 2019. Growth in Medi- 2022. Extension of the additional federal premium assis- Cal managed care and individual market enrollment tance beyond the current expiration date at the end of drove the expansion, along with increased enrollment in 2022 will be important for maintaining the enrollment Medicare managed care. These enrollment gains far out- gains. weighed the small declines in group and ASO enrollment. The economy and employer-sponsored insurance. The Growth in insurance enrollment during a recession stands extent of the economic recovery will shape the recovery in contrast with historical trends. During the recession in of ESI and its long-term health. the early 2000s and in the Great Recession, the number of Americans with insurance fell (PDF). These recessions The pandemic year of 2020 provided important lessons preceded the Affordable Care Act coverage expansions on how policy can affect enrollment levels and coverage in 2014, which contributed to the net enrollment gains in the state, and California will need to navigate the com- in 2020, in addition to factors that may be unique to this ing changes with care. pandemic, such as many employers continuing to offer coverage to furloughed workers. Looking Ahead: Road Bumps and Opportunities in 2022 The 2020 enrollment dynamics - characterized by pol- icy-driven growth in Medi-Cal and the individual market - could stay in play through the end of 2021. But in 2022, the environment could change, including a plunge in Medi-Cal enrollment. Impact of PHE's end on Medi-Cal. The national PHE declaration may remain through the entirety of 2021, keeping the Medi-Cal continuous coverage requirement in place. Once the PHE ends, counties must resume renewals and redeterminations, which are expected to take place gradually over the following 12-month period (PDF). These enrollment actions could lead to an unprec- 9 edented number of Californians being disenrolled from Medi-Cal. Help transitioning to other sources of cover- age will be critical for them. California Health Care Foundation www.chcf.org 4 About the Author Endnotes Katherine Wilson is an independent consultant special- 1.Total enrollment consists of individual, group, Medi-Cal and Medicare managed care, and administrative only services izing in health insurance markets and health care costs. provided to self-insured employers. Department of Health Care Services reporting of Medi-Cal 2. About the Foundation Certified Eligibles Tables, by County from 2010 to Most Recent Reportable Month (April 2021). Figures showed 2020 expansion The California Health Care Foundation is dedicated to of 897,000 and 917,000 in Medi-Cal managed care and total advancing meaningful, measurable improvements in the Medi-Cal (which includes FFS), respectively. way the health care delivery system provides care to the Stakeholder Advisory Committee Meeting (PDF), DHCS, 3. people of California, particularly those with low incomes February 11, 2021, p. 40. The number of new Medi-Cal enrollees and those whose needs are not well served by the status (with no prior enrollment) in the April to December 2020 period quo. We work to ensure that people have access to the was 90,000 fewer than for the same period in 2019. Similarly, total new enrollments (newly enrolled + re-enrollments) were care they need, when they need it, at a price they can 297,000 lower in the April to December period of 2020 than in afford. the same period in 2019. 4.The federal government, in its Families First Coronavirus CHCF informs policymakers and industry leaders, invests Response Act, provided a 6.2 percentage point increase in the in ideas and innovations, and connects with changemak- federal share of Medicaid spending and tied it to a requirement ers to create a more responsive, patient-centered health to maintain eligibility (MOE) through the end of the public health emergency (PHE). Specifically, states must provide continuous care system. eligibility through the end of the month in which the PHE ends for those enrolled as of March 18, 2020, or any time thereafter during the PHE period. To comply, the state, through executive order (PDF) and directives (PDF) to counties, ordered delays in annual eligibility reviews - so-called "redeterminations" or "renewals" - which would otherwise have dropped some beneficiaries. 5."COVID-19 Caseload Impact: Regular Policy Change Number: 251," in Medi-Cal May 2020 Local Assistance Estimate for Fiscal Years 2019–20 and 2020–21 (PDF), California Dept. of Health Care Services. Active Member Profiles (Dec. 2020), Covered California. 6. Coverage When You Need It: Lessons from Insurance 7. Coverage Transitions in California's Individual Marketplace Pre and Post the COVID-19 Pandemic (PDF), Covered California, September 22, 2020. 8."As the Pandemic Eases, What Is the State of Health Care Coverage and Affordability in the U.S.?: Findings from the Commonwealth Fund Health Care Coverage and COVID-19 Survey, March–June 2021," Commonwealth Fund, July 16, 2021. Nationally, in the March–June 2021 period, 40% of those who lost employer coverage because of job loss related to the pandemic enrolled in either COBRA or other ESI coverage. Updated Guidance Related to Planning for the Resumption of 9. Normal State Medicaid, Children's Health Insurance Program (CHIP), and Basic Health Program (BHP) Operations Upon Conclusion of the COVID-19 Public Health Emergency (PDF), Centers for Medicare & Medicaid Services, August 13, 2021. Unexpected Growth in California Health Insurance During COVID-19 Recession www.chcf.org 5