- Issue: During the COVID-19 pandemic, most states issued lockdown orders that closed many workplaces. The ensuing job losses may have left millions of workers without employer health coverage.
- Goal: To estimate how many workers lost jobs that came with employer-sponsored insurance (ESI) — by industry, age, and gender — during the pandemic.
- Methods: Health insurance coverage data were used to generate the proportion of workers with ESI, by various characteristics. Data on unemployment benefit recipients were used to generate the proportion of workers who lost jobs because of the pandemic. We apply the proportion of workers with ESI to the number of workers who lost jobs to obtain an estimate of jobs with ESI coverage that were lost. We also determine the number of dependents of these workers who potentially lost coverage.
- Key Findings and Conclusion: We estimate that as many as 7.7 million workers lost jobs with ESI as of June 2020 because of the pandemic-induced recession. The ESI of these workers covered 6.9 million of their dependents, for a total of 14.6 million affected individuals. Only with time will we know how many job losses are ultimately permanent, resulting in loss of ESI for workers and their dependents.
In response to the COVID-19 pandemic, most states issued lockdown orders that closed many workplaces and dramatically slowed U.S. economic activity in the spring of 2020. The result was a massive increase in unemployment, which peaked in April at 14.7 percent. During the 15 weeks from mid-March to the end of June, Americans filed nearly 49 million new claims for unemployment benefits.1
The strong link between employment and health insurance coverage has important implications for Americans’ insurance coverage and access to health care. Employer-sponsored health insurance (ESI) is the most common form of health insurance in the United States. In March 2019, 69 percent of the 152 million workers age 16 and older had ESI, meaning that 175 million workers and their dependents had coverage.2 But if millions of workers and their dependents have lost ESI during the pandemic, we would expect increased enrollment in COBRA (Consolidated Omnibus Budget Reconciliation Act) continuous coverage, Affordable Care Act (ACA) marketplace plans, and Medicaid, as well as an increase in the number of uninsured.
The path from loss of a job with ESI to loss of health insurance is not simple and depends on three factors:
- Is the job loss temporary or permanent, and if temporary, does the employer continue ESI coverage until the worker is called back to work?
- To what extent will temporary layoffs without loss of ESI become permanent layoffs with loss of ESI?
- When workers do lose ESI, either at the time of layoff or when a temporary layoff becomes permanent, how many will obtain coverage through other family members, COBRA, the ACA marketplace, or Medicaid?
We examine these factors in more detail in the following sections.
Maintaining Coverage During Temporary Job Loss
A Commonwealth Fund survey of nearly 2,300 adults age 18 and older found that, of workers who had lost jobs with ESI during the pandemic, more than half had been temporarily laid off or furloughed and still had ESI through the employer.3 This makes sense because temporarily laid-off workers remain attached to their employer, and the employer has an interest in the continued health and future productivity of these workers.
Losing ESI When Layoffs Become Permanent
At the outset of the recession in April, nearly 18.2 million of the 23.1 million workers who were unemployed were temporarily laid off or furloughed and expected to be recalled to their previous employer.4 By August, the number of temporarily laid-off workers had fallen to 6.2 million as many workers returned to their jobs. But during the same time, the number of permanently laid-off workers increased from 2.6 million to 4.1 million, and the number of workers unemployed for 15 or more weeks increased from 1.8 million to 8.1 million. Although improvements in the labor market since April have been good news for many laid-off workers, a large minority has already lost or remains at risk of losing ESI.
Obtaining Coverage After Loss of ESI
The Urban Institute estimates that, during the last three quarters of 2020, on average only about a third of those who lose ESI coverage through pandemic-related job loss will become uninsured.5 About a third will obtain coverage through another family member’s ESI, just over a quarter will become covered by Medicaid or the Children’s Health Insurance Program (CHIP), and a small percentage will obtain nongroup insurance. This implies that, even for those who lose ESI following the loss of a job with ESI, only a minority will lose health coverage.
All three of these factors involve much uncertainty, and any estimate of losses of ESI or any health insurance coverage resulting from the pandemic recession must be understood as provisional.
In this issue brief, we use a combination of health insurance coverage data and state-level data on the characteristics of unemployment benefit recipients to estimate how many workers have lost jobs with ESI following the recent surge of unemployment, and break that number down by industry, age, and gender. We also examine how many of these workers’ dependents may have lost coverage.
Exhibit 1 shows that, between February and June 2020, the number of unemployed individuals increased by 15.9 million (from 2.0 million to 17.9 million). This is a reasonable estimate of the job loss resulting from the pandemic, and it represents 10 percent of prepandemic employment (Exhibit 2).6
We estimate that, of these newly unemployed workers, 7.7 million lost jobs with ESI, and these job losers had 6.9 million dependents who were covered by ESI. As a result, 14.6 million individuals in total either lost a job with ESI or were the covered dependent of a job loser with ESI.7
The pandemic-related lockdowns severely affected certain industries and groups of workers, while leaving others virtually untouched. As a result, we would expect the number of people losing jobs with ESI to vary greatly by industry, and possibly by other characteristics, such as age and gender.
ESI Coverage Loss by Industry
The seven industries shown in Exhibit 3 accounted for two-thirds of prepandemic employment, 69 percent of unemployed workers in June, and 68 percent of lost jobs with ESI. The disparities among these industries in total job loss versus loss of jobs with ESI are striking. For example, total job losses in manufacturing were roughly proportional to employment — manufacturing accounted for 10 percent of prepandemic employment and 12 percent of unemployed workers in June. But because manufacturing has one of the highest rates of ESI coverage (66%),8 it accounted for a greater proportion of loss of jobs with ESI (18% of lost jobs with ESI and 19% of potential ESI coverage loss when dependents are included).
In contrast, job losses in accommodation and food services were far out of proportion to employment. Although accounting for only 7 percent of prepandemic employment, 20 percent of unemployed workers in June were former accommodation and food service workers. But because only 25 percent of these workers had ESI prepandemic, they accounted for only 11 percent of lost jobs with ESI and 10 percent of potential ESI coverage loss when dependents are included.
Similarly, retail trade accounted for 10 percent of prepandemic employment and 14 percent of unemployed workers in June. But because only 40 percent of workers in retail trade had ESI prepandemic, these workers accounted for only 12 percent of lost jobs with ESI and 11 percent of potential ESI coverage loss including dependents.
Exhibit 4 shows further detail on the pandemic-related increase in unemployment by industry, along with the percentage of workers in each industry who became unemployed, the percentage of workers with prepandemic ESI coverage, and the percentage of those workers who lost jobs with ESI.
Nearly 3.3 million workers in accommodation and food services (30% of the industry’s workforce) became unemployed between February and June 2020. However, only 25 percent of workers in that industry had ESI prepandemic, so only 7 percent of accommodation and food service workers lost jobs with ESI as a result of shutdowns. In contrast, far fewer manufacturing workers lost jobs following the pandemic (about 1.6 million, or 10% of employment in the industry). But because two-thirds of manufacturing workers had ESI coverage prepandemic, the same proportion (7%) of all manufacturing workers lost jobs with ESI as a result of the shutdowns.
ESI Coverage Loss by Age
Exhibit 5 shows that workers ages 35 to 44 and 45 to 54 bore the brunt of ESI-covered job losses. They accounted for 17 percent to 19 percent of workers who lost jobs, but 22 percent to 27 percent of potentially affected individuals (workers plus their dependents) because workers in these age groups were the most likely to be covering spouses and other dependents. In contrast, workers younger than age 25 and age 65 and older accounted for disproportionately small shares of lost jobs with ESI because of their relatively low rates of ESI coverage.
The case of workers younger than 25 is striking because, although they accounted for 12 percent of prepandemic employment and for 16 percent of unemployed workers, they represented only 7 percent of lost jobs with ESI, and only 5 percent of potential ESI coverage loss including dependents. Only one in five of these younger workers had ESI through their job, and only 14 percent provided coverage for a dependent.9
Workers age 65 and older accounted for only 6 percent of unemployed workers, and for only 4 percent of lost jobs with ESI because most older workers have Medicare as their primary coverage. Only 35 percent had coverage from an employer, and some of these workers have retiree health coverage through a former employer.
ESI Coverage Loss by Gender
Exhibit 6 shows that the adverse effects of the pandemic recession fell disproportionately on women. Although women made up 47 percent of prepandemic employment, they accounted for 55 percent of total job losses. But because women were somewhat less likely than men to have health coverage through their own job, and less likely to have family coverage, they and their dependents accounted for slightly more than half of all lost jobs with ESI and potential ESI coverage loss when dependents were included.
Between February and June 2020, the number of unemployed workers increased by 15.9 million. We estimate that about 7.7 million (48%) of these workers lost jobs with ESI. And because 6.9 million dependents were covered by ESI through a job loser, a total of 14.6 million individuals potentially lost ESI as of June because of the pandemic. If all these individuals lost ESI coverage, it would represent an 8 percent reduction in total ESI coverage.
The ESI coverage rate of individuals who lost jobs because of the pandemic (48%) is somewhat less than the ESI coverage rate of workers overall (51%) (Exhibit 4). This is because workers employed in two of the three industries most affected by lockdowns — accommodation and food services, and retail trade — were less likely than average to have ESI coverage (Exhibit 3). Workers in manufacturing — the third industry heavily affected by the lockdowns — were more likely than average to have ESI coverage.
These estimates of lost jobs with ESI and dependents covered by the job losers do not imply that 14.6 million individuals have lost ESI or become uninsured during the pandemic. Rather, they represent an upper-bound estimate of ESI losses because the only available estimate suggests that roughly half of workers who have lost jobs with ESI have been furloughed or temporarily laid off and have continued to be covered by ESI.10 Estimating the number of individuals who have lost ESI because of the COVID-19 recession requires estimates of the number of job losers, the number of job losers with ESI, and the number of job losers with ESI whose coverage was not continued by their employer. Considerable uncertainty surrounds all these estimates.
Uncertainly also surrounds estimates of the number of individuals who have lost any health insurance coverage as a result of lost ESI. As discussed earlier, an Urban Institute study estimated that roughly a third of those who lose ESI coverage through pandemic-related job loss will become uninsured. We caution, however, about the difficulties in making such estimates.11
As previously discussed, the path from loss of a job with ESI to loss of health insurance is not simple. It follows that the evolution of ESI coverage during the pandemic will be far from straightforward and will depend on many unpredictable circumstances. Only with time will we know how many job losses are ultimately permanent and result in loss of ESI. In the interim, it will be important to monitor key labor market statistics, including the number of workers on furlough or temporary layoff who become permanent job losers, and the number of job losers who have been unemployed for 15 weeks or more and are unlikely to be attached to an employer and covered by ESI.