Uninsured Rate Hits Record Low of 8.3%

WASHINGTON — The uninsured rate in the U.S. has fallen to a record-low 8.3%, but that percentage is expected to gradually increase as insurance protections from the COVID-19 pandemic wind down, according to officials from the Congressional Budget Office (CBO).

The temporary policies enacted in the wake of the COVID-19 pandemic “have contributed to a record low uninsurance rate in 2023 of 8.3% and record-high enrollment in both Medicaid and ACA [Affordable Care Act] marketplace coverage,” said Caroline Hanson, PhD, principal analyst at the CBO, during a briefing sponsored by Health Affairs. “As those temporary policies expire under current law, the distribution of coverage will change and the share of people who lack insurance is expected to increase by 2033.”

CBO is projecting an uninsured rate of 10.1% by 2033, and “while that’s obviously higher than the 8.3% that we’re estimating for 2023, it is nevertheless lower than the uninsured rate in the last year prior to the COVID-19 pandemic,” which was about 12%, she said.

“Throughout the 2023-33 period, employment-based coverage will remain the largest source of health insurance, with average monthly enrollment between 155 million and 159 million,” Hanson and co-authors wrote in an article published in Health Affairs.

However, they added, “in addition to policy changes over the course of the next decade, demographic and macroeconomic changes affect trends in coverage in the CBO’s projections.”

The current rate of 8.3% varies by income, Hanson said during the briefing. “In particular, people with incomes below 150% of the federal poverty line are more likely to be uninsured than people with incomes above 400% of the federal poverty line. And when those lower-income people are covered, they are most often covered by Medicaid or CHIP [Children’s Health Insurance Program], while those higher-income people are most often covered by employment-based coverage.”

However, the differences in the uninsured rate among those with varying incomes are beginning to narrow, she added. “Since 2019, CBO estimates that the uninsured rate has fallen from 17% in 2019 to 10% in 2023 for people with incomes below 150% of the federal poverty line, while it has fallen from 9% to 8% for people with incomes above 150% of the federal poverty line,” with the narrowing of the difference “largely related to some of the temporary policies affecting Medicaid and marketplace coverage.”

Those policies include one from the Families First Coronavirus Response Act of 2020, which gave states a 6.2-percentage-point boost in their Medicaid matching rates as long as the states didn’t disenroll anyone in Medicaid or CHIP for the duration of the COVID public health emergency. Hanson noted that this law “allowed people to remain enrolled regardless of their changes in eligibility. So, for example, even if they had an income increase that would have made them ineligible but for the policy,” they were still able to stay on Medicaid.

As a result of the law, Medicaid enrollment has grown substantially since 2019 — by 16.1 million enrollees, she said. But that has been superseded by another act of Congress, which allowed states to begin “unwinding” the continuous eligibility rules and start disenrolling people from Medicaid and CHIP beginning on April 1.

In total, “15.5 million people will be transitioning out of Medicaid after eligibility redetermination,” said Hanson. “Among that 15.5 million people, CBO is estimating that 6.2 million of them will go uninsured and the remainder will be enrolled in another source of coverage,” such as individual coverage or employment-based coverage.

Of those who are leaving Medicaid, how many are leaving voluntarily and how many are “falling through the cracks” because they didn’t receive their disenrollment notification or failed to fill out the required paperwork to reapply?

“We recognize that before these continuous eligibility requirements were put into place, people were losing Medicaid coverage, both because they were becoming no longer eligible for Medicaid, and … because they did not complete the application process despite remaining eligible,” said CBO analyst Claire Hou, PhD. However, she added, “we’re currently not aware of any data that would allow us to quantify the size of those two different groups.”

Hanson delivered some bad news for those footing the bill for private health insurance. “We are projecting relatively high short-term premium growth rates in private health insurance and this is for a few reasons,” she said. “One is the economy-wide inflation that we’re experiencing in 2023 and that we have been experiencing, and that has not fully reflected itself in premiums yet. And another contributor is the continued bouncing back of medical spending after the suppressed utilization that we saw earlier in the pandemic.”

The study authors project average premium increases of 6.5% in 2023, 5.9% during 2024-2025, and 5.7% in 2026-2027.