The New Health Dialogue

Millions of unemployed Americans are about to face a tough choice -- pay a lot more for health insurance. Or go without.

 

Back in February, the stimulus package allocated $25 billion for COBRA subsidies for people who were losing their jobs -- and their employer-sponsored health coverage. (COBRA is the acronym for the Consolidated Omnibus Budget Reconciliation Act, a 1986 federal law that allows individuals to temporarily extend group health coverage to people whose health benefits otherwise would be terminated.)

 

In the stimulus package, the federal government provides a 65 percent subsidy to certain individuals who are involuntarily terminated between September 1, 2008 and December 31, 2009. The program was launched as a temporary, nine month fix for laid-off workers. COBRA generally means that laid off workers who want to continue coverage must pay the full cost, plus a 2% administrative fee.

 

Nine months have quickly come and gone. The subsidy for the first wave of enrollees is expiring, and thousands more will hit that nine-month mark in the coming weeks and months. For many, the end of the COBRA subsidy means the end of affordable health coverage. Families USA estimates that without the subsidy, COBRA insurance premiums would swallow more than 83 percent of the average unemployment check. In nine states, the COBRA benefit actually costs more than monthly unemployment benefits.

 

“It’s hard to imagine that many people who are subsisting on an unemployment check will be able to keep coverage,” explains Families USA Executive Director Ron Pollack.

 

Even with the federal subsidy (the government doles out an average of $722 per family plan each month), COBRA premiums are expensive. The Kaiser Family Foundation estimates that the average family pays $398 per month for subsidized coverage and the average individual pays $144. And once the subsidy expires, those numbers will jump to $1,137 and $410 respectively.

 

While healthy individuals may be able to find affordable health insurance in the individual market (although those benefits are often skimpier than the group market), we can’t forget that many Americans will be unable to access insurance altogether or afford the very high premiums, particularly if they have a pre-existing condition.

 

There are bills pending in Congress that would extend the COBRA subsidy, and according to the LA Times, “this subsidy may be a lifeline to health insurance for nearly 6 million workers.”  It's not yet clear whether Congress will extend subsidies, or on what scale or time frame. The federal government is already looking at a tab of around $140 billion for unemployment benefits for fiscal 2010,  the Associated Press reports.

 

The COBRA crisis is just another reminder of how important health reform is to millions of Americans. The health reform bills pending in Congress would permit millions of unemployed, underinsured, uninsured and self-employed families and individuals afford quality health care coverage.