Laid-off workers face loss of health care

San Francisco Chronicle

John Mathson had been paying about $550 a month to continue his health insurance coverage after he got laid off in October after 39 years at a pulp mill.

For Mathson, 63, who is undergoing chemotherapy for non-Hodgkin lymphoma and had knee surgery in September, the news got worse last week. The mill, which shut down, informed him it could no longer afford to offer health or welfare programs to any employees or retirees as of Jan. 1.

Two years short of Medicare eligibility and beset by health problems, Mathson has only limited and expensive options for health care.

“There is insurance out there, but they’re like $1,000 a month, and they don’t pay anything to speak of,” said Mathson, whose wife receives coverage through Medicare because of a disability. “You still have to come up with all this money out of your pocket. You’re basically left out there, high and dry.”

With the recession and the expectation that job losses will get worse next year, a growing number of American workers will find themselves not only out of a job, but also without access to affordable health coverage. Already, about 46 million Americans have no health insurance.

Last month, U.S. employers slashed 533,000 jobs — the most in 34 years — as unemployment rose to a 15-year high of 6.7 percent.

About 60 percent of American workers are covered by health plans offered by their employers, according to the Kaiser Family Foundation. It’s difficult to determine how many people who lose their jobs will lose health insurance.

Those who are lucky enough to be married to someone who has job-based insurance probably can be added to their spouse’s group policy. Some people may be able to find another job quickly enough to avoid a gap in coverage. But for many, especially older workers or those with pre-existing medical conditions, the options are few.

“Even during good times, employers trimmed and scaled back their coverage. In these tough economic times, we have to be prepared for a dramatic drop in coverage when people are losing their jobs and thus their health insurance,” said Anthony Wright, executive director of Health Access California, a coalition of grass-roots health-care consumer groups.

To make matters worse, traditional safety-net options — public health programs, clinics and other sources of care that receive government funding — are being cut back or threatened by state and national budget crises.

People who lose their jobs and have a medical condition that makes it difficult for them to find coverage may be able to continue their insurance through the Consolidated Omnibus Budget Reconciliation Act, a 1986 federal law known as COBRA that allows workers to pay to remain on their employer’s health policy.

Workers often experience sticker shock when they see their COBRA premiums because they’re buying their employer’s benefits (up to 102 percent of the premium). Employers pay on average $4,704 a year for individual coverage and $12,680 for families, according to the latest survey by the Kaiser Family Foundation and Health Research & Educational Trust.

“The reason COBRA is so expensive is because group insurance is a completely different market than individual insurance,” said Phil Lebherz, founder and executive director of the nonprofit Foundation for Health Coverage Education in San Jose, Calif. “Group insurance really is something where they want to keep you as an employee. ... They [employers] want to compete for employees and buy the best benefits they can afford.”

People often can buy cheaper health insurance as an individual. But unlike group policies, individuals are medically underwritten, so they can be denied coverage or charged more if they have pre-existing health conditions.

Individual policies often come with high deductibles, which can make the plan all but unusable for someone who can’t afford to pay $1,000 to $5,000 before coverage kicks in. Under those circumstances, such coverage acts to protect the policyholder from bankruptcy in the event of a catastrophic medical event.

People who have exhausted COBRA can buy insurance through another federal law called the Health Insurance Portability and Accountability Act. The law requires insurers to cover people who have used up their COBRA benefits, regardless of their health condition. Such policies are expensive, and any lapse in coverage must be less than 62 days.