Without COBRA subsidy, insurance to rise

McClatchy Newspapers

WASHINGTON — A new study estimates that the end of a hefty government subsidy could force millions of laid-off workers to pay more than 80 percent of their monthly unemployment checks to keep their job-based family health-insurance coverage intact.

An estimated 7 million jobless workers and their dependents are thought to have received the temporary subsidy, which pays 65 percent of their health-insurance premiums under a law known as COBRA, the Consolidated Omnibus Budget Reconciliation Act.

However, the nine-month subsidy expired Monday for those who first began receiving it in March through the American Recovery and Reinvestment Act.

Estimates vary, but COBRA subsidies pay an average of $722 per month toward the average national cost of family coverage, which runs about $1,111 per month, according to Families USA, a liberal consumer health advocacy group.

Without the subsidy, however, COBRA family coverage would eat up a whopping 83.4 percent of the $1,333 average monthly national unemployment insurance benefit, according to a Families USA report issued today.

In nine states, the full COBRA family premium exceeds the average monthly state unemployment benefit, the study found.

The situation is worst in Mississippi, where the average unsubsidized COBRA premium of $1,027 for family coverage is 22.4 percent more than the average monthly unemployment benefit of $839, which is the lowest in the nation.

The other states in which the average COBRA family premiums top the average monthly unemployment benefit are Alabama, Alaska, Arizona, Delaware, Florida, Louisiana, South Carolina and Tennessee.

Congressional Democrats are pushing to include some type of COBRA subsidy extension in a major jobs bill that’s being crafted. Rep. Joe Sestak, D-Pa., and Sen. Sherrod Brown, D-Ohio, have introduced stand-alone legislation to extend the subsidies in the House of Representatives and the Senate, but it’s unclear how soon any new funding can be secured.

In the meantime, many jobless Americans may be left with the difficult choice of paying higher rates at a time of dire financial struggle, going without coverage or looking for cheaper coverage through government programs or the private market.

In general, COBRA allows certain workers who lose their jobs — unless they were fired for gross misconduct — to continue their health insurance with their former employers for up to 18 months. Before the subsidy was offered, only about 9 percent of people who were eligible took advantage because it was so expensive.