The Wonk Room

Health Care Stimulus Fundamentals: Subsidized Insurance For The Unemployed

Just as the unemployment rate reaches new heights, a new report from Families USA makes a compelling case for adding a “meaningful subsidy” for COBRA benefits to any economic stimulus package.

For the recently unemployed, COBRA (from the Consolidated Omnibus Budget Reconciliation ACT of 1986) extends employer health benefits so long as the recipient pays the full cost of coverage plus an additional 2% administrative fee. As “Squeezed,” Family USA’s report, points out, “average unemployment checks are not sufficient to pay COBRA premiums“:

The prohibitive costs of insurance significantly lower COBRA’s pick-up rate. In any given year, for instance, only 18 to 26 percent of eligible COBRA applicants enroll in extended health benefits, the rest simply forego doctor visits, skip preventive services, or allow chronic health conditions to go untreated.

President-elect Barack Obama has indicated that along with allocating more federal funds to Medicaid and computerizing “all medical records within five years,” his stimulus bill will also provide subsidies to help “recently laid-off workers pay to retain their health insurance through COBRA.” Indeed, including health care funding in the stimulus would not only serve as a down payment on extending affordable health care to all Americans, but it would also create thousands of new jobs and protect American families from financial ruin.

An increase in federal funding for Medicaid through a temporary increase in the federal matching rate for Medicaid, for instance, “will have a measurable effect on business activity, jobs, and wages in every state in the country.” According to the report, “the 10 states that would receive the greatest number of additional jobs because of the temporary FMAP increase are New York, California, Texas, Florida, Pennsylvania, Ohio, Illinois, North Carolina, Massachusetts, and Michigan.”

For the recently unemployed, moreover, having access to affordable health insurance coverage can insulate a family from medical debt and financial ruin. As Families USA concluded, “during these hard times, workers would at least have the peace of mind that comes with knowing that they can get the medical care they need, for themselves and their families.”