COBRA Costs Prohibitive for Many Unemployed

The Los Angeles Times has run a noteworthy AP article regarding the often prohibitive cost of COBRA coverage. COBRA is the program which enables unemployed Americans to continue their health insurance by purchasing it through their former employers. The national unemployment rate reached 7.2% in December. As noted here just yesterday, the Kaiser Foundation has devised a "metric on unemployment: an increase of 1% unemployment leads to 1.1 million uninsured, and 1 million more people added to Medicaid." That metric, however, is thought by some to be somewhat understated for a current analysis as it does not take into account the various state cuts to Medicaid already enacted since the metric was designed-- nor does it take into account those further cuts which are anticipated for the new year.

Individuals
The L.A. Times, based upon a recently released report by Families USA, reports that “Newly unemployed Americans would have to spend an average of about 30% of their jobless benefits to pay for health insurance through their former employer.”

That number, however, seems to have been somewhat skewed by the reporting of one state, as the article goes on to say that “In all those states except South Carolina workers would have to spend more than 40% of their unemployment insurance on COBRA premiums for individual coverage.”

Families
The LA Times also reports that if individuals “want coverage for their families, the report by Families USA says, it will take more than 80% of their unemployment check.”

Investors Business Daily reports that the Families USA study found:

“The average monthly Cobra premium for family coverage, $1,069, consumes 84% of the average monthly unemployment check, which is $1,287”

and that

In nine states -- Alabama, Alaska, Arizona, Delaware, Florida, Louisiana, Mississippi, South Carolina, and West Virginia -- average premiums for family coverage under Cobra equal or exceed total income from unemployment insurance….

Conclusions
The Health Law Prof Blog, which quoted from a similar article in the Washington Post, reported that Ron Pollack, executive director of Families USA, stated that "COBRA health coverage is great in theory and lousy in reality,"

and that

Pollack and House Speaker Nancy Pelosi (D-Calif.) said the new report highlights the need to include health insurance subsidies in the economic recovery package being crafted this month. "Without that," Pelosi spokesman Brendan Daly said, "they [the unemployed] simply cannot afford to pay for temporary continuation of their health insurance."

But Nina Owcharenko, a health policy analyst at the conservative Heritage Foundation, said it would be wiser to offer unemployed Americans a broad range of health insurance options, including high-deductible private policies or new state-based programs. Given how expensive COBRA is, she said, alternatives would "save the individual money and save taxpayer money."