Unemployment extension 101: how health care is affected

When President Obama signed the six month federal extension of unemployment insurance, one item not included was an extension of the subsidy for health insurance for newly laid-off workers.

That means that as of June 1, thousands of workers are either paying out most of their unemployment checks for health coverage under “COBRA,” or just not getting covered.

COBRA, which is administered by the Department of Labor, allows for unemployed individuals to continue to get group health insurance from their former employer who had been subsidizing their coverage. But, they must pay the whole cost of the insurance, plus a 2 percent administrative fee, making the insurance expensive.

Advocates for the unemployed say Congress’ decision not to help out those who have lost their employer-subsidized health care is forcing families to put off getting health care if they need it, and is putting even greater pressure on emergency room facilities. Opponents say the benefits extension is expensive if not paid for, and it doesn't fix the underlying problem – getting people a stable source of health-care insurance.

“The best thing for the unemployed and the sick is for Congress to spend as little of the people’s money as possible and not create the uncertainty it's causing right now by passing costly new regulations that discourage people from hiring,” says Michael Cannon, director of health policy at the Cato Institute, a Libertarian think tank, in Washington. “These subsidies are like unemployment insurance – they are a band-aid that helps a lot of people but does not fix the problem.”

The program was particularly popular, however, among the unemployed, because it worked, says Cheryl Fish-Parcham, the deputy director for health policy for Families USA. “It gave unemployed people the opportunity to use the same health insurance, see the same providers, use the same services – and it was a premium they could afford for a short time,” says Ms. Fish-Parcham.

She says one indication that it worked: it doubled the normal intake of people using COBRA. Now, she says, people have limited options for affordable insurance.

One of those is Jaime Wild, who was laid-off a month ago as the director of social services for the township of Montville, New Jersey. Ms. Wild, with one nine-month-old and a 2-1/2 year-old, lost her health care coverage, which also covered her husband, an electrician with multiple sclerosis (in remission).

Since she knew in January she would be laid-off, she started researching alternative health insurance since COBRA coverage would cost over $1,400 a month for her family. “We can’t let our health insurance lapse,” says Wild.

She ultimately found a private insurer that is less expensive than COBRA but not as comprehensive.

“It has a $500 a year cap on prescription drugs,” she says, an amount that she anticipates they will reach quickly.

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