Losing Health Security in an Uncertain Economy

Many Texans who’ve lost jobs during the recession will lose their health insurance starting today.  The stimulus passed by Congress in February included temporary subsidies to help laid-off workers and their dependents buy COBRA coverage from their former employer.  Without this help, many more people losing jobs would have also lost access to health coverage for their family.  The COBRA subsidies have been successful in helping Texans bridge their health insurance coverage during the recession.  A survey of large business found that the percentage of eligible laid-off workers enrolling in COBRA has doubled since the subsidies took effect.  CPPP estimates that as many as 470,000 adults and dependent children in Texas could be receiving this assistance, but a full count of people using COBRA subsidies is not available yet.

The temporary subsides last for 9 months and are available to people who were laid off from September 1, 2008 to December 31, 2009.  Today subsidies will expire for the first recipients who started getting subsidies in March.  Without subsidies, COBRA premiums are too expensive for most to afford.  According to a report released today by Families USA,

• the average monthly COBRA premium for family coverage in Texas is $1,081.  
• COBRA coverage would eat up 78% of the average monthly unemployment benefit in Texas ($1,385).  
• But with the subsidy, average family premiums in Texas are $378 a month.

More people will lose their coverage each month as subsidies expire unless Congress acts to extend the subsidies.  Because the economy is still shedding jobs, the assistance is still needed.

To help Texans struggling to maintain health coverage after a layoff, COBRA subsidies should be extended so that: (1) the period of subsidy for those currently eligible is extended by at least 6 months; (2) people laid off as of January 1, 2010 are made eligible; and (3) people who lose coverage because their work hours have been cut are made eligible.  Of course, this is just a temporary fix.  The long-term fix lies in health reform and the ability in the future for those losing jobs and job-based health insurance to buy comprehensive coverage on a sliding scale through a health insurance exchange.