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Healthcare foundation calls for return of COBRA subsidies Posted: September 15th, 2011

By Maryalene LaPonsie


Most unemployed workers find it is impossible to maintain health insurance coverage after the loss of their job, according to a healthcare think tank. The Commonwealth Fund reports six in 10 working Americans rely on their employer for medical insurance. Of those who lost their jobs during the past two years, three in five became uninsured as well as unemployed.

Health insurance plans for the unemployed

The medical insurance offered through employers is generally group insurance coverage. Group health plans can keep premiums low by spreading the health insurance company's risk across a number of insured individuals. In addition, employers often subsidize some or all of the premium costs for their workers.

However, the unemployed often lose access to group coverage unless their spouse is employed at a job offering health benefits. Instead, they must purchase individual coverage or COBRA coverage, both of which can be prohibitively expensive.

"Currently, for a majority of Americans, losing a job also means losing health insurance," Sara Collins, Commonwealth Fund vice president, said in a statement. "To make matters worse, once you are unemployed and uninsured, it's nearly impossible to afford COBRA or buy an individual policy."

A survey conducted by The Commonwealth Fund found very few unemployed workers take advantage of COBRA coverage and most end up uninsured. When those who became unemployed from 2008 to 2010 were asked what became of their employer-sponsored health insurance, 57 percent said they also became uninsured. Twenty-five percent said they went on a spouse's health insurance plan or found insurance through a different source. Only 14 percent continued their coverage through COBRA.

Of those who became uninsured, 72 percent reported missing needed medical care such as filling a prescription, seeing a specialist or visiting a doctor for treatment. That same percentage also reported having difficulty paying their medical bills.

Making COBRA insurance more affordable

Named for the Consolidated Omnibus Budget Reconciliation Act, COBRA allows most workers with employer-sponsored health insurance to continue their group coverage even after they lose their job. However, the employer passes the entire cost of the plan on to the insured individual, which can mean average monthly premiums for family plans in excess of $1,100, according to The Commonwealth Fund.

The American Recovery and Reinvestment Act of 2009 sought to help unemployed workers by offering a government subsidy of up to 65 percent of the premium amount. That subsidy has since expired, and The Commonwealth Fund argues it should be reinstated to help unemployed workers until the ACA-mandated Health Insurance Exchanges are implemented in 2014.

"As the economy continues to struggle to recover, extending those subsidies would assure that workers, particularly those with lower incomes, could maintain their health insurance," Michelle Doty, Commonwealth Fund vice president, said in a statement.