Families USA, the national organization for healthcare consumers, released a report Friday that shows temporary healthcare premiums for the recently unemployed consume some 84 percent of their unemployment income.
Employers are required by law to extend temporary continuation coverage, or COBRA (from the Consolidated Omnibus Budget Reconciliation Act of 1985) to laid-off workers.
The "big catch," according to Ron Pollack, executive director of Families USA, is that the newly unemployed have to pay the full premium, plus an additional 2 percent to cover administrative costs.
"For many, it would take their entire unemployment check and more to continue coverage for themselves and their families," said Pollack. "Though COBRA is a very important right, it is not meaningful in reality."
Further, laid-off workers who chose not to continue their employer-based coverage under COBRA and have pre-existing conditions will likely be unable to find an insurance program willing to take them. Pollack called COBRA "a tragic ruse" for those who get laid off.
Pollack said it is his understanding that Obama aims to include temporary healthcare coverage relief for the unemployed in his economic recovery plan.
Families USA is urging Congress to expand Medicaid eligibility to allow coverage to the newly unemployed. It's also pushing for a COBRA subsidy to cover around 80 percent of premiums for the unemployed. However, there is no assurance of getting that, Pollack said.
"This situation is extremely fluid," he said of current Capitol Hill negotiations. "Questions about the mechanics of getting something in place changes from day to day."
The new Families USA report comes as the Bureau of Labor Statistics announced Friday that the unemployment rate in December rose from 6.8 percent to 7.2 percent. Payroll employment fell by 524,000 over December and by 1.9 million over the last four months of 2008, bringing the total number of unemployed to 11.1 million. Since the start of the recession in December 2007, the number of unemployed has grown by 3.6 million, according to the BLS.