Washington, D.C. – Millions of newly laid-off workers and very low-income people may lose health coverage because key federal safety net assistance was not extended in the recent jobs bill, according to a report released today by the consumer health organization Families USA.
The report analyzed the impacts of decisions by the House of Representatives when it adopted the new jobs bill. The House jettisoned expected COBRA health coverage subsidies for workers who are laid off after May 31, and it refused to extend special financial assistance to states so that they can avoid major cuts in their Medicaid programs.
For most laid-off workers, the absence of COBRA subsidies will make continued health coverage impossible to afford. According to the report, the average monthly COBRA premium for family health coverage is $1,107, which consumes more than 84 percent of the average monthly unemployment insurance (UI) check.
In 11 states (Alabama, Alaska, Arizona, Delaware, Florida, Louisiana, Mississippi, New Hampshire, South Carolina, Tennessee, and West Virginia), the average COBRA premium for family health coverage exceeds the average UI benefit. In Mississippi, for example, the average monthly COBRA premium is $1,023, while the average UI benefit is only $827.
In February 2009, as part of the American Recovery and Reinvestment Act (ARRA), Congress provided subsidies covering 65 percent of COBRA premiums for workers who were laid off between September 2008 and December 2009. Congress later extended this aid for people who were laid off through May 31, 2010. Contrary to expectations, however, the House of Representatives eliminated an extension of the subsidy to workers who are laid off After May 31 in the recent jobs bill.
“The elimination of COBRA subsidies means that people losing their jobs will also lose their health coverage,” said Ron Pollack, Families USA’s Executive Director. “Such a loss of health coverage flies in the face of the recently enacted health reform legislation that is intended to expand health coverage to tens of millions of people.”
The average nationwide monthly COBRA subsidy for workers who were laid off on or before May 31, 2010, has been $719 for family coverage, leaving those laid-off workers with average premium costs of $387. For workers who are laid off after May 31 and who will not receive the subsidy, the average premium will rise to $1,107—a cost that would consume 84.3 percent of the national average monthly UI benefit, which is currently $1,313.
The Families USA report also highlights difficulties that will be caused by the failure to extend special fiscal relief for state Medicaid programs. Under the ARRA, the federal government has been providing special Medicaid-related funding to states to alleviate their fiscal crises. Since Medicaid is the largest single expenditure for most states, this additional funding has provided significant fiscal relief and has helped to mitigate huge potential cuts in the program.
The ARRA’s special fiscal help for state Medicaid programs will expire on December 31, 2010. Since most states operate on fiscal year budgets that run from July 1 through June 30, they currently can rely on special Medicaid help for only one-half of the next fiscal year. As a result, it is expected that many states will curtail Medicaid services for the poor as they complete their fiscal year 2011 budgets in the next few weeks.
It was generally expected that the jobs bill would extend special Medicaid fiscal help for six months through June 2011—relief totaling $24 billion. However, this extended special relief was cut by the House of Representatives in the recently adopted jobs bill.
Under the six-month extension proposal, significant help would have been provided to all states, especially for New York ($3.3 billion), California ($2.9 billion), Texas ($1.6 billion), Pennsylvania ($1.1 billion), and Florida ($1.0 billion).
“The failure to extend special fiscal relief for state Medicaid programs will cause enormous harm to low-income families,” said Pollack. “It will result in cuts of Medicaid benefits, increases in out-of-pocket health costs that low-income families must bear, and will lower payments to health providers, thereby making needed care unaffordable and unavailable.”
