January 10, 2009-Minot Daily News
Health insurance poses problem for unemployed
By JILL SCHRAMM, Staff Writer, jschramm@minodailynews.com
Laid-off workers who try to maintain health insurance through a former employer’s health plan likely will find that premiums eat up most of their unemployment checks, according to new research released Friday by Families USA, a national organization for health-care consumers.
The organization’s report shows that, on a national basis, average COBRA premiums for family coverage consume about 84 percent of average unemployment insurance benefits. In North Dakota, the figure is 77 percent for a family and 29 percent for the worker alone.
COBRA stands for Consolidated Omnibus Reconciliation Act of 1985. It provides that employees who lose their jobs can buy into their employers’ health plans for 18 months or sometimes longer. They must pay the full premium, plus a 2 percent administration fee.
“Affording COBRA when somebody is unemployed is a very difficult thing,” said Ron Pollack, executive director of Families USA., Washington, D.C. “COBRA health coverage is great in theory and lousy in reality for the vast majority of workers who are laid off.”
In 41 states, monthly COBRA family premiums consume 75 percent or more of average, monthly unemployment benefits. Nine states have COBRA premiums that exceed the average unemployment benefit, led by Alaska, where premiums are 130 percent of benefits.
In 17 states and the District of Columbia, premiums are more than one-third of unemployment benefits for the worker alone.
“I don’t want to call the program a failure because there are a significant number of people who are eligible for COBRA, and even though the vast majority of people eligible for it cannot afford to participate, for those who do participate, it serves as a lifeline,” Pollack said.
Information from Spencer Research, which conducted studies through 2006, showed 18 to 26 percent of eligible workers used COBRA.
North Dakota Insurance Commissioner Adam Hamm said his office received a call about a month ago from a laid-off worker concerned about health coverage. That employee resolved the issue before the department needed to step in.
Options for laid-off workers besides COBRA include purchasing individual coverage or if pre-existing conditions make that difficult, they can apply to the Comprehensive Health Association of North Dakota. CHAND was set up to provide insurance for high-risk individuals but it since was opened to assist people between jobs, Hamm said. Premiums are capped at 135 percent of the typical premium charge in North Dakota for similar coverage.
Workers who are struggling to afford health insurance after losing a job can contact the insurance department or check out its Web site for information, Hamm said.
He said about 8 percent of North Dakotans don’t have health insurance, which is about half the national average. North Dakota’s November 2008 unemployment rate was 3.3 percent, up only slightly compared to 3 percent in November 2007.
Unemployment nationally is at a 15-year high at 7.2 percent.
An additional 3.6 million people joined the ranks of the unemployed from the time the recession began in 2007 through December 2008, Pollack said.
“For every 1 percent of increase in the number of people who are unemployed, there’s an increase of 1.1 percent in the number of people who are uninsured,” Pollack said. “It has a significant impact on their dependents, who often receive their coverage as the result of the employment of the key breadwinner in the family.”
Families USA supports either premium subsidies to help laid-off workers afford health coverage or an extension of Medicaid for these workers.
Pollack said stimulus legislation proposed by President-elect Barack Obama contains those benefits. The proposal would have the federal government pick up the full Medicaid cost for unemployed workers rather than place that burden on states, many of which already are struggling with Medicaid bills.