Book Description

Because private health insurance is generally obtained through employment, workers who lose their jobs face a significant risk of becoming uninsured. The Congress, in the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), addressed that issue by requiring firms with 20 or more employees to continue offering health coverage to workers who separate from the firm. However, firms may charge former employees slightly more than the full group premium for that continued coverage. Given that employers typically contribute most of the premium for active workers as part of employee compensation, former employees may face a large increase in their out-of-pocket premiums if they lose their jobs. Some firms continue to pay their customary share of the health insurance premiums for workers for a short period of time after a layoff, but those employer-subsidized benefits last only for a limited time. Other firms do not provide such extensions. Sooner or later, accepting coverage under the COBRA provisions generally means a manyfold increase in the explicit premium faced by the worker. The Congressional Budget Office (CBO) estimates that about 19 million workers will be unemployed for at least some time during fiscal year 1998. About 7.5 million of those workers will go at least a month without health insurance during a spell of unemployment. Of those 7.5 million workers, almost 2.5 million will have had insurance in their most recent month of work; the other 5 million will not have been insured even when they were working. Although many unemployed people will go through some period without insurance, an even larger proportion of them--about 11.5 million unemployed workers--will have health coverage throughout their spell of unemployment. To target initiatives toward particular groups who may be prone to not having insurance, some policymakers have proposed that the federal government provide health insurance subsidies for the unemployed.