The average unemployment benefit across the U.S. is $1,278; COBRA monthly premiums for family coverage are $1,069.
In 9 of the 50 states, COBRA equals or is greater than the monthly unemployment benefit. Those states are Alaska, Arkansas, Arizona, Delaware, Florida, Louisiana, Mississippi, South Carolina, and West Virginia. These metrics are shown in the table above.
Families USA has appropriately titled its report on this situation, Squeezed: Caught Between Unemployment Benefits and Health Care Costs.
COBRA, the Consolidated Omnibus Budget Reconciliation Act, is the mechanism that allows laid-off workers to buy into their employer’s health plans when they lose their job. Under COBRA, the unemployed worker can hold onto his/her health benefits if they pay the full cost of the insurance premium.
What’s underlying the problem?
Based on December’s unemployment rise of over 500,000 jobs, unemployment is rising rapidly.
  • Because health coverage in the U.S. is founded on an employer-based system, unemployment usually leads to uninsurance.
  • COBRA is thought to be a lifeline for workers who lose their jobs/

However, obstacles can get in the way of laid-off workers who want to secure health coverage:

  • At 84% of unemployment benefits, COBRA would be unaffordable to the average worker.
  • For laid-off workers whose companies went out of business, HIPAA provides protections — of a sort. HIPAA offers workers who had at least 18 months of coverage the right to buy into a plan in the individual insurance market. But there is no federal law that governs how much these plans can charge for the plan. Families USA found that in some state high-risk pools, such premiums can be twice as high as the average premiums charged in the individual health insurance market.
  • Finally, Medicaid doesn’t cover all unemployed workers who are childless. Furthermore, as most Governors face budget shortfalls, the possibility of Medicaid absorbing the growing number of uninsured, unemployed workers is at great risk.
Ron Pollack, the head of Families USA, called the right to COBRA, “a tragic ruse for millions of families whose breadwinner was laid off.”
Health Populi’s Hot Points: In the U.S., job insecurity equals health insecurity. Without significant subsidies to buy into COBRA, most unemployed workers will also quickly morph into uninsured workers.

Don’t depend on the Governors to easily cover unemployed workers. In 2008, the Kaiser Family Foundation (KFF) calculated that for every 1% increase in unemployment, there would be a 1.1 million person increase in the number of the uninsured and a 1 million person increase in Medicaid; KFF’s slide is on the ride illustrating this calculation. That metric was based on Governors bringing in tax receipts that could cover the status quo scenario for Medicaid.

Now that most Governors’ budgets are in the red, and health and education cuts are on the on the rise in these states, KFF will no doubt be recalculating the 1:1.1 ratio to show an increase in the latter half of the equation.