Receiving Unemployment Extension Benefits? No More Cobra Health Insurance Subsidies; Medicaid Cut As Well

Before the economy took over everyone’s thoughts, we had the health care crisis — and now, they are joining forces to kick the nation’s unemployed while they’re down: the bill that just passed may have extended unemployment benefits, but it didn’t extend funding for COBRA health insurance or Medicaid subsidies.  On its face, it was an attempt by the Democrats to satisfy the GOP’s griping about the unfunded nature of the bill.  But the long-term impacts on our nation’s poor and unemployed will be utterly devastating.

Health insurance is not an option anymore.  We all know that unexpected medical costs are the number one bankruptor of American citizens, and that health care even with insurance can make a laughingstock of a middle class family’s attempt to budget their money.  Now, with COBRA and Medicaid being cut, unemployed and low-income families are going to be underinsured or, more likely, completely uninsured.

Here’s why:  COBRA health insurance subsidies allowed unemployed people to maintain the same health care that their employers had offered them, but the jobless individuals had to pay their portion and their employer’s portion of the insurance costs.  Nationally, that averages about $1,100 per month — and unemployment compensation averages about $1,200 per month.

The Feds saw those numbers and realized that they didn’t exactly work out in favor of the unemployed, so they created a subsidy that paid a large chunk of unemployed worker’s COBRA health insurance costs– enough to bring the national average payment down to about $375 per month.  That’s still more than 25% of unemployment benefits, but it’s at least moderately viable.  Then, the subsidy got cut out of the extended unemployment benefits with this last bill, so starting in January 2011, unemployed folk are going to have to turn over nearly 90% of their unemployment checks if they want to stay insured.

Well, they can always get on Medicaid, the nation’s very-low-income medical plan, right?  While that’s technically true, Medicaid itself is about to cause an economic collapse on the state level — in nearly every state in the Union.  Already every state’s #1 expense, Medicaid has been federally subsidized as well, with the feds paying 57% of every Medicaid bill for the past few years.

Guess what?  That program got cut with the latest unemployment extension as well.  Now, suddenly, every state’s Medicaid costs just more than doubled in a single fiscal year.  That’s going to lead to either massive new taxes, or (far more likely) a serious slash in Medicaid benefits.  Thus, low-income families will have to bear more out-of-pocket costs, and doctors will get paid less by Medicare — meaning in all likelihood many doctors will stop accepting Medicare patients.  The people who need health coverage the most — those who are too poor to maintain good health — will find that it’s unavailable and unaffordable.

There’s only one potential way of averting this massive double-boot-to-the-head for America’s jobless and low-income. Congress has five months left to put through a bill that extends the Medicaid and COBRA health insurance subsidies the way they extended unemployment benefits; failing that, the poor and unemployed are going to be forced into an economic health-care trap from which they are unlikely to ever recover.

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