Saturday, January 10, 2009

Families USA: Alaska's Unemployed Families Pay Up To 131.7 Percent Of Their Benefit Check To Keep COBRA Health Insurance; Highest In The Nation

According to a report just released by Families USA, Alaska's unemployed families pay up to 131.7 percent of their benefit checks to keep their COBRA (Consolidated Omnibus Budget Reconciliation Act of 1986) health insurance in force after the breadwinner loses the job. This assumes that the employee even had coverage in the first place. Read the press release HERE.

The numbers are posted in the 16-page report entitled "Squeezed: Caught Between Unemployment Benefits And Health Care Costs". Table 3 shows the numbers for Alaska families, and quite frankly they're unachievable:

-- Average Monthly Unemployment Benefit: $869
-- Average Monthly Family COBRA Premium: $1.145
-- Share of Benefits Needed For COBRA Premium: 131.7 percent

Table 2 shows the numbers for Alaska singles. While achievable, it is still burdensome:

-- Average Monthly Unemployment Benefit: $869
-- Average Monthly Family COBRA Premium: $428
-- Share of Benefits Needed For COBRA Premium: 49.2 percent

Here are the key findings nationwide from the report:

-- Nationally, to maintain single coverage, the average unemployed worker would need to spend 30 percent of his or her unemployment insurance (UI) check on COBRA premiums. In many states, the situation is even worse:

-- To maintain coverage for themselves, in six states (Alabama, Alaska, Arizona, Louisiana, Mississippi, and West Virginia), newly unemployed workers would need to spend, on average, more than 40 percent of their UI income on COBRA premiums.

-- In an additional 11 states (Delaware, Florida, Maine, Missouri, Montana, Nebraska, New Hampshire, South Carolina, South Dakota, Tennessee, and Wisconsin) plus the District of Columbia, newly unemployed workers would need to spend, on average, more than one-third of their UI income on COBRA premiums.

-- Maintaining family coverage under COBRA is an economic impossibility for most newly unemployed workers. Nationally, unemployed workers would need to spend nearly 84 percent of their UI income, on average, to pay for premiums for family coverage.

-- In nine states (Alabama, Alaska, Arizona, Delaware, Florida, Louisiana, Mississippi, South Carolina, and West Virginia), the average premiums for family coverage under COBRA equal or exceed total UI income.

-- In an additional 32 states (Arkansas, California, Connecticut, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Maine, Maryland, Michigan, Missouri, Montana, Nebraska, New Hampshire, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Wisconsin, and Wyoming) plus the District of Columbia, premiums for family coverage under COBRA would consume, on average, more than three-fourths of the average UI income.

Families USA, which bills itself as non-partisan despite its association with the late Minnesota Senator Paul Wellstone, concludes the report with two recommendations:

-- To make COBRA coverage truly affordable, a meaningful subsidy should be provided to recently unemployed workers.
-- For those who do not have a COBRA coverage option, Congress should provide a temporary Medicaid benefit to recently unemployed, low-wage workers.

Meanwhile, U.S. News and World Report offers four suggestions on how you can avoid getting squeezed by COBRA:

1. Sign on with your spouse. Once your own coverage ends, you have 30 days to take advantage of special enrollment rights to sign up with your spouse's plan. Check out this Labor Department site or call 866-444-3272 toll free to find out more.

2. Sign your kids up for coverage through your local State Children's Health Insurance Program (SCHIP). Some states, like Illinois, offer coverage to all kids, regardless of family income. One couple I spoke with bought coverage for their kids through SCHIP and then purchased a high-deductible policy for themselves that gave them catastrophic coverage. Not as good as a regular plan, perhaps, but a reasonable stopgap that cost less than half of the $1,000 a month they would have owed under COBRA.

3. Delay a bit. If you think you may be eligible for new insurance within a month or two, delay signing up for COBRA. You have 60 days to decide, and if you don't have any medical expenses during that time you could save a bundle. On the other hand, if you break your leg and need care, you can sign up, pay those premiums retroactively and still be covered.

4. Get hitched. It may seem extreme, but in a recent poll, 7 percent of people said that either they or someone they lived with got married for health insurance. Saying "I do" allows you to take advantage of No. 1, above.

What are we doing about it in Alaska? In the Department of Health and Social Services 387-page FY2009 Budget Overview, the Palin Administration proposes to spend $2,147.2 million on health care, an increase from the 1,974.6 million expended in 2008.

The January 9th list of pre-filed legislative bills shows at least 15 measures directly related to health care. But no discussion of health care in Alaska is complete without reference to what I've nicknamed "HollisCare". Named after its primary architect, State Senator Hollis French (D-Anchorage), it constitutes a broad-based market-oriented scheme to ensure that all Alaskans have affordable health care, including a means-tested public subsidy scheme.

One of French's primary assumptions, which is questionable, is that the more people you dump into the pool, the more affordable health care will become, because providers will just "magically" flock to compete. This assumption clearly flies in the face of the fact that most health care providers who've ministered to Medicare patients are either not accepting new Medicare patients, or have dumped Medicare altogether. Nevertheless, on the strength of his assumption, French will require, as part of his plan, that everyone buy health insurance. This is the fatal flaw which causes me to oppose "HollisCare", because when people are losing their jobs, the last thing they need is to have another unfunded mandate dumped upon them. Nevertheless, HollisCare made it out of two committees in 2008, and French intends to re-submit it for the 2009 session.

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