Cobra Coverage for Laid-off Workers

September 27, 2001

Dear Senator:

As Congress works on legislation to address the needs of the victims of the September 11 terrorist attacks, we call on you to give urgently needed relief to individuals and families who lose their health insurance when they lose their jobs. We urge you to provide a full federal subsidy for the premiums of laid-off workers to continue the employer-based coverage available under COBRA. This relief could be included in an economic stimulus package, as part of a relief package for people affected by the attack (directly or indirectly), or as a separate bill.

Economists indicate that the key to economic recovery is restoring consumer confidence. Many Americans worry that if the economy continues to weaken, they will lose their jobs. The loss of a job often means the loss of health benefits, because laid-off workers cannot afford to pay the high cost of premiums under COBRA, which amounts to 102 percent of the sum of the premiums formerly paid by employer and employee.

Fully subsidizing these health insurance premiums would provide a degree of health care security at a time when a family's overall financial security is precarious. The benefits would be felt by everyone with employer-based health insurance coverage, because they would share the peace of mind of knowing that their health insurance will continue even if employment does not.

This targeted subsidy would also benefit a truly vulnerable population, and it could do so for a limited period of time (possibly for a maximum of 18 months, but ideally for a longer period). Many people would be able to end the subsidy in less than 18 months, when they find new jobs and new health benefits. For those laid off without a COBRA option, the premium subsidy could go towards an alternative source of insurance, possibly developed by the states, as provided for by the Health Insurance Portability and Accountability Act of 1996.

We ask you to act soon to provide a full subsidy for health insurance benefits for people who lose their jobs. Such legislation would provide targeted relief to a vulnerable population, and would be a key ingredient in boosting consumer confidence, thereby contributing to an economic recovery that will benefit us all.

Thank you for your consideration.

Sincerely,
Gail Shearer
Director, Health Policy Analysis

View Files Sorted By Office: Consumers Union OPI, New York - Washington DC Office
West Coast Regional Office - Southwest Regional Office - Consumer Policy Institute

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