Stimulus to offer health subsidies for jobless, senator says

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By Lisa Wangsness

COBRA help would allow more to stay insured

The economic stimulus package now being assembled on Capitol Hill will include significant subsidies to help the newly unemployed keep their health insurance after they lose their jobs, the chairman of the Senate Finance Committee said yesterday.

COBRA benefits let laid-off workers keep their group healthcare coverage for up to 18 months, but the benefits are too expensive for many unemployed people because they must pay the full cost of their premiums - typically more than $1,000 a month for a family. Democratic senators want the federal government to ease that burden so more people can keep their insurance.

"It's pretty much been agreed to," said Senator Max Baucus, a Montana Democrat who heads the Senate finance panel. "COBRA is just so expensive."

Massachusetts is virtually alone in subsidizing COBRA premiums for the unemployed, paying 80 percent of the cost for low- and middle-income people for about a year. But an aide to Senator Edward M. Kennedy, chairman of the Senate Health, Education, Labor and Pensions Committee, said Kennedy is working to make sure the federal subsidy would replace state money.

Families USA, a consumer advocacy group based in Washington, is planning to release a report on Friday that shows the average COBRA premium for family coverage uses up 84 percent of unemployment benefits. Buying insurance outside COBRA usually means either losing benefits or paying much higher prices.

For many families, Kennedy said, the stress of losing a job is compounded by the loss of quality healthcare.

"Congress has a responsibility to help the victims of this crisis to keep their health insurance even when they lose their jobs," he said in a statement. "The stimulus package needs to include both job support and health support."

The COBRA subsidies will be part of a large investment in healthcare in the economic stimulus package, which Democrats view as a down payment on a larger healthcare overhaul. Total spending on healthcare could amount to $100 billion of the $775 billion total package, a Democratic Senate aide said yesterday. The aide said health provisions will also include investments in health information technology - as a candidate, President-elect Barack Obama promised a $50 billion investment over five years - as well as Medicaid, community health centers, medical research, and disease prevention.

As unemployment has risen in Massachusetts, participation in the state's Medical Security Program has grown by 73 percent over a year ago, the Globe reported last week. Callers to the program's hot line yesterday were put on hold for more than 10 minutes. Funded by a tax on employers, the program had $71.8 million in reserves as of November - enough, the director of the program told the Globe, to keep it running for another year.

But Brian Rosman, research director for the nonpartisan Boston consumer advocacy group Health Care For All, said he was not sure that would be enough with unemployment on the rise, so the federal subsidy could be critically important. Some of the additional money could also be spent on outreach to the newly unemployed, he added.

"We hear frequently from people who were unaware they were eligible for the benefit," he said.

Governor Deval Patrick's office said yesterday that it is working closely with Kennedy's office on the issue.

Senate Democratic aides said they had no estimate of how much a COBRA subsidy would cost, but that the Congressional Budget Office was working on numbers. Also uncertain was what portion of COBRA premiums would be covered.

Republicans have yet to weigh in on the issue. Senator Judd Gregg of New Hampshire, the ranking Republican member on the Senate Budget Committee, said he was open to the idea, depending on the cost, but said it ought to be temporary.

Nina Owcharenko, a health policy analyst at the Heritage Foundation, a conservative think tank, said that it is not a bad idea to provide health subsidies for the unemployed but that Congress should let the jobless decide whether to buy insurance through COBRA or a cheaper plan on their own, an option that could save both them and taxpayers money, she said.