Families USA January 2009 1
INTRODUCTION
The current recession is having a devastating impact on working American
families. By November 2008, more than 2.7 million people had joined
the ranks of the unemployed since the recession began in 2007, and
10.3 million people were unemployed.1 Many of those people (and their families)
lost their health coverage when they lost their jobs. Researchers estimate that, for
every one percentage point increase in unemployment, the number of uninsured
people increases by 1.1 percent. Some workers who had insurance through their
former employers may be able to continue to purchase the same coverage—but
they must pay the full cost out of their own pockets. This continuation coverage,
called “COBRA” (from the Consolidated Omnibus Budget Reconciliation Act of
1985), could provide a vital health care lifeline for many families. Unfortunately,
for most individuals and families, the cost of this coverage is prohibitively high,
especially when compared to average unemployment benefits.
This report shows that, to maintain their employer-based health coverage under
COBRA, most unemployed people would have to devote an unrealistically high
proportion of their incomes to health insurance. For many, it would take their
entire unemployment check and more to continue coverage for themselves and
their families. However, if laid-off workers do not continue their employer-based
coverage by electing COBRA and instead seek coverage in the individual health
insurance market, those with health problems are likely to find that no insurer will
sell them a policy that will cover their pre-existing conditions at any price. Thus,
many American workers find themselves in a catch-22.
from Family USA, for the complete study go to: www.familiesusa.org/assets/pdfs/cobra-2009.pdf
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