ACA, COBRA to play roles in ensuring health coverage after job loss

Most people (72%) who lost their health insurance when they lost their jobs during the last two years say that they skipped necessary health care or did not fill prescriptions because of their cost, according to a new report from the Commonwealth Fund. The same proportion is also struggling with medical bills or medical debt, compared to about half (49%) who lost jobs but not their health insurance.

According to the report, six in 10 working Americans rely on health insurance obtained through their employer, and when an estimated 15 million working-age adults lost their jobs and their employer-based insurance between 2008 and 2010, 9 million became uninsured. Though COBRA is an option, it’s a costly option and one not often used, says the report, noting that, because unemployed workers must pay the full premium, few people elect to continue their coverage through COBRA.

The American Recovery and Reinvestment Act of 2009 substantially offset the cost of COBRA for some unemployed workers by covering 65 percent of their COBRA premiums. Although several studies have found that COBRA enrollment among eligible individuals increased after the subsidies went into effect, helping millions of people who lost their jobs stay insured, these subsidies have not been offered to newly laid-off workers since 2010, the report points out.

The individual insurance market is also not a viable option for those who have lost a job and health insurance, the report suggests. According to the report, 60 percent of people who shopped for individual insurance policies over the last three years were unable to find a plan they could afford, and 35 percent were turned down by an insurer, charged more because of their health status, or had a specific health problem excluded from their coverage.

Impact of ACA. The report finds that once the major coverage provisions of the Affordable Care Act are implemented in 2014, job loss will not automatically mean going without health insurance, because the newly unemployed will have greatly expanded health insurance options, including subsidies to purchase insurance through exchanges, and expanded access to Medicaid coverage.

"Currently, for a majority of Americans, losing a job also means losing health insurance," said Commonwealth Fund Vice President and report co-author Sara Collins. "To make matters worse, once you are unemployed and uninsured, it's nearly impossible to afford COBRA or buy an individual policy. However, when it is fully implemented in 2014, the Affordable Care Act will usher in a new era for the unemployed, who will have a variety of options for comprehensive and affordable health insurance."

How health reform helps. Some early health reform provisions, including allowing young adults up to age 26 to remain on their parents' health insurance, and the creation of pre-existing condition insurance plans in all 50 states and the District of Columbia, are already helping some of the unemployed and uninsured, the Commonwealth report suggests.

However, the reforms that will have the most significant impact will take effect in 2014 when Medicaid is substantially expanded to cover single adults earning up to $14,484 a year and families of four making up to $29,726 a year. In addition sliding scale premium tax credits will be available for single adults earning up to $43,560 and families of four making up to $89,400 to purchase private policies through new state insurance exchanges. People who buy health insurance through the exchanges will enjoy new consumer protections that will assure they won't have to pay high premiums or be denied insurance because of their health status.

COBRA’s role to continue. Despite the new protections, the report authors say that there will still be a role for COBRA in 2014, to reduce the burden switching insurance plans places on families, and to curb federal and state administrative costs associated with changing plans to fill short gaps in coverage.

Between now and 2014, the report’s authors recommend that policy makers continue the current protections in place for unemployed Americans, including extending jobless benefits and re-establishing the COBRA subsidies that helped millions of Americans who lost their jobs during the recession keep their health insurance coverage.