Can Economic Recovery Legislation be Most Effective in Helping Laid-Off Workers Obtain Health Coverage?

Pending economic recovery legislation proposes to subsidize health coverage for laid-off workers. To help such workers buy insurance available under the Comprehensive Omnibus Budget Reconciliation Act of 1985 (COBRA), the House and Senate bills would pay 65 and 50 percent of premiums, respectively, which is too little to make coverage affordable to people who have lost their jobs. An existing program that pays 65 percent of premiums for workers laid-off because of trade liberalization enrolls only 12 to 15 percent of eligible workers.

Limiting assistance to COBRA subsidies, as in the Senate bill, would deny help to the many uninsured, laid-off workers who are ineligible for COBRA. Some worked for companies that have gone out of business or were too small to be governed by COBRA or similar state laws; others did not receive health coverage from their former employers. Given the need to respond quickly to the current economic emergency, it would be more reasonable to help laid-off workers who are ineligible for COBRA by expanding the existing Medicaid program, as in the House bill, than by creating a new federal program.

While increasing the number of laid-off workers who obtain health coverage would generate economic stimulus, cost constraints may prevent some laid-off workers from receiving assistance. Congress could thus deny both COBRA subsidies and Medicaid to workers with incomes above specified, moderate levels. If Congress must prioritize among laid-off, uninsured workers, it may be particularly important to retain the House-passed Medicaid expansion that focuses on low-income households, thereby helping those who are in the most difficult economic straits and so have the least access to coverage and care.