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Summary

When workers lose their job, they can also lose their health insurance. For people with good health and luck, loss of insurance might not matter that much since they would not use many health care services anyway. However, for people who have health problems or are injured, loss of coverage can be serious. Without insurance, people often have difficulty obtaining needed care and problems paying for the care they receive. Unemployed people who cannot postpone care may incur large bills that add to their financial distress. The 111th Congress has passed legislation that begins to address this problem. The American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5), signed on February 17, includes two provisions that will help some unemployed maintain or get coverage: (1) a premium subsidy for COBRA continuation coverage, and (2) an increase in the Health Coverage Tax Credit (HCTC) and expansion of eligibility for it to service sector and public agency workers who lost their jobs due to increased foreign imports or shifts in production to outside the United States. Other bills introduced in the 111th Congress would provide additional assistance to some unemployed, though their express objectives are different and their target populations are broader. Some of these bills would extend COBRA continuation periods; other would provide tax subsidies that could help individuals and families purchase insurance in the individual market. In addition, the 111th Congress might consider measures to bring about comprehensive health care reform; this could be helpful once the changes become effective. Future legislative solutions face three broad challenges. First, the unemployed are a diverse population in terms of age, gender, marital status, income, and other characteristics. These attributes suggest they likely have different health care needs and different capacities to pay for care and insurance. Over a quarter of the unemployed are under age 25, a group that as a whole is relatively healthy, while about a third are age 45 or older. About 40% of households that receive unemployment compensation have incomes under $25,000, while about 30% have incomes greater than $50,000. Some people are unemployed for a short period of time, others for years. The diversity makes it difficult to craft targeted remedies that are both equitable and effective. A second challenge is that many people do not lose health insurance when they lose their jobs since their employers did not provide it. While sometimes people choose jobs without insurance because they do not want it, other times these jobs are their only options. Among the groups less likely to have employment-based insurance are workers in the leisure and hospitality industry, part-time workers, and people who were previously family caregivers. Whether legislation should provide assistance to the unemployed in general or just to those who lost coverage involves difficult cost and equity issues, as well as debate over whether they should be helped to obtain public or private insurance. A third challenge is whether legislation should build upon existing federal programs and provisions or should create new solutions. Building upon what is established might be appropriate given the immediate needs of the unemployed and their families, but new approaches might allow solutions that are preferable in terms of long-term needs, equity, and other matters. A major consideration for new approaches is how long the recession will last and how high the unemployment rate will be.

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