lose your job, lose your health care

One of the joys of our system of employer-provided health insurance is that the odds are pretty good that if you lose your job, you'll also lose your health insurance

Well, you can continue your coverage with COBRA, but relatively few workers who have just lost their job can afford to pay 102 percent of their premiums for an extended period of time. The average COBRA payment eats up something like half of the average unemployment insurance benefit.

If you're young and healthy, you might be able to buy an individual plan for less than your COBRA payments, especially if you're willing to accept a high deductible and hope you don't get sick.  If you have children, they might qualify for public insurance, through SCHIP or Medicaid, but unless you were seriously living paycheck to paycheck and have no assets, you probably won't qualify.

The Economic Recovery bills moving through Congress attempt to deal with this problem in a couple of different ways:

  • it would provide a federal subsidy for part of the cost of COBRA payments
  • it would extend how long you could continue to participate in your former employer's plan if you were within 10 years of qualifying for Medicare, or had worked for your old employer for at least 10 years.
  • At least on the House side (it may be in the Senate bill too, but I haven't found it), it would let states cover workers receiving unemployment benefits under Medicaid, without regard to income or assets.

I'm not an expert on health care policy, but this strikes me as a bit of a kludged together package.  For one thing, it leaves out the 60 percent of unemployed workers who don't qualify for unemployment insurance, most of whom probably didn't get employer-provided benefits in the first place, and so can't get COBRA either.  For another, COBRA is a pretty expensive way to cover people — Medicaid is  lot cheaper. 

I'm not really objecting to the proposal — it's better than doing nothing, and I recognize that health care reform isn't likely to happen in the next month.  But this really isn't a substitute for doing health care reform for real.

7 Responses to “lose your job, lose your health care”

  1. urbanartiste Says:

    I know a number of people out of work for a year now. It seems ridiculous to still be tapping into a former employer’s health plan at Cobra cost. What it the company went bankrupt and closed as so many businesses seem to be doing now. Can a former employee still tap into the health plan? If the unemployment rates keeps going up and people are out of work for longer periods of time, there will be only one solution – socialized medicine. People who are employed will have to pay for those out of work and still in need of medical treatment or hospitalization.

  2. urbanartiste Says:

    The first option would not work if the government did not put a cap on what health insurance companies can charge. Their contribution might not cover much of the cost if health insurance costs are increased. The second option would work for baby boomers, but how many people have stayed with the same employer for 10 years within the private sector? The word medicaid seems to be a form of socialized medicine, but many doctors won’t accept it. Isn’t that the plan Ron Paul was pushing?

  3. bj Says:

    “What it the company went bankrupt and closed as so many businesses seem to be doing now. Can a former employee still tap into the health plan?”
    No, they can’t. The plans disappear with the bankruptcy.
    Snickollet was discussing this issue (health insurance) on her blog: http://snickollet.blogspot.com/2009/01/health-insurance.html and cited to an interesting article in the New Yorker by Atul Gawande.
    Of relevance to Elizabeth’s points is that Gawande points out that every “universal” plan is a product of its own specific history (citing to France, England, and Switzerland, and our own non-universal kludge). So, he says, moving forward is useful even if it isn’t a whole-sale re-working of the system.
    My plan involves the insight that health care isn’t really “insurance” in the sense that it pays for a catastrophic and highly unlikely event (like a fire burning your house down). It seems more like school or retirement, a cost that occurs sporadically, and perhaps before one can have saved for it, but that many people will spend comparable amounts of money on their health, over a lifetime. This seems especially likely because end of life care costs so much. That means we have to find ways to distribute the costs over time and society, but not pretend that the costs can be managed like insurance for houses is.

  4. jen Says:

    I’m with bj. I don’t think you have to automatically jump to socialized medicine to move this issue along. Really, the first step would be requiring providers to charge everyone the same, regardless of their funding source. One of the dirty little secrets of the health care industry is that private insurance pays more than the government for the same care. Many hospitals and doctors use the profits from privately-insured patients to cover the losses they incur in treating medicare/medicaid patients. If the mix of these patients gets upset they start losing money and have to refuse medicare/medicaid. There would be no reason to fear more people being added to medicare/medicaid if everyone were getting charged the same.
    The primary problem, which is that we pay for services rendered and thus incent providers to overtreat, would still be on the table. But if everyone’s getting paid the same there would be less gaming for private payers and less reason to quibble over where you’re getting your health care during layoff. We could then move on to whatever next issue we’re capable of handling! Like, say, the near-complete absence of quality metrics across the lifetime of the patient.

  5. bj Says:

    “The primary problem, which is that we pay for services rendered and thus incent providers to overtreat”
    I disagree that this is the primary problem in health care. I think the primary “problem” is that we can now do so much that we couldn’t do before. Take, for example, the dramatic rise in the survival rates of pre-term infants and in the life expectancy of Downs babies. Take the increase in treatment of high blood pressure, high cholesterol, and diabetes. Health care is expensive because it does more than it used to. In the olden days, only a few things could be treated, so the chances that you’d have a disease that could be treated, and thus require expensive medical are were lower. Now, more people have treatable diseases.
    “Really, the first step would be requiring providers to charge everyone the same, regardless of their funding source.”
    I’m for this, but I’m not sure why requiring health care providers to charge everyone the same is different from requiring car dealers or airlines to charge everyone the same. If we’re going to regulate the prices that health care providers charge (even if only by demanding equivalence) shouldn’t we also regulate the amount that health insurance providers can charge?
    I was convinced by the Gawande article that working forward from the system we have now is a reasonable option. But, I think that working forward will move us to “socialized” (or at least public) medicine, just with a messier and less regular route.

  6. jen Says:

    Sorry, I should have made it clearer what I’m presuming to be the relationship between uniform charges and the actual charge.
    I do think we’ll get to the point where a single body is stating what the appropriate charge is for a given set of services. We’re pretty close to that right now, with Medicare setting the threshold level and then various entities basically building in a profit margin on top of that. I don’t have a problem with the single entity setting charges, personally. Because of the complexity of health care delivery, this makes much more sense than, say, a governing body regulating airline tickets in this way. Keep in mind that right now many hospitals have no idea what it costs to deliver certain services. They know what they *charge*, but they do not necessarily know how much it cost them, because of the difficulties of tracking all the people and products in play. This is a very hard thing to untangle. It’s going to require more oversight, by very experienced individuals, to get it working. This, to me, is the big potential gain to be had with electronic medical records — that we might finally be able to figure out actual costs, especially across both inpatient and outpatient settings.
    But I don’t want to distract from my real point, which is that you don’t have to do “socialized” to fix the issue. By socialized I mean one big government entity doing all the approvals for care paths and processing of payment. I just don’t see that flying in the States; the libertarian crowd would go apesh*t over it. I do think it would fly to regulate it to the point where the differences between providers are less severe.
    More than anything I’m reminded of salary capping in the NFL. The team-wide salary cap, when it was introduced, brought about profound change in the league. Suddenly almost every team had roughly the same resources. And quite a few “dynasty” teams suddenly fell on hard times, as they were stripped of their biggest tool.
    Yet when we look today what we see is that various NFL teams continue to perform at different levels. The salary cap just increased the importance of non-cash assets (such as good coaching and scouting, and good general management).

  7. plain jane Says:

    Actually, the figure I heard was that on average it eats up 84% of unemployment benefits.
    My new pet peeve? I have a health care savings account. It seems like it is such a round-about cumbersome way to save some money. Think of the money and energy spent on keeping receipts, filling in the forms, sending them off, processing the forms, cutting a check, mailing it. Not to mention that you have to estimate how much you will spend on health care during the year. I saved such a small amount on this tax-free money.

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