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Utah Legislature: Potential loss of COBRA subsidy worries jobless

"The sky isn't falling; it fell a while ago. That's what all this bad air really is."

That was supposed to be a joke, Rob Manning said last Wednesday as he waited west of the Capitol for the northbound 470 bus. His ride home had been "coming any minute now" for nearly half an hour.

"This is getting past a joke, like what goes on in there," he said, nodding toward the House building up the hill to the east. He had been among a throng of Utahns who had come to speak to the subcommittee of lawmakers laboring to make ends meet for state public health and human services programs.

Manning said he couldn't make heads or tails of the discussion, or anything else that he has experienced during the six months since he was laid off from a medical services provider that he declined to name. He hung at the back of the room and ultimately kept his comments to himself.

"Too many people talking; too many people not listening," he said. His 2 cents, as he put it, was that things aren't working, here in the real world. There's real trouble — real people are losing real jobs, their medical insurance and their bearings and are well down a path that is a short hike to feeling like they can't make it anywhere anymore.

"The bus can't seem to make it here anymore, either," he said. "They don't need to fix anything. It would just be nice to be heard."

Apparently rethinking his options to get home, he turned and walked south. "Maybe I can catch the 500 (Capitol shuttle) and another bus from downtown."

Manning didn't know it, but his comments echoed an equally urgent assessment made earlier that day at the other Capitol in Washington, D.C.: If Congress doesn't extend a health insurance subsidy program as part of its pending jobs bill, the sky will feel like it's falling for thousands of Americans who will lose their coverage when they lose their jobs.

That's not being negative about the economy. It's one of the realities of recession, Ron Pollack, executive director of the health care consumer advocacy group Families USA, said in a letter he sent Monday to the U.S. Senate.

"Working Americans who lose their jobs after Feb. 28 are all but guaranteed to lose their insurance coverage as well, because they can't afford to extend their plans under COBRA," Pollack said. Unless Congress extends it, a stopgap federal assistance program to help laid-off workers pay the full insurance premium they shared with their former employer will expire at the end of he month.

As part of the pending jobs bill, the Senate could extend the subsidy adopted last year as part of the federal stimulus bill, the American Recovery and Reinvestment Act of 2009.

Utah's Legislature adopted its own version of the measure just before the end of its general session in March 2009. A vote to extend it also would be needed, but that decision, like most spending, hinges on what Tuesday's state revenues report shows.

COBRA is the acronym for the Consolidated Omnibus Budget Reconciliation Act of 1985, which allowed workers to continue their employer's health coverage after leaving employment. The hitch is that workers must pay the full cost of the coverage they used to share with their former employer.

COBRA, which Pollack has called a "ruse" and "the Catch-22" of the U.S. health care system, isn't an option because someone laid off who manages to get state unemployment would spend about 84 percent of his or her unemployment benefit on health insurance premiums.

The nationwide average monthly COBRA premium for family coverage is $1,111, compared to an average monthly unemployment insurance benefit of $1,333.

According to a Families USA study released last December, a Utah family continuing under COBRA pays on average $1,030 per month, or 76.8 percent of the $1,341 monthly unemployment check. For an individual, the average COBRA payment is $363, or 27 percent of unemployment.

Average monthly benefits are calculated by multiplying average weekly benefits for all unemployed workers by a conversion factor of 4.3. This calculation assumes that individuals receive unemployment benefits for four consecutive full weeks.

The sad fact is if laid-off workers don't continue their employer-based coverage and it lapses before they can find another job that offers it as a benefit, people with common pre-existing conditions will most likely have a six-month waiting period before the new plan kicks in or simply won't be able to find another policy at any price, Pollack said.

"And once coverage has lapsed for whatever reason, good luck in finding a new one," he said. Extending the subsidy is the difference between paying $390 or $1,200 per month for insurance, which under current difficult economic times "is next to impossible for any working family."