March 7, 2002 | Commentary on Health Care
Consider what Senate Majority Leader Thomas Daschle wants to do.
He's introduced legislation designed to give health coverage to
workers who have seen their jobs move overseas. His "Trade
Adjustment for Workers, Farmers, Communities and Firms Act" would
give laid-off workers a federal subsidy so they could continue
getting coverage through their former employer.
At first glance, extending so-called "COBRA" coverage sounds
like a decent solution. COBRA can be awfully expensive, since it
requires now-unemployed workers to pay the full cost of their
health-care premium, as well as a small administrative fee. Under
Sen. Daschle's bill, the federal government would bear at least 50
percent of this cost, greatly lightening a substantial financial
burden. What's not to like?
Plenty. For one thing, the Daschle proposal would help far too
few uninsured workers. That's partly because it's restricted to
certain types of jobs, but also because of the fact that not all
workers qualify for COBRA. In fact, only 57 percent qualify. Those
left out include people who worked for small-business employers
(COBRA applies to employers with 20 or more workers), those whose
employers didn't offer coverage, and those who declined their
employer's coverage because it was too expensive or otherwise
didn't suit their needs.
Low-income workers would get the least amount of help; 60
percent of them don't qualify for COBRA. The assistance in the
Daschle bill would wind up going to help wealthier families
maintain private coverage and leave many struggling families with
Second, even with a subsidy, many workers still would find their
employer's health plan too expensive. Employers tend to over-insure
their employees in an effort to meet the various health care needs
of their diverse workforce. This makes the cost of
employer-sponsored coverage quite expensive, with an average cost
reaching more than $7,000 a family per year. Requiring families to
pay even a fraction of an expensive plan while they face a drastic
reduction in income makes no financial sense.
Third, the COBRA-based approach keeps displaced workers shackled
to coverage controlled by the employer who just laid them off. And
if that employer offered a self-insured plan and subsequently goes
out of business (certainly a possibility for a company in lay-off
mode), the health coverage could simply disappear, with or without
To fill in these gaps, some members of Congress propose using
Medicaid as "fall back" coverage for displaced workers unable to
get or afford COBRA. But this could dramatically swell Medicaid's
rolls at a time when the program is ailing: States have begun to
cut back benefits and reimbursements, greatly limiting access to
quality care. Forcing millions of unemployed Americans into this
substandard program will necessitate even more cost-cutting
Here's a better remedy: Take the money that would have gone to
extending COBRA coverage for some displaced workers and give it to
all unemployed workers to buy the health plan of their choice. This
would enable displaced workers to choose the health coverage that
best fits their personal, medical and financial situations.
At least, members of the House of Representatives think so. More
than once, they've passed an economic stimulus bill which would
have done just that. It proposed giving displaced workers a premium
subsidy in the form of a tax credit that would go toward the cost
of the health care plan of their choice. But each time, tax-credit
opponents in the Senate -- led by Sen. Daschle -- have refused to
allow it to even come up for a vote.
Meanwhile, millions of unemployed families -- not just those
designated in Sen. Daschle's bill -- remain in desperate need of
assistance. Hundreds of thousands of workers have been laid off
just in the past year. Should another economic slowdown occur,
thousands more are just a pink slip away from losing not only their
income but their health coverage.
It's time to stop playing politics with the health care of unemployed workers and help these families buy coverage of their own choosing. That's the healthiest solution.
Nina Owcharenko is a Health Care policy analyst at The Heritage Foundation.
Distributed nationally on the Knight-Ridder Tribune wire