Unhealthy indecision

Unless Congress and the president act soon, many unemployed workers and their dependents may lose their health insurance if a federal subsidy to help them pay for the coverage isn’t extended.

The economic stimulus package passed in February established an employer-provided subsidy for unemployed workers under the Consolidated Omnibus Budget Reconciliation Act, commonly referred to as COBRA.

COBRA gives former employees the opportunity to temporarily continue their health coverage at their employer group rates. The problem is that many families can’t afford the premium, which can be more than $1,000 a month. But under the stimulus plan, workers involuntarily terminated between Sept. 1, 2008, and Dec. 31 of this year were granted the subsidy, through their former employers, to help cover COBRA premiums for nine months.

Those who take advantage of the program pay 35 percent of the COBRA premium. Employers pick up the remaining 65 percent, which is reimbursed through a payroll tax credit.

For those who signed up on March 1, the subsidy terminated at the end of November. Each month that passes without an extension increases the number of people who can’t afford coverage, said Ron Pollack, executive director of Families USA, a consumer health advocacy group.

Legislation to extend the subsidy has been introduced in both House and Senate. The House bill would extend the maximum subsidy to 15 months. It would also expand eligibility to people who are involuntarily terminated through June 30, 2010. Senators Sherrod Brown, Democrat of Ohio, and Robert Casey, Democrat of Pennsylvania, also want to extend the subsidy to 15 months and increase the federal share to 75 percent.

Just before Thanksgiving, Brown and Casey, and others wrote to the Senate leadership, urging an extension of the COBRA subsidy.

Congress, of course, has found time to extend programs for folks not in great need. Billions were allocated for people to buy cars under the cash for clunkers program - many cars that the auto research website edmunds.com estimates would have been purchased even without a subsidy. Our leaders have given away money as part of the first-time home buyer tax credit to borrowers purchasing homes they could already afford.

And yet a subsidy for people who really need the money to continue health insurance isn’t getting the same treatment.

How important is this subsidy?

After the law was passed, COBRA enrollment doubled, according to an analysis by Hewitt Associates. And with the subsidy, the cost of maintaining the average policy was $398 per month for a family and $144 for an individual, according to the Kaiser Family Foundation. Once the subsidy expires, that cost jumps to $1,137 per month for family coverage and $410 per month for individual coverage.

I know the administration has been preoccupied with what to do with troop levels in Afghanistan and party crashers, but this subsidy should be more than a notion.

Michelle Singletary writes The Color of Money for The Washington Post.