Easing anxiety of health coverage

Jim Brackin, 53, of Upper Moreland, lost his job last month and with it his family's health insurance.

He'd been paying $300 a month for coverage through his job, the rest paid by his employer.

A federal law, known by the acronym COBRA, allows him to continue covering his family under his former employer's plan. But he'd have to bear the full cost himself - in his case, $1,300 a month.

Brackin and millions of Americans who have lost their jobs in recent months have learned a cruel irony: Just when incomes plummet, health insurance costs soar.

That will change, at least temporarily, for millions of Americans, including the Brackins, with the stimulus package expected to be signed today by President Obama.

The package includes $25 billion to subsidize 65 percent of COBRA payments owed by laid-off workers.

The Brackins, relying on the advice of benefits broker David Waters, had cobbled together health insurance for the family using three different plans.

But on Friday, with the COBRA subsidy now all but certain, they reconsidered.

Lisa, Jim's wife of 25 years, will get coverage through her job as a billing coordinator for a Center City law firm.

Jim and the boys will get COBRA through his former employer, Liberty Mutual Insurance Co., where he had helped businesses lower premiums by improving safety.

What would have cost Jim and his sons $750 a month before the subsidy will now be $262 a month - less than the family was paying before Jim lost his job.

"I hate to rely on the government for anything," Lisa Brackin said last week, "but when it comes to trying to save some money, that's what you got to do."

Families can continue COBRA up to 18 months. The discount in the stimulus bill will last nine months. Only people who lost their jobs after Sept. 1 are eligible.

"If he doesn't get a job within nine months, I'm kicking him out!" Lisa said after she was told of the nine-month expiration. "I'm kidding, but come on. Nine months?" She didn't want to think about how the family would survive on one income for that long.

In case her husband can't meet her deadline, another provision of the stimulus package extends unemployment pay beyond the current six months, for an additional 33 weeks. That will cost an estimated $27 billion.

"We still have it better than 90 percent of the world," she said. "It's just stressful. It's frustrating."

Six hundred thousand Americans lost jobs in January. Nearly 2 million people have lost jobs in the last three months.

About 170 million U.S. workers and families get health coverage through their jobs. When those are lost, insurance is lost, too. The government created COBRA, which stands for the Consolidated Omnibus Budget Reconciliation Act, to help workers keep insurance until they find new jobs.

But only 9 percent of Americans eligible for COBRA actually use it, according to a recent study by the Commonwealth Fund.

It's too expensive.

The stimulus bill itself acknowledges this, stating: "With COBRA premiums averaging more than $1,000 a month, this assistance is vitally important."

Only 4.7 million people - workers and their families - used COBRA in 2006, the most recent statistics available, said a spokesman for the federal Bureau of Labor Statistics.

The stimulus bill states that the new COBRA subsidy will "help 7 million people maintain their health insurance."

COBRA was always intended to be temporary and transitional.

Because COBRA is so expensive, only the sickest former employees tend to use it. And this heavy use drives up the cost of insurance for companies.

These former employees, according to the National Association of Healthcare Underwriters, "actually cost employers as much as 150 percent more than the average plan participant."

Ronald Gibbs, 51, lost his manufacturing job last month, and his health benefits expired Jan. 31. Nine days later, on Monday, his wife, Annette, got the results of her breast biopsy - cancer.

Gibbs was paying only $20 a month for the couple's health benefits at a packing-tape manufacturer in Fairless Hills, where he had worked for nine years.

Without the subsidy, COBRA payments for him and his wife would be $1,000 a month. His monthly unemployment compensation is only $1,216.

"I can't afford COBRA," he said last week.

Now, he might reconsider.

The subsidy could cut it to $350 for the couple.

Gibbs has been getting advice from Melissa Grothus, a health-care adviser with the Philadelphia Unemployment Project.

She told him that his wife would qualify for health care under the Breast and Cervical Cancer Prevention and Treatment Program, a state Medical Assistance program.

Grothus said that one city hospital had used up its annual funding for the program, but that other hospitals were still accepting new patients.

Many states, confronted by budget crises and growing numbers of unemployed workers, are struggling to maintain programs like this one.

The $787 billion stimulus package will pump $86.6 billion into state Medical Assistance budgets through the end of next year.

Even with the 65 percent subsidy for COBRA, the pricetag may still be too high for Ronald Gibbs.

Grothus had thought his best choice was the Special Care program run by Independence Blue Cross, which provides a basic level of coverage for Pennsylvanians with modest income. His coverage under the Special Care program wouldn't be as good as COBRA coverage, but his monthly cost would be only $130, Gibbs said.

But now, with the 65 percent subsidy, Grothus thinks he should get COBRA for himself. It'd be better coverage at about the same price.

Before he had any idea he'd lose his job, Gibbs last fall enrolled in a class at the Art Institute of Philadelphia to become a pastry chef. His true love is baking. And perhaps, if he can afford it, he can use this layoff as his own stimulus - to reinvent himself.

Robert McLeod, 53, of West Philadelphia, lost his job in August and started paying for COBRA benefits immediately: $947 a month - nearly half of his monthly $2,100 unemployment.

"Health insurance is killing us," said his wife, Meg Newburger, 50.

McLeod, in the printing business for two decades, worked for the last three years for the Lehigh Press in Pennsauken. He was laid off Aug. 26.

He appears to have missed the COBRA subsidy cutoff by six days.

"He might want to write to or call his congressional reps immediately, and if this passes, he should still get some advice whether there are any arguments regarding his effective date," suggested Cheryl Fish-Parcham, deputy director of Health Policy for Families USA.

"Also," she added, "if he was displaced due to trade policy - increased imports or jobs going overseas - there may be help under a different provision: trade-act adjustment assistance."

McLeod said two-thirds of printing companies in business 20 years ago no longer exist. Much of the business has moved to China.

As much as they would love to qualify for the COBRA subsidy, McLeod and his wife would prefer to get jobs with health benefits. They'd rather work.

"You accept the blows as they fall, and you try to work around them," Newburger said Friday. "I feel kind of let down. It's bigger than us, right? You do the best you can. We're lucky we have family and friends. If we have to, we'll move into my mother's basement."

60 days from enactment of the stimulus bill to elect COBRA and receive the subsidy.

SOURCE: Stimulus bill EndText