Unemployment and Health Insurance: Current Legislation and Issues

Janemarie Mulvey
Specialist in Aging Policy

When workers lose their job, they can also lose their health insurance. For people with good health and luck, loss of insurance might not matter very much since they would not use many health care services anyway. However, for people who have health problems or are injured, loss of coverage can be serious. Without insurance, people often have difficulty obtaining needed care and problems paying for the care they receive. Unemployed people who cannot postpone care may incur large bills that add to their financial distress. 

The 111th Congress had passed legislation that temporarily addressed this problem. On February 17, the American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5), which included two provisions that help some unemployed maintain or get coverage: (1) a premium subsidy for COBRA continuation coverage, and (2) an increase in the Health Coverage Tax Credit (HCTC). More recently, on December 19, Congress extended the COBRA subsidy for unemployed workers under the ARRA. As part of the FY2010 Defense Appropriations (P.L. 111-118), the eligibility period for the COBRA premium reduction was extended for an additional two months (through February 28, 2010) and the maximum period for receiving the subsidy was extended for an additional six months (from nine to 15 months). On March 2, H.R. 4691 was enacted, which extends eligibility for COBRA premium subsidies for individuals who are involuntarily terminated on or before March 31, 2010. A number of legislative proposals to extend eligibility for COBRA premiums subsidies further have been introduced (including a substitute amendment to H.R. 4213) and are discussed in this report. In addition, both the House and Senate have passed separate comprehensive health care reform proposals, which now have to be reconciled by both chambers. If enacted, they could be helpful to the unemployed once the changes become effective. 

Future legislative solutions face three broad challenges. First, the unemployed are a diverse population in terms of age, gender, marital status, income, and other characteristics. These attributes suggest they likely have different health care needs and different capacities to pay for care and insurance. Over a quarter of the unemployed are under the age of 25, a group that as a whole is relatively healthy, whereas about a third are aged 45 or older. About 40% of households that receive unemployment compensation have incomes under $25,000, whereas about 30% have incomes greater than $50,000. Some people are unemployed for a short period of time, others for years. The diversity makes it difficult to craft targeted remedies that are both equitable and effective. 

A second challenge is that many people do not lose health insurance when they lose their jobs since their employers did not provide it. Although sometimes people choose jobs without insurance because they do not want it, other times these jobs are their only options. Among the groups less likely to have employment-based insurance are workers in the leisure and hospitality industry, part-time workers, and people who were previously family caregivers. Whether legislation should provide assistance to the unemployed in general or just to those who lost coverage involves difficult cost and equity issues, as well as debate over whether they should be helped to obtain public or private insurance. A third challenge is whether legislation should build upon existing federal programs and provisions or should create new solutions. Building upon what is established might be appropriate given the immediate needs of the unemployed and their families, but new approaches might allow solutions that are preferable in terms of long-term needs, equity, and other matters. A major consideration for new approaches is how long the recession will last and how high the unemployment rate will rise.


Date of Report: March 3, 2010
Number of Pages: 22
Order Number: R40165
Price: $29.95

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