Unemployed Face Daunting Health Care Costs

Millions of unemployed Americans face significantly higher health insurance premiums starting today, and many of them will be forced to give up their coverage.

That's the assessment from a consumer group studying costs of Cobra, the program that allows workers to continue the same level of health coverage after they lose their jobs.

For fired workers who started getting a federal subsidy last March, their help from the government ended at midnight. That means people getting aid to cover 65 percent of their premiums now pay the full amount of Cobra. The person paying $389 a month for family coverage will now pay $1,111 on average, the group Families USA says.

That average Cobra family premium will eat up 83 percent of unemployment checks, Families USA says. What's more, the Cobra monthly premium for family coverage actually exceeds the unemployment payout in nine states: Alabama, Alaska, Arizona, Delaware, Florida, Louisiana, Mississippi, South Carolina, and Tennessee.

"It has been a lifeline that has allowed people to retain their health coverage, and that lifeline is being withdrawn," Families USA executive director Ron Pollack says.

Earlier this year, Congress approved the subsidies as part of President Obama's stimulus package. Budget scorekeepers estimated 7 million people would take advantage of the program at a cost of $24.7 billion. Bills are pending in both the Senate and the House to extend the subsidies by six months, but it's unclear whether there's enough support for them.

And if health reform ever gets passed, any changes in law wouldn't take effect for a few years, and that's no help to the folks now unemployed.

"For people who lose the subsidy, the overwhelming number of them will become uninsured," Pollack says.

Even though Cobra is terribly expensive, buying health insurance in the open market is even more costly, he says. And for people with health problems (who typically sign up for Cobra), forget it.

"If you want comparable coverage, you're going to pay a whole lot more," Pollack says.