Health insurance after job loss

Jan. 15, 2009 -- Losing a job usually comes with the double whammy of losing any employer-sponsored health insurance. Timothy McBride, Ph.D., leading health economist and associate dean for public health at WUSTL's George Warren Brown School of Social Work, is available to discuss current coverage options and the future of health insurance for low-income people.

Possible health insurance options for the unemployed:

• Maintaining former employer coverage through COBRA

McBride

"The drawback, unfortunately, is that individuals have to pay the full premiums, and in fact employers can charge 105 percent of the full premiums to individuals to recover administrative costs," McBride says.

"Individuals are often surprised to realize that their employers covered a good portion of their premiums, so COBRA coverage can be prohibitively expensive, especially for a person who has limited income, without a job."

• Individual health insurance, purchased directly from an insurance company

"This can be a good option if the person is healthy and young," McBride says. "However, the costs will be prohibitive and coverage may not be even be offered if the person is unhealthy."

• State plans that subsidize coverage for lower income persons, or allow a person to buy into insurance pools

"Individuals should investigate whether these are viable options, especially if they have prohibitively high medical costs," he says.

McBride notes that none of these options are very good for the unemployed. "The Catch-22 is that the person who loses their employment has lost their income so they cannot afford to pay for health insurance when they most need it," he says.

The new administration is considering options to help the unemployed purchase health insurance and to afford COBRA coverage. This may be taken up early this year by the new Congress. "Health reform, if it is considered in Congress, may provide relief for low-income persons," he says.

"In the short run, there are unfortunately few options for the unemployed unless they are relatively healthy and can buy cheap policies, or have significant savings. It is one of the sad aspects of our broken health-care system," McBride says.