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Unemployment extension 101: how health care is affected

Congress excluded a subsidy for 'COBRA' from the unemployment-benefits extension. As of June 1, thousands of unemployed face higher insurance costs.

Unemployment extension: People wait in line to enter the City University of New York (CUNY) Big Apple job fair in New York, in this April 23 file photo. As of June 1, thousands of unemployed workers face higher insurance costs.

Shannon Stapleton/Reuters/File

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When President Obama signed the six month federal extension of unemployment insurance, one item not included was an extension of the subsidy for health insurance for newly laid-off workers.

That means that as of June 1, thousands of workers are either paying out most of their unemployment checks for health coverage under “COBRA,” or just not getting covered.

COBRA, which is administered by the Department of Labor, allows for unemployed individuals to continue to get group health insurance from their former employer who had been subsidizing their coverage. But, they must pay the whole cost of the insurance, plus a 2 percent administrative fee, making the insurance expensive.

Advocates for the unemployed say Congress’ decision not to help out those who have lost their employer-subsidized health care is forcing families to put off getting health care if they need it, and is putting even greater pressure on emergency room facilities. Opponents say the benefits extension is expensive if not paid for, and it doesn't fix the underlying problem – getting people a stable source of health-care insurance.

“The best thing for the unemployed and the sick is for Congress to spend as little of the people’s money as possible and not create the uncertainty it's causing right now by passing costly new regulations that discourage people from hiring,” says Michael Cannon, director of health policy at the Cato Institute, a Libertarian think tank, in Washington. “These subsidies are like unemployment insurance – they are a band-aid that helps a lot of people but does not fix the problem.”


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