Portability can keep families healthy through an unhealthy economy.

In December, 524,000 Americans lost their jobs. These numbers rounded out a full year of job losses, the worst since 1945, in the midst of a recession that began last December as the housing crisis began to spread to the broader economy. As a result, the total number of Americans out of work now stands at 11.1 million people.

For the millions of Americans who are now facing unemployment, there's a genuinely unnerving quality about the idea of waking up on a Monday morning and not knowing when your next paycheck will come or the manner of anxiously checking your voicemail for the callback about your last job interview. Uncertainty abounds, but the bills aren't going anywhere.

As if that idea isn't scary enough, imagine that losing your job also means losing your health insurance.  For the young and healthy, this may be little more than a passing thought, but for the 43.8% of Americans who suffer from at least one chronic condition, losing your job is not only scary,

it can also be dangerous. But such is the nature of a health care system where health insurance is tied to employment.  

Employer-provided health plans provide few solutions for ensuring continuity of health care for ordinary Americans who either lose their jobs or change careers.  What the current system needs is portability. As an attempt to address this, the COBRA Act was enacted in 1985 to allow people who lose their jobs to continue receiving health benefits under their previous health plan for 18 months by paying the full cost of premiums plus a 2% fee for administrative costs. This sounds like a great idea, so why is it that only 20% of the uninsured who are eligible for COBRA actually elect to use it?

The answer, as reported by Families USA and the Washington Post, is that the cost of COBRA coverage nearly outstrips unemployment insurance benefits . The average monthly unemployment check is $1,278, while the average monthly COBRA premium for a family is $1,069, a full 83.6% of that family's unemployment income. For a single person, COBRA premiums average $388, still a significant 30.4% of his or her monthly income. 

The report additionally finds:

"In nine states (Alabama, Alaska, Arizona, Delaware, Florida, Louisiana, Mississippi, South Carolina, and West Virginia), the average premiums for family coverage under COBRA equal or exceed total UI income. 

In an additional 32 states (Arkansas, California, Connecticut, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Maine, Maryland, Michigan, Missouri, Montana, Nebraska, New Hampshire, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Wisconsin, and Wyoming) plus the District of Columbia, premiums for family coverage under COBRA would consume, on average, more than 75% of the average UI income."

Nearly 61% of people with health coverage receive benefits through employer-based plans. As a consequence, for every 1% increase in the unemployment rate in the United States, there is a subsequent 1.1% decrease in the number of people with health insurance, according to a report by the Kaiser Family Foundation.

The ability of families to afford COBRA coverage may also be exacerbated by rising costs of health care that have steadily outpaced wage growth, significantly diminishing the purchasing power of unemployment income for health care purchases.  "Health insurance premiums have increased rapidly over the recent past, growing a cumulative 78 percent between 2001 and 2007 and far outpacing cumulative wage growth of 19 percent over the same period," according to another Kaiser report.

These issues surrounding COBRA coverage are likely to continue unabated throughout 2009 as the recession lingers and health costs continue to rise. For this reason,  NCPA and the Family Policy Center believe portability in health plans should be encouraged through individually-owned health plans. Current laws say that employers can only purchase group health plans with pre-tax dollars, such that any employer who wanted to purchase a plan that would be owned by the employee, and thus transportable between jobs, would not be able to do so without paying with after-tax dollars. Similarly, some states have even passed laws that say employers cannot pay any portion of the premiums on employee-owned health plans without being subjected to group plan regulations.

Employers can also be encouraged to offer Health Savings Accounts to their employees to help supplement coverage through high-deductible plans that are generally cheaper for both the employee and employer. The employee owns the pre-tax balances that are deposited into the HSA's to pay for his or her own health expenses and thus providing a critical backstop against a loss of benefits with unemployment.

It's hard to tell exactly how long the recession will last, so it may be important to dig in and protect yourself and your family in any way you can. The government should take a hard look at health care portability to ensure that an unhealthy economy doesn't also bring unhealthy families. 

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