NCPA - National Center for Policy Analysis

Parties Diverge on Health Coverage for Uninsured

January 9, 2002

As part of the economic stimulus package, Senate Democrats wanted to provide the newly unemployed a 75 percent subsidy to help pay for their health coverage under their former employer's insurance plan. Displaced workers who never received health insurance from their employer would be lumped into Medicaid.

House Republicans, on the other hand, wanted to provide a 60 percent refundable tax credit to everyone qualifying for unemployment insurance. Recipients could remain in their employer's plan -- or purchase a policy in the "individual" health insurance market, which some 15 million Americans already do.

  • In most states, policies in the individual market cost about half that of an employer-provided group plan.
  • Uninsured families could also get a "bridge policy" to provide them coverage during job transition.

Experts are at a loss to explain why the Democrats insist that displaced workers get their insurance through their former employer -- known as COBRA coverage.

  • The average family policy under COBRA costs about $600 a month -- or $150 under the Democrat's 75 percent subsidy.
  • In contrast, unemployed families in most states could purchase a policy on the individual market for about $300 a month -- or $120 with the Republican's 60 percent subsidy.

Lower-income minorities would have benefited most under the GOP approach. In 1999, about 21 percent of blacks and 33 percent of Hispanics lacked health insurance -- versus about 15 percent of the population nationally.

Source: Merrill Matthews Jr. (Council for Affordable Health Insurance), "Some Comfort: High Costs for the Uninsured in Dems' Plan," Investor's Business Daily, January 8, 2002.


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