Today is a rough day for anyone who values work and staying employed. As I write this, five large employers have just announced a total of 45,000 layoffs (20,000 at Caterpillar, 8,000 at Sprint Nextel, another 8,000 at Pfizer, 7,000 at Home Depot and another 2,000 at General Motors). 

The recession the new president is battling seems to be getting worse by the day. That’s why it makes a lot of sense for the president’s stimulus package to push for the reform of COBRA insurance for the rapidly growing population of the unemployed.

Anyone who has lost their job and wanted to utilize COBRA to continue health coverage until they find new work knows all too well that the big problem with COBRA is that it’s incredibly expensive. I tried it once, for about a three- month period, and even the most inexpensive catastrophic coverage policy for my family was about 50 percent more than my old employer-subsidized policy. Try paying for something like THAT when you are out of a job.

In other words, although COBRA sounds great in theory, in reality it just costs too much to do much good for the unemployed. A new study by the Commonwealth Fund that was reported in the Dollars & Sense blog in The Kansas City Star bears this out. It found “that only 9 percent of laid-off workers took up coverage under COBRA in 2006.” The article cites the report, “Maintaining Health Insurance During a Recession: Likely COBRA Eligibility,” which found that 60 percent of current workers, if laid off, would be eligible for COBRA.  The report notes: “But for most people, COBRA payments are unaffordable–averaging $4,704 a year for individuals and $12,680 for families.”

This is why COBRA expansion is part of economic stimulus package President Obama is trying to push through. Although this proposal doesn’t deal with core problem of the cost of COBRA, it does address a more pressing concern: that people who lose their jobs frequently need to continue health coverage on their own for a lot longer than the 18 months allowed under current law.

The Senate version of the economic stimulus bill does deal with the high cost of COBRA coverage, by having the federal government pay 65 percent of COBRA premiums for employees who lose their jobs between September 1, 2008, and December 31, 2009, according to a story from Business Insurance, a sister publication of Workforce Management. “The subsidy would be available for up to nine months,” the story says.

Every unemployed worker in America gets COBRA sign-up information from HR when they get laid off. But as the Commonwealth Fund report shows, less than one in 10 workers choose to take advantage of this pricey benefit, even though it is being offered at a time when they probably need it most.

You can debate a lot of the proposed spending that’s in the president’s stimulus package, but reforming COBRA and helping unemployed workers keep their health care going seems like a no-brainer to me. We’re long past the time for meaningful COBRA reform. Maybe this economic downturn is finally when we’ll have a benefit that really helps out-of-work Americans, rather than offering something that sounds good in theory but fails to help people in the real world of illness and medical bills.

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