Center on Budget and Policy Priorities Recommends ‘Temporary Medicaid Improvements’ to Help Laid Off Workers

The Center on Budget and Policy Priorities issued a policy brief on Oct. 9 calling for Congress to enact substantive measures to help low-income workers who are laid off from their jobs maintain their health insurance (Park/Ku, "Temporary Medicaid Improvements As Part of a Stimulus Package," 10/9). Lawmakers and President Bush, working on a multi-billion dollar economic stimulus package, have expressed interest in the federal government partially subsidizing premiums for the unemployed through COBRA, as they look to help workers nationwide affected by the Sept. 11 attacks on the World Trade Center and the Pentagon (Kaiser Daily Health Policy Report, 10/5). Under COBRA, most unemployed workers and their families can retain their employer-sponsored health coverage for up to 18 months if they pay the full cost of the premiums, which, on average, exceed $7,000 per year for family coverage. While these subsidization proposals "merit serious consideration," the brief states that the COBRA proposals alone will not be enough to help low-income workers. Instead, the brief offers two recommendations that would augment the COBRA proposals and help to ensure that the stimulus package is both targeted at "low- and moderate-income households" and provides enough financial relief for states so that they can avoid cutting health services, which would "work at cross purposes" with federal stimulus efforts:

• Establish a temporary Medicaid option: States should be allowed to create a Medicaid option to cover individuals who are either not eligible for or cannot afford COBRA premiums. Coverage provided under this option should be reimbursed at the "enhanced matching rate" found in the Children's Health Insurance Program. Under this option, the brief says, states "would have flexibility to set income and resource eligibility limits as they saw fit" and low-income individuals who receive a partial COBRA premium subsidy through the federal government could use Medicaid funds to cover the remainder of the premium.
• Temporarily lift Medicaid matching rates: The brief says that the economic slowdown has already forced states to ponder Medicaid cuts and that greater unemployment will add to their "fiscal stress." Temporarily raising the federal matching rate would allow states to "cover the cost of increased enrollment and to avert program cutbacks." The brief suggests that the federal government either increase the matching rates across the board, "targe[t] ... states with high unemployment" or "targe[t] ... non-elderly, non-disabled adults and children." Enrollment from the latter group is "most likely to increase as a result of higher unemployment" ("Temporary Medicaid Improvements As Part of a Stimulus Package," 10/9). The complete policy brief is available online.