Health Insurance for Displaced Workers

Publication Date: January 2003

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Health

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Abstract:

The events of September 11, 2001, the economic aftermath and the relocation of American-based firms abroad have been separating persons from employment and reducing access to health insurance. In response, the 107th Congress considered a wide array of provisions intended to stimulate the economy and promote job growth, addressing such areas as trade practices, tax policy, labor, state fiscal relief and health care. Part of this debate was about whether, and how, to continue (or restore) health insurance for displaced workers and their families. As economic conditions leading to job loss persist and the number of uninsured increases, discussion concerning policy options for the uninsured will likely continue into the 108th Congress.

The proposals offered in the House and Senate in the 107th Congress reflected concerns among some Members that existing law may not provide a sufficient safety net for the unique economic situation the U.S. is currently facing. This concern is likely due to three contributing factors: health insurance is costly; continuation coverage for those who had employer-based coverage, also known as COBRA coverage has limited reach; and coverage under programs designed to help lower income individuals, such as Medicaid and the State Children's Health Insurance Program (SCHIP), are not available to all displaced workers.

The 107th Congress considered several approaches to expanding this safety net for subsets of the population of displaced workers and their families. Among these approaches were proposals that would have assisted persons with the purchase of health insurance though tax credits for health insurance premiums, block grants to states, subsidies for COBRA continuation coverage, as well as proposals that would have provided states the option of temporarily expanding their Medicaid programs. Although a variety of measures were proposed to assist displaced workers and their families in maintaining or acquiring health insurance, they diverged on who would be offered assistance, and what form of assistance should be provided.

On August 6, 2002, the President signed the Trade Act of 2002 (P.L. 107-210), a bill which contains, among other things, provisions aimed at assisting workers who have lost jobs and are receiving Trade Adjustment Assistance (TAA) with the purchase of health insurance. The law provides a refundable and advanceable tax credit of up to 65% of a TAA recipient's health insurance premiums and authorizes grant programs intended to encourage states to establish or expand programs for the uninsured. An expansion of this program may be considered by the 108th Congress as a method for providing assistance to other groups of uninsured individuals.