Because of high premiums, only 9 percent of unemployed workers have COBRA coverage.

Maintaining Health Insurance During a Recession: Likely COBRA Eligibility, a study from The Commonwealth Fund (CMWF), clarifies how COBRA is actually used by unemployed people in the U.S.

CMWF calculates that:

– Two of three working adults are eligible to buy into COBRA under the 1985 Consolidated Omnibus Budget Reconciliation Act (COBRA) if they became unemployed.

– Under COBRA, workers pay 4 to 6 times their current premium for health benefits.

– Thus, only 9 percent of unemployed workers have COBRA coverage due to the high price of entry during unemployment — a time when one’s income dramatically diminishes.

CMWF estimates that subsidies of 75 to 85% of the COBRA premium would be incentive enough to bring unemployed workers into COBRA — leaving them 15-25% of the premium to pay.

For more on the challenge for unemployed workers to access COBRA, see The average health insurance premium costs 84% of average unemployment benefits.

Health Populi’s Hot Points: Economists use the words “need” and “demand” quite differently. A “need” is a necessity.

“Demand” is need translated into the desire to possess a commodity or use a service, combined with the ability and willingness to buy it.

The CMWF illustrates the difference between need and demand for COBRA. Without substantial subsidization to health benefits during periods of unemployment, being unemployed will equate to being uninsured.

Access to COBRA benefits will be one of the top short-term health economic challenges in 2009.