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Image: Chuck Lacasse
Mike Roemer  /  AP file
Chuck Lacasse in front of his Wisconsin home on Thursday. If Lacasse had gotten his pink slip four days earlier, Uncle Sam would have covered most of his family's health insurance while he looked for a new job.
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updated 6/12/2010 5:41:42 PM ET 2010-06-12T21:41:42

If Chuck Lacasse had gotten his pink slip four days earlier, Uncle Sam would have covered most of his family's health insurance while he looked for a new job.

But Congress allowed emergency health care assistance for unemployed workers to expire May 31, and seems unwilling to renew it despite pleas from President Barack Obama.

Not three months after lawmakers passed his $1 trillion insurance overhaul, Obama is facing a rare defeat on health care at the hands of his own divided Democrats. Moderates have rebelled against adding billions more to the deficit in a treacherous election year.

"The same Congress that spent all this political capital trying to get people health insurance is going to take a crucial benefit away from unemployed people," said Andrew Stettner, deputy director of the National Employment Law Project, which advocates for the unemployed.

On June 4, Lacasse lost his job as advertising director for a company that makes nutritional supplements. He'll soon have to pay the entire $1,500 monthly premium to keep his family covered under his former employer's health insurance plan.

Until May 31, under Obama's economic stimulus law, the government provided a 65 percent subsidy. That would have lowered his cost to $525.

"This really isn't about welfare," said Lacasse, 40. "It's about buying people some time. In a position as specialized as mine, it would have been nice to know that I had some time to look for the right job." He lives near Green Bay, Wis., with his wife and two children.

Democratic Sens. Bob Casey of Pennsylvania and Sherrod Brown of Ohio have introduced a measure that would allow the program to continue helping people who get laid off through Nov. 30. That would cover Lacasse.

The lawmakers, who are seeking a vote this coming week, want to attach their nearly $7 billion provision to must-pass legislation that would extend unemployment benefits and make changes in dozens of federal programs. But a similar proposal was dropped from the House-passed bill, and Senate Democratic leaders also omitted it from their version.

"I'm concerned about it," said Washington Sen. Patty Murray, a member of the Democratic leadership. "There will be people who fall through the cracks."

'We haven't recovered fully'
Under a 1980s law known as COBRA, laid-off workers generally can stay on their former employers health plan for up to 18 months, provided they pay the full premium plus a small administrative charge. But with family premiums averaging about $13,500, the cost is prohibitive for most people.

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That changed under the 2009 stimulus bill and subsequent expansions, which provided a 65 percent federal subsidy for up to 15 months. Workers laid off through May 31 can qualify for the benefit through their former employer.

"It has been a significant program and it has helped many middle-class families to keep their health insurance at a time when maintaining health insurance was difficult because of the high rate of job loss," said Alan Krueger, the Treasury Department's chief economist. Official statistics on how many people were helped have yet to be compiled, but Krueger estimates that as many as one-third of eligible unemployed workers enrolled in subsidized coverage.

Melanie Miller, 34, who suffers from debilitating neurological problems, said the COBRA program allowed her to maintain her independence after losing her ad agency job. "Without the subsidy, I probably would have had to move back and live in my mother's house in the basement," said Miller, an artist who lives in Philadelphia.

With the unemployment rate hovering just under 10 percent and with 15 million people looking for work, advocates say it's premature to withdraw assistance.

"We're recovering, but we haven't recovered fully," said Casey. "Now is not the time to pull up the ladder on people who are hanging on, in some cases to the last rung."

'We're picking and choosing'
Some conservative Democrats, however, say they don't understand why the government should subsidize workers who lose jobs with employer coverage and not others who are equally deserving — for example self-employed people priced out of the private market.

"You're paying 65 percent of (one) family's health care costs, but the neighbor next door, there's no help for," said Rep. Dennis Cardoza, D-Calif. "So we're picking and choosing. There's an inequality there between our constituents." Not to mention that Congress has treated the program as emergency spending, adding its cost to the deficit.

In Marietta, Ohio, boiler operator Neil Davis is facing the loss of his job as the coal-burning power plant he works at prepares to shut down for good. Davis, 33, has marketable skills but he's unsure how quickly he'll be able to find comparable work. His wife is a stay-at-home mom raising two elementary-age children.

"Being able to have coverage at an affordable rate, we wouldn't be afraid to take the kids to the doctor if they get sick," said Davis. "The economy might be getting better some place, but I don't know where at."

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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