This week, the Senate passed the American Workers, State and Business Relief Act (AWSBRA), which will create jobs and support those who have lost a job through no fault of their own. The legislation includes important extensions of unemployment benefits and health insurance tax credits to sustain families struggling with the practical realities of unemployment.
In 2009, more than 20 million Americans received unemployment benefits for some part of the year. [AP, “Unemployment sets a grim record in 2009“] Senate Democrats are committed to assisting Americans who have lost their jobs and are looking for new work. These individuals depend on this help to supplement their wages, help pay for health insurance, and protect their families during these tough times. The one-year extensions championed by Senate Democrats will provide certainty and stability to American families who rely on these benefits while looking for a job.
American families are struggling. Although the unemployment rate has recently remained steady at 9.7 percent, more than 6.1 million individuals have been out of work for more than six months. [Bureau of Labor Statistics, Employment Situation] The uncertainty of the job market and the fluctuating status of unemployment benefits have created a great amount of anxiety for American families.
Senate Democrats understand that millions of Americans depend on unemployment benefits. In February, 11.4 million individuals relied on unemployment compensation to support themselves and their families. [Washington Post, “The Price of Unemployment,” 3/9/10] The unemployment insurance system assists Americans who are eligible by replacing part of their wages so they can continue to provide for their families. Unemployment compensation provides up to 99 weeks of benefits to individuals who have lost their job through no fault of their own.
Those who have lost their jobs are finding it difficult to find new work. There are currently six job seekers for every one job available. [Washington Post, 3/9/10] In February, the median amount of time a worker was unemployed was 19.4 weeks and nearly 41 percent of the unemployed have been without a job for more than six months. [Bureau of Labor Statistics, Table A-12] Americans depend on unemployment benefits to them through longer periods of unemployment. Senate Democrats are working to restore job growth but in the meantime, as the economy recovers, millions of Americans who are looking for a job need these benefits to get by.
Unemployment benefits are an effective way to inject money into the economy. Senate Democrats understand that investments in unemployment benefits produce a meaningful impact on local economic growth. Last year, the Congressional Budget Office estimated that for every $1.00 spent on unemployment benefits, as much as $1.90 in GDP couldbe returned to the economy. [Congressional Budget Office, Policies for Increasing Economic Growth and Employment in 2010 and 2011, 1/2010] When the unemployed receive unemployment checks, they often spend this money immediately on basic goods like food, gas, and health care, contributing to the local economy with increased consumer spending.
For many families, a lost job also means the loss of health insurance. Sixty percent of Americans under age 65 receive their health insurance coverage through their employer. [Kaiser Family Foundation, 10/2009] For these individuals, losing their jobs means losing both their income and their health insurance. Under the Consolidated Omnibus Budget Reconciliation Act, known as COBRA, workers may continue their employer-sponsored health insurance for up to 18 months (or longer under certain circumstances). However, they must pay both their portion and their employer’s portion of the premium, as well as a two percent administrative fee, which is cost prohibitive for many Americans.
COBRA covers unemployed families, if they can afford it. The average unemployed worker would need to spend 30 percent of their unemployment insurance check to maintain single coverage through COBRA. [Families USA, 1/2009] With an average national monthly premium for family COBRA coverage of $1,111 and an average monthly unemployment benefit of $1,333, families would have to spend more than 83 percent of their income to maintain health insurance coverage through COBRA. [Families USA, 12/2009] As a result, maintaining family health insurance is not a option for many families.
Senate Democrats support reducing the cost of health insurance for Americans looking for work. In legislation championed by Senate Democrats last year, the American Recovery and Reinvestment Act (P.L. 111-5) and the Department of Defense Appropriations Act (P.L. 111-118), workers who lost their jobs between September 1, 2008 and February 28, 2010 can receive up to 15 months of premium tax credits, which covers 65 percent of the cost of COBRA coverage. This assistance reduces the average monthly cost of COBRA coverage from a national average of $1,111 to $389 for a family policy. [Families USA, 12/2009]
Democrats extend premium credit to those who lose their jobs this year. While our economy continues to recover, we may still face difficult times this year. That is why Senate Democrats recently passed the American Workers, State, and Business Relief Act (H.R.4213) to extend the COBRA premium tax credit to Americans who lose their jobs during the rest of this year. Health insurance coverage is too important to go without, and this premium assistance helps unemployed Americans facing difficult choices about how to best care for their families during these challenging times.