Job Loss and Health Insurance in the Great Recession: Evidence on the ARRA COBRA Subsidy from the Survey of Income and Program Participation

Bridget J. Lavelle, University of Michigan

Data from past recessions suggest that for each one percentage point rise in the U.S. unemployment rate, the uninsured population expands by over one million. To strengthen the safety net amidst the Great Recession, the American Recovery and Reinvestment Act provided a 65% subsidy to aid involuntary job losers in paying for continued health insurance coverage through their former employers (COBRA). Between March 2009 and May 2010, most workers with employer-sponsored health insurance who lost jobs involuntarily were offered COBRA at a significantly reduced price for up to 15 months. Using nationally representative panel data from the Survey and Income and Program Participation, I evaluate the ARRA COBRA subsidy’s effectiveness in preventing health insurance loss for involuntary job losers in the recession.