The temporary health benefits continuation subsidy might delay some unemployed people's efforts to get new jobs, but, then again, it might not.
Analysts at the Congressional Budget Office consider the Consolidated Omnibus Budget Reconciliation Act benefits subsidy in a discussion of strategies for increasing economic growth this year and in 2011.
The government now wants to phase out the 15-month COBRA subsidy and access to extended unemployment insurance benefits in March.
The government could extend access to the subsidy program and access to extended unemployment benefits to December, the CBO analysts write.
"Households receiving unemployment benefits tend to spend the additional benefits quickly, making this option both timely and cost-effective in spurring economic activity and employment," the analysts write. "A variant of this option would extend assistance with paying health insurance premiums, which would allow some recipients to maintain health insurance coverage they would otherwise have dropped."
Subsidizing COBRA benefits would cause unemployment people to pay more for health care services than they would if they had no coverage, and it would increase the amount of income they would have available to buy other goods and services, the analysts write.
"Both policy options could dampen people's efforts to look for work, although that concern is less of a factor when employment opportunities are expected to be limited for some time," the analysts write.
Together, the policies could add 8 to 19 "cumulative years of full-time-equivalent employment in 2010 and 2011″ for every $1 million in government spending or lost federal tax revenue, the analysts predict.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.