Obama Jobless Benefit Expansion Funded by Employer Payments

January 6, 2009 (PLANSPONSOR.com) - President-elect Barack Obama's economic stimulus plan includes several items with direct employer impact, including an expansion of health care for departing workers and unemployment insurance changes.

A Wall Street Journal news report said Obama’s two-year plan includes providing jobless benefits for part-time workers and others currently not eligible for the coverage in many states with that added coverage to be financed by employer contributions, and not borne by taxpayers.

The government will offer states $7 billion as incentive to permanently change their unemployment insurance laws, the news report said. The proposal will seek to use short-term aid to cash-strapped states to force long-term changes that the Obama team believes are overdue, Obama aides told the Journal.

The changes to the unemployment insurance program were designed to help entice state officials to make changes recommended by a bipartisan commission in 1994. Those suggestions were aimed at the fact that fewer than half of the unemployed currently receive unemployment benefits, either because they work part-time or because outdated regulations do not define them as having been working recently, the newspaper said.

Many states also use older wage data to establish work histories and exclude the most recent three to five months of employment when determining eligibility, according to the news report.

A COBRA Change

The Obama package also includes changes in the Consolidated Omnibus Budget Reconciliation Act( COBRA ) program governing health care available to workers leaving a job. According to the newspaper, for  the first time, workers laid off from jobs that did not include health insurance would be allowed to buy into the federal-state Medicaid program for the poor.

The Obama stimulus proposal continues to raise concerns about its long-term impact on the size of the federal budget deficit. A new Congressional Budget Office (CBO) forecast due out Wednesday is expected to put the fiscal 2009 deficit at about $1 trillion, more than double the $438 billion CBO foresaw in September, the newspaper reported.