What Congress Giveth, It Also Taketh Away

Farewell, COBRA extensions?

Much of the health news coverage of late has tracked the topics that administration officials, notably HHS Secretary Kathleen Sebelius, want people to know about—the $250 rebate for seniors who’ve had huge drug expenses, the tax credit for small business, etc. Okay. Fine.

But right before the holiday, the House took away an important benefit that folks in the White House may be less eager to discuss—an extension of subsidies to help laid-off workers pay for their COBRA benefits. We urge the media to hop on this one fast, for the benefit of those in their audience who may depend on this assistance. So far, the coverage has been thin, existing mostly in the business press and in liberal blogs like Firedoglake.

As part of the stimulus package last year, Congress offered a special deal to workers who were laid off because of the recession. It gave them fifteen months of COBRA coverage, and paid 65 percent of the cost of staying on their employer’s policy, normally a pricey proposition. That benefit itself was a compromise. As Campaign Desk reported, the House originally proposed a more generous arrangement. Workers age fifty-five and older who had been at the same job for ten years could keep their COBRA benefits at their own expense until they turned 65 and were eligible for Medicare or got another job with insurance. That provision would have gone a long way to ensuring continuity of coverage for displaced workers. (COBRA coverage usually lasts for eighteen months.)

The influential National Business Group on Health objected, and sent letters to Congress outlining its concerns—mainly that keeping laid-off workers on a company’s health insurance policy would raise premiums for everyone in the group, including current workers. It seemed, according to the business group, out-of-work employees generally have higher medical costs and higher rates of chronic illnesses. (Hey, it’s not unreasonable for these workers to be stressed out.) Businesses also grumbled about the administrative expense they would face in keeping track of older workers.

There have been four extensions since the 65 percent deal passed more than a year ago. The last extension, in April, extended the coverage until June 1. After that, workers must assume the full cost of their coverage—no doubt a burden that will cause thousands to drop their insurance. The provision the House axed before the holiday would have extended the coverage through the end of the year. But, alas, COBRA got caught up in the politics of deficit reduction. The $7.8 billion it would have cost the government to help out those still needing the subsidy was too much for deficit hawks. And so it went.

There’s a political story here, with the Dems sacrificing workers’ health on the altar of deficit reduction; a consumer story, in the costs and benefits of other options for those laid-off workers now facing the prospect of losing their subsidized coverage; and a cautionary tale for the future.

The crux of health reform lies in the subsidies the uninsured with low and middle incomes will get to help them buy private insurance that they otherwise cannot afford. The bulk of the money for subsidies comes from cuts to Medicare and Medicare Advantage plans. All the talk during the debate was about a ten-year funding horizon. Almost no one asked what would happen after ten years. There is no dedicated funding source for the subsidies, like the mandatory payroll tax that helps fund Medicare and Social Security. Indeed, the lack of a dedicated tax has become a problem in Massachusetts, which has run into financial snags paying for the subsidies its own health care reform law requires.

Think ahead to 2017 or 2020, when people have gotten used to the subsidies and the coverage the new law promised. If a new round of deficit mania sweeps the land, will the subsidies be in jeopardy like the COBRA subsidies today? Will their coverage be yanked away by a Congress in no mood to pay for expensive health care? It’s time for the media to start asking these questions.

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Trudy Lieberman is a longtime contributing editor to the Columbia Journalism Review. She is the lead writer for The Second Opinion, CJR's healthcare desk, which is part of our United States Project on the coverage of politics and policy. She also blogs for Health News Review. Follow her on Twitter @Trudy_Lieberman.