Over the last few weeks there’s been a lot of Washington chatter about using COBRA extensions to keep more people insured. It all sounded so logical—until the special interests weighed in. When employees leave a job, they are usually entitled to 18 months worth of COBRA benefits: they can stay on their employer’s policy, but must pay all the premiums themselves, plus a two percent administrative fee. The House bill also called for the government to subsidize people’s COBRA coverage during the first year of their unemployment. The subsidy would pay 65 percent of the premium costs. Whether a 65 percent subsidy is large enough to encourage out-of-work people who have no income to continue with COBRA may be problematic in the first place, as Campaign Desk pointed out recently. A trade bill in 2002 called for a 65 percent subsidy for those displaced from their jobs. But, even at that level, only 12 to 15 percent of those eligible took it. Nevertheless, the Senate bill calls for a mere 50 percent subsidy. The advocacy group Families USA found (pdf) that with a 50 percent subsidy, COBRA coverage would cost about 42 percent of the average family’s unemployment income.
The House bill allows people age 55 or older, or people who have been at the same job for ten years or more, to continue on COBRA at their own expense until they became eligible for Medicare. Some health experts saw this as a way to begin extending guaranteed coverage to those older people who weren’t yet 65, with the eventual goal of moving to a Medicare for All solution for reform. (Sen. Max Baucus, for instance, has proposed letting people age 55 to 64 buy into Medicare.) Perhaps opponents of this solution saw that too.
Employers objected to expanding COBRA, for which they’ve never had much love, arguing that keeping track of former employees was an “administrative burden,” and that costs would increase as these ex-workers got older and sicker, causing the premiums these companies pay for both current and former workers to rise.
The changes in the Senate version of the stimulus package show that health reform may have a tough time making it to the finish line. Journalists need to keep a sharp eye on the race.