The Miami Herald‘s John Dorschner looked into just how much of a hassle it is for laid-off employees to retain health coverage through the federal COBRA program. Along the way, he also noted that the program’s not popular with employers or insurers either.
Dorschner opens with an anecdote that shows just how broken the system is and illustrates the frustrations many are facing.
The Rosens’ case is an extreme example of something that’s happening frequently throughout South Florida: Laid-off workers are struggling through a difficult maze to keep health insurance while insurers and former employers have no interest in helping them beyond what federal and state laws require.
For employers, COBRA means unwanted paperwork and bureaucracy. For insurers, it means unwanted risk.
A key problem for insurers is that young and healthy employees who are laid off tend to reject COBRA, while older and sicker workers grab it. “Typically those who take COBRA coverage cost two to five times [[more] in benefits than a normal employee costs,” LeCompte says.
Despite its flaws, COBRA is seen to provide an important safety net, and the 65 percent federal subsidy for COBRA coverage has been extended to cover those workers laid off before March 1, 2010. Furthermore, the House version of the reform package, at least, has a provision saying that folks could retain their COBRA coverage at least until federal insurance exchanges begin sometime around 2013.