Fate of COBRA reforms in the HEROES Act

Photo: Jernej Furman via Flickr

Democrats in Congress have several ways that they’d like to address the millions of newly unemployed and uninsured Americans during the coronavirus pandemic, including widely opening enrollment for the Affordable Care Act.

One measure that made it into the recent $3 trillion stimulus bill known as the HEROES Act (Health and Economic Recovery Omnibus Emergency Solutions) would subsidize COBRA. That would enable newly unemployed people keep the insurance they had gotten on the job without having to shoulder the entire cost as typical. Taking over the entire premium can be considerable: Employer premiums average $7,188 for a single person and $20,576 for a family of four, according to the Kaiser Family Foundation, and COBRA adds a 2% surcharge.

The HEROES Act is the first pandemic bill that is not bipartisan, with the Senate unlikely either to pass the bill in its current form or pass its own version for some time. It’s also unclear whether any COBRA provision will survive, or whether a modified version in which the government subsidizes the health policy but takes on a smaller share, may pass instead. Remember that while Congress did offer assistance during the Great Recession ― by subsidizing 65 percent of COBRA cost ― the remaining third was still too expensive for many workers who had lost their income. This was before passage of the ACA.

COBRA has its advantages (continuity of care and often lower cost-sharing and deductibles than with ACA plans). The insurance industry, of course, likes it because the program keeps the book of business at least partly intact. It also shores up the employer-based insurance market at a time when many Democrats are crying for a more significant government role, either from ACA expansion or some version of “Medicare for All.”

But COBRA subsidies may not be the best bang for the federal buck. Such plans generally cost more than even the more generous options on the ACA exchanges. It also tends to help better educated, higher-income workers, and it’s not available to people who worked for businesses that have closed. And this measure wouldn’t help people who were uninsured before the pandemic. But employer-sponsored insurance is less politically toxic than expanding coverage under the ACA or Medicaid. It’s by no means a cure-all for this latest newly-uninsured problem, but may turn out to be a politically-palatable partial fix.


  • Kaiser Family Foundation: This new issue brief focuses more about the non-COBRA options, but COBRA is included as well, and the brief gives an overview of how the various pieces fit together.
  • Politico: Susannah Luthi explains why insurers – and many unions – like the COBRA approach.
  • The Intercept: This piece by Akela Lacy and Jon Walker criticizes the move to use federal dollars to shore up a profitable industry, although the industry probably will take a hit with millions of workers losing coverage.
  • NPR: This story by Dan Gorenstein and Leslie Walker offers a fairly detailed discussion of COBRA and relevant history from the 2008-09 crash.

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