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. Continue reading
On Prepared Patient Forum, AHCJ Immediate Past President Trudy Lieberman examined the fallout of the Friday House vote to toss a proposed extension of COBRA subsidies through the end of the year. The Senate has yet to vote on the extension, which Lieberman says would cost about $8 billion.
The up-to-65-percent subsidy had already been extended four times since it first passes in 2009. Lieberman says that without this latest extension all the unemployed Americans who have been relying on COBRA will be forced to wade into what she called the “insurance market jungle” to get quotes on the unsubsidized market. Lieberman even did a bit of bushwhacking of her own, wading into the online insurance market to see just what consumers are up against.
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.
In the Columbia Journalism Review, Trudy Lieberman, president of AHCJ’s board of directors, reviewed recent media coverage of the federal COBRA plan and its recent stimulus subsidy. She found the plan’s portability provision to be particularly under-covered and poorly explained. Under the portability program, COBRA customers who meet certain requirements are guaranteed to opportunity to purchase private insurance upon finishing the program, regardless of pre-existing conditions. Here’s her take on the provision:
Enrolling and staying on COBRA gives you protection and rights you otherwise wouldn’t have. Let’s say you have a medical condition and don’t get a new job that offers insurance—but you know you still need coverage. The law protects you only if you sign up and stay on COBRA for the full eighteen months the law allows. After leaving COBRA, you must apply for new health insurance in the individual market within sixty-three days. There are a few exceptions, but generally if you satisfy these two requirements, any company must sell you a policy regardless of any preexisting conditions you might have.
Some states, though, may send you to their high risk pools instead. If you don’t complete eighteen months of COBRA, or if you wait too long to apply for coverage, you’re out of luck. Insurers can turn you down for any reason — even if you were sick years ago and no longer have that medical condition. You may end up with no insurance at all.
One more thing: Even if an insurer agrees to sell you a policy, it can refuse to cover a condition you had in the past or have now.
A Commonwealth Fund analysis found that only 9 percent of laid-off workers took advantage of the COBRA program and that for many, the program was prohibitively expensive.