COBRA Articles

There's no question about it – the last few years have been rough. Millions of Americans have been hard hit and have lost their jobs through no fault of their own. Bankruptcy, depression and foreclosure are just a few items on the long list of recessionary troubles. Unemployed or not, it seems no one has escaped the economic crisis unscathed.

Even when times are tough, we can still be thankful for many things. In addition to being thankful for my health, family, friends and happiness, I'm thankful that lawmakers back in 1985 had the foresight to enact COBRA to help people keep their private insurance. I'm also thankful that today's lawmakers stumbled upon a program that appears to be a HUGE success – the recent ARRA COBRA subsidy. The subsidy paid for 65 percent of healthcare premiums for up to 15 months, reducing the cost of COBRA from about $13,500 to $4,725 for a typical family. Interestingly, it was so restrictive by design that it appears it actually worked. Only people who had no access to other care benefited from the program.

Was ARRA effective? It was. Results from two new reports show unemployed workers made considerable use of COBRA continuation coverage with the help of the ARRA subsidy. The first report (Department of the Treasury, June 2010) indicates that more than 2 million households were helped at a cost of roughly $2 billion for the program. In short, each household received an average of $1,000 in assistance. Enrollment was especially high among those with middleclass and higher incomes. Around 80 percent of individuals who made use of the ARRA COBRA subsidy were from households with annual incomes between $30,000 and $134,000 (U.S. Treasury Department of Economic Policy, COBRA Insurance Coverage Since the Recovery Act: Results From New Survey Data, 2010).

Although ARRA was messy to administer, I'm not thankful it has ended. In September, the Census Bureau announced that our overall poverty rate climbed to 14.3 percent. The share of Americans without health coverage rose from 15.4 percent to 16.7 percent – 50.7 million people – mostly because of the loss of employer-provided health insurance during the recession.

Absent the subsidy, COBRA healthcare benefits consume more than 50 percent of the laid-off worker's monthly unemployment payment, making it even more difficult to make ends meet. Enrollment rates will likely decline over time as workers can't or aren't willing to afford the high premiums. Unfortunately, it's also likely that some will forgo health insurance altogether. The National Employment Law Project estimates that since June 1, 144,000 individuals and families per month have lost out on the subsidy. It's a sad situation for the unemployed, but it's also a sad situation for taxpayers. When these unemployed people become sick, taxpayers will foot the bill for their treatment, and it won't be cheap. We know uninsured Americans are less likely to have regular healthcare or use preventive services. They are more likely to delay treatment, resulting in more medical crises. In addition, a 2001 study in five states found that medical debt contributed to 62 percent of all personal bankruptcies (Medical Debt Huge Bankruptcy Culprit Study: It's Behind Six-in-Ten Personal Filings).

As a taxpayer, what would you prefer? Is it smarter to pay a portion of insurance premiums for one million unemployed people, or is it smarter to pay for their uninsured medical bills over the long term? Is it really a good idea to end COBRA ARRA assistance while poverty rates are hitting all-time highs? There surely has not been much done well in Washington lately, but this was a program that had merit – especially if the goal was to reduce the number of uninsured individuals prior to 2014.

Regardless of political bent, it's refreshing to see the subsidy was actually a proactive, cost-controlling measure. That's why I'm telling everyone I know ..., give thanks for COBRA and give thought to the subsidy. It's the right thing to do for our nation's citizens and for our nation's pocketbook.

Robert Meyers has more than 25 years of experience in business management and COBRA. He is the founder and president of Kansas-based COBRA administrator COBRAGuard. For questions or more information, please visit www.COBRAGuard.net or email Robert at robert.meyers@cobraguard.net.