By Melissa Attias, CQ Staff
JANUARY 23, 2009 -- A new Commonwealth Fund report found that only 9 percent of people who lost their jobs continued their health insurance under the Consolidated Omnibus Budget Reconciliation Act (COBRA) in 2006.
The report, "Maintaining Health Insurance During a Recession: Likely COBRA Eligibility," found that laid-off employees need assistance paying 75 percent to 85 percent of their COBRA premiums in order for their premium contributions to remain at the level they paid while they were working.
"Americans are losing their jobs at an alarming pace and this report clearly shows that many people cannot afford to take on the expense of COBRA just as they lose their income," Commonwealth Fund President Karen Davis said in a news release.
Two House committees on Thursday approved sections of an economic stimulus bill that, among their provisions, would require government to subsidize 65 percent of COBRA premiums for up to 12 months. The Senate Finance Committee's stimulus measure would require the government to subsidize 65 percent of the COBRA premium--the same as proposed by the House--but only for nine months.
According to the Commonwealth report, 66 percent of all current workers will be eligible to extend their health insurance under COBRA if they are laid off. Because COBRA payments are roughly four to six times higher than the amount of money workers contribute to their health insurance while they are employed, however, they would be unaffordable for most.
The analysis finds that millions of the eligible workers could continue their coverage under COBRA if they received assistance paying their premiums, which average $4,704 a year for an individual and $12,680 a year for a family.
The report also shows that only 38 percent of low-wage workers are eligible to receive COBRA benefits because they are uninsured, do not receive health insurance through their jobs or work for small firms that are not required to offer COBRA.
To enable these low-wage workers to support their families, the authors of the report recommend extending Medicaid and the State Children's Health Insurance Plan (SCHIP) eligibility to unemployed, low-income adults with assistance for premium shares.
"The number of uninsured Americans could grow markedly during this recession unless we take action to help unemployed Americans keep their health care coverage," Davis said in the news release.
The House Ways and Means Committee approved legislation (HR 598) that would require government to subsidize 65 percent of COBRA premiums for up to 12 months. Additionally, people 55 and older or those with 10 or more years of tenure at their jobs would be able to continue COBRA coverage until they either find a new job offering health coverage or reach age 65, when they can enter Medicare.
In a letter Thursday to Ways and Means leaders, the National Business Group on Health (NBGH), which represents many of the nation's biggest corporations, voiced support for temporary subsidies but expressed concern that the House legislation goes too far in extending COBRA eligibility.
NBGH President Helen Darling said in the letter that long-term extensions of COBRA are likely to significantly raise health costs for employers and those still employed, as well as increase the administrative burden on employer plans.
"COBRA is the wrong vehicle to assist the uninsured on a permanent basis," Darling said in the letter. "Rather, NBGH believes that Congress should focus on improving the quality of care and offering more affordable health care choices to reform our nation's broken health care system."
The House Energy and Commerce Committee approved a measure (HR 629) that would require that an employee only pay for 35 percent of the premiums, instead of the usual 100 percent. The benefit would last up to 12 months for workers who have been involuntarily terminated and would apply to their families as long as they elect to get COBRA coverage. Any COBRA-eligible workers 55 years old and older, or who have worked for an employer for at least 10 years, would be able to keep their COBRA coverage at their own expense until they become Medicare eligible at age 65 or secure coverage through a new employer.