COBRA Bites

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This provision of health law is named all too aptly. COBRA allows laid-off workers to keep their insurance for up to 18 months—if they pay all the costs.

Since health insurance costs average about $28,000 for a family of four, and employers cover most of the costs of employer-provided plans, the chances of laid-off workers coming up with that kind of cash are slim. About 10 percent of eligible workers actually use COBRA.

The Obama-era Recovery Act provided tax credits of up to 65 percent of the costs of COBRA coverage. But that has expired.

That’s why Congress was quick to cover health insurance costs for laid-off workers in its recent rescue package. Oh wait, Congress didn’t do that. (It did, however, find $170 billion for real estate developers and hedge funds.)

Thus, workers who lose their jobs usually lose their health insurance, too. And the enhanced unemployment benefits in the CARES Act are barely adequate to make ends meet without the added costs of health insurance.

The Economic Policy Institute estimates that over 12.7 million workers lost employer-provided health insurance as of April 30, and that number is sure to rise.

Legislation has been proposed to have the next rescue bill cover this gap, and pick up most of the cost—not just of the laid-off workers who had health insurance from their jobs, but of those who did not. You’d think this would be a priority for Democrats, but it did not make it into any of the first four relief bills.

Drilling down further, the COBRA mess is another window on the larger travesty of the American health insurance system. Covering COBRA costs would be a patch on a patch on a patch. If people did not get their insurance from employers, you wouldn’t need the wretchedly conceived and designed COBRA, nor would you need Congress to appropriate emergency funds to cover COBRA costs.

Single-payer, anyone?

COBRA, by the way, stands for a provision of the 1986 Consolidated Omnibus Budget Reconciliation Act. (Who said policy wonks didn’t have the souls of poets?)

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