Some members of Congress are urging action to expand a program that allows laid-off workers to keep their health coverage at a reduced rate because the subsidy is set to expire as soon as Dec. 1.
Some senators propose extensions to the subsidy
Last week, five Democratic senators sent a letter to Senate leaders asking them to take action on a bill that would keep alive the COBRA premium assistance program, established as part of the $787 billion federal stimulus law signed by President Barack Obama in February.
COBRA, a program named for the health benefits provision of the Consolidated Omnibus Budget Reconciliation Act of 1986, allows workers who leave their jobs to retain their employer-sponsored health benefits for up to 18 months if they pay the full cost of the benefits.
The COBRA premium assistance program, included in the stimulus act, provides a 65% subsidy for that cost of coverage. So the unemployed pay just 35% of total premiums, while the federal government picks up the rest. The subsidy is available for up to nine months to most workers laid off Sept. 1, 2008 through Dec. 31, 2009. The stimulus act appropriated $25 billion for this program.
Unless Congress acts quickly, anyone who signed up for the subsidy starting in March—the earliest it was available—will see it lapse this week as the nine-month timeframe ends. “We desperately still need it,” said Maurice Emsellem, policy co-director at the National Employment Law Project. “We have way more people unemployed for a much longer period of time than anytime in recent history.” The National Employment Law Project estimates that by March, about 3 million laid-off workers will no longer have unemployment benefits. As of October, the unemployment rate was 10.2% nationally, and about 5.6 million people have been out of work for 27 weeks or longer, according to the U.S. Labor Department.
Members of both the House and the Senate have introduced bills in recent weeks to roll the COBRA subsidy over to next year. These bills are not part of Congress' major healthcare reform proposals. The Extended COBRA Continuation Protection Act of 2009, introduced by Rep. Joe Sestak, (D-Pa.), would extend the subsidy for another six months. Anyone laid off prior to June 30, 2010 could apply for the benefit.
A similar Senate bill would do more. Called the COBRA Subsidy Extension and Enhancement Act of 2009, the legislation would boost the subsidy to 75%, meaning individuals would pay just 25% of the cost of the total premium for coverage.
Without continued premium assistance, more laid-off Americans will become uninsured in the coming months, warned five Democratic senators in a letter sent Nov. 23 to Senate Majority Leader Harry Reid (D-Nev.), and Senate Minority Leader Mitch McConnell (R-Ky.). “With millions of Americans no longer receiving employer-subsidized health insurance through work, it is imperative that we do all we can to limit the rise in the newly uninsured—and the subsequent increase in uncompensated care and Medicaid enrollment that would surely follow,” the senators wrote. The letter was signed by Sens. Sherrod Brown (D-Ohio), Robert Casey Jr. (D-Pa.), Al Franken (D-Minn.), Robert Menendez (D-N.J.) and Sheldon Whitehouse (D-R.I.).
It is unclear how many qualified unemployed are taking advantage of the COBRA subsidy. The Internal Revenue Service has not yet released figures. Major health insurers report that the number of members on COBRA have doubled since the subsidy began. Ceridian Benefits Services, the nation's largest administrator of COBRA benefits, reported that about 18% of eligible workers signed up for COBRA after the subsidy began, up from about 12% previously, according to a report released in October. However, Hewitt Associates estimated that about 38% of eligible Americans signed up for COBRA after the subsidy began, up from 19% previously.
“The need for this is great,” Sen. Casey said on a call with reporters last week.
—with Matthew DoBias
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