Health Insurance News

Sad news today America!  In what will most likely truly hurt many Americans, the subsidy to help laid-off workers afford and continue their health insurance ends today Wednesday, August 31st.  If you wonder how the long term unemployed will continue to afford their Cobra payments you are not alone.

Unlike the PCIP program which no one seems interested in, the COBRA ARRA subsidy literally subsidized millions of laid off workers enabling them to continue their health benefits.  The program began in February 2009 as part of the Federal Stimulus Package.  The program included a 65 percent subsidy for COBRA premiums for anyone laid off September 2008 or after.

Congress was nice enough to extend the COBRA subsidy three times to cover workers through May 2010.  Last year Congress opted not to continue the program because suddenly everyone is worried about the deficit.  Oh poor me, the deficit!  Is it better to have a marginally higher deficit that can be fixed in better times or have people not continue their health insurance and possibly die?  The subsidy lasted for up to 15 months so it expires Wednesday.   The only exception is for workers laid off before May 31, 2010 who were allowed by their employers to continue to receive their work-sponsored health coverage.  In that case their subsidy eligibility would begin when the company-paid insurance ended and could extend beyond Wednesday.   I only stress that for people that got nervous by my article because there is some people that can continue benefits.Obviously, consumer advocates this week were virtually crying in their muselix at the end of the subsidy, saying it will add to the burdens of people losing work.

“COBRA is a critically important benefit for people who lose their jobs,” said Ron Pollack, executive director of Families USA. “Unfortunately, it is a benefit that is unaffordable for the overwhelming majority of laid-off workers — and that’s why the end of COBRA subsidies will make continued health coverage impossible for their families.”

“The best-case scenario is that families who are already struggling and between jobs will have to pay more to stay insured, leaving less money for the other necessities of life,” he said.

Ideally the subsidy should have continued until the key benefits of the federal health law take effect in 2014. The law will prohibit insurers from denying coverage to people with pre-existing conditions and charging consumers higher premiums based on their health status.

In 2014, more than 30 million Americans will begin to gain coverage as a result of expansion of Medicaid, the state-federal insurance program for the poor and disabled, and subsidized coverage through new health insurance exchanges, or online marketplaces.

When originally passed, the bill made $25 billion available for the subsidies and analysts estimated the program would aid more than 7 million laid-off employees and dependents nationwide.

Studies vary on just how many people were helped.  One consulting fir reported in 2009 that COBRA enrollments had doubled, from 19 percent of eligible individuals to nearly 40 percent. In contrast, Ceridian, which administers the COBRA benefit for many employers, found that COBRA enrollment increased from 12.4 percent to 17.7 percent.

The Treasury Department last year reported that up to a third of eligible unemployed workers took advantage of the subsidy—helping as many as 2 million households at a cost of $2 billion in 2009. But the nonpartisan Employee Benefit Research Institute questioned that figure, suggesting it was likely inflated because employers may have counted the same worker twice.

What is not disputed is that the COBRA subsidy made a big difference in the price of coverage. The average price for family coverage is about $1,137 a month, according to the Kaiser Family Foundation. With the subsidy, COBRA coverage costs an average of $398.