If you’ve ever lost a job that had employer-sponsored health insurance as a benefit, you probably know about COBRA, the 1985 law that made it possible to continue insurance coverage for a period of time (theoretically, until you found another job with health benefits) by paying both the employer and employee share of premiums — though not a lot of unemployed people had that kind of money stashed. During the Great Recession, President Obama’s stimulus legislation gave people in this situation a federal subsidy equal to 65 percent of total premium costs, which still left a hefty payment due.
Now, as part of their menu for a fourth coronavirus stimulus bill, congressional Democrats are talking about a 100 percent COBRA subsidy to benefit the many millions of workers who are in the process of losing jobs that had health insurance benefits, as Vox’s Ella Nilsen reports:
A new bill from House Democrats, previewed exclusively to Vox, aims to give laid-off or furloughed workers a way to stay on their health insurance plan at no extra cost to them — through increased subsidies with the existing health insurance plan COBRA …
House Democrats’ bill would expand COBRA to cover 100 percent of the cost of a person’s health insurance premiums. Importantly, it would also cover 100 percent of premiums for furloughed workers — temporarily laid-off workers whose employers have promised they will return to work when economic conditions improve, and who still get health insurance through their employer.
The idea is to complement the expanded unemployment insurance in the last big stimulus bill with the COBRA subsidies so that these same laid-off (or furloughed) workers can keep their health insurance. Though it’s unclear whether Republicans can be induced to support it, using COBRA is the least disruptive approach available (allowing people to maintain existing provider networks and ongoing treatments) and sets no precedents for expanded public control of health insurance (unlike, say, a big Medicaid expansion). You have to figure the private insurance companies who will receive the subsidized premiums would lobby their Republican friends on its behalf as well, and that the unemployed who are its intended beneficiaries would swallow their misgivings (e.g., high co-pays and deductibles) about the insurance they are losing and applaud.
According to Nilsen, this proposal will soon be unveiled as House legislation, with a Senate counterpart to follow, but the path to implementation is to make subsidized COBRA a key part of Democratic demands in the ongoing stimulus negotiations. It’s unclear whether Democrats will try at the same time to expand insurance for unemployed Americans who did not have decent employer-provided insurance, via Medicaid or the Obamacare networks, but that would make both economic and political sense. And perhaps the cost and complexity of keeping the whole rickety system in place during a pandemic and a deep recession will, in the longer term, build support for a simpler system like Medicare for All or some other form of universal health coverage.