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Friday, May 28, 2010

Why Americans need COBRA

Colleen Haller

Staff Writer

Over the last few months, the newly enacted health reform law has dominated most discussions about the health care system. Given the historic nature of the new law, it’s easy to see why. However, there are other important areas of the health care system that also need attention, such as COBRA.

COBRA is a program that allows workers to continue their employer health coverage for a limited time after they leave a job. It is a vital safety net for thousands of families across the country, especially during times of economic uncertainty. However, COBRA coverage tends to be expensive—workers pay the full share of their premium and an administrative fee, without a contribution from their employer—and many Americans are unable to afford the premiums.

When Congress passed the American Recovery and Reinvestment Act last year, they included a subsidy for laid-off workers to help pay their COBRA premiums. The subsidy, which covers 65 percent of the cost, has proved to be an important lifeline for the unemployed across the country. Unfortunately, it was temporary and needs to be reauthorized. After passing some short-term emergency funding, it is now time for Congress to pass a long-term extension of the subsidy to prevent workers from losing their health coverage.

Families USA recently released a brief entitled: COBRA Assistance: A Lifeline for America’s Uninsured, which discusses a recent report released by the Department of the Treasury on the effect of the COBRA subsidy, using New Jersey as a case study.

The report found that laid-off workers made considerable use of COBRA—estimates are that between one-quarter and one-third of workers eligible for the subsidy took advantage of it. The subsidy has been an essential component of expanding the use of COBRA, making it more attainable for workers across the board, especially middle-class workers. Without the subsidy, COBRA coverage would consume 83.4 percent of a family’s monthly unemployment check, on average. That leaves just over 15 percent for other fundamental necessities such as rent, food, and clothing. Most family budgets just aren’t able to handle that kind of financial burden for health insurance. The subsidy helps COBRA coverage to be a more manageable expense.

It’s time for Congress to move on the COBRA subsidy. Without it, we leave thousands of Americans without the health coverage they need.