TheLoop21.com

By: Alyssa Giachino (Add to your loop)
Thu, 12/31/2009 - 01:00

No insurance? There's always the emergency room.

The 11th-hour extension of the Cobra insurance subsidy this month will certainly help some people, but it does more to underline how broken the health care system is— and how the current reform is unlikely to be of much help.

People who are unceremoniously dumped by their employers, of which there are around 15 million currently, have had the option to extend their employer-provided health care.

For the last couple of decades, the Reagan-era Cobra program has allowed laid off workers to buy into their former company’s health plan. Under our current health care system, most people’s insurance is tied to their job, so the program made sense. But its usefulness has been gnawed down to virtually nil by the skyrocketing cost of premiums.

The Wall Street Journal reports that the average monthly Cobra bill for a family now gobbles up 83 percent of the average unemployment insurance check. Back in 2001, Cobra took up 61 percent of the monthly unemployment check. So if you don’t need to eat or have a place to leave, it works perfectly.

While health care reform was being debated last March, high unemployment prompted the Obama administration to create a 9-month subsidy for Cobra. The government pays 65 percent of the premium and the worker pays the remaining 35 percent. The first nine months of the program expired in November. But on Dec. 19, the subsidy was extended through February 2010. Recognizing that people are remaining unemployed for long periods, it was also expanded to allow people to buy in for an additional six months of coverage.

The current unemployment crisis has highlighted the inadequacies of such a program without cost controls on insurance. Without government subsidies, or major reductions in the cost of private health insurance, it’s virtually impossible for families or individuals to purchase their own insurance.
 
The “bending down” of the cost curve contemplated in the House and Senate reform bills are dubious, and if the reform passes at all, subsidies to help cover premiums are at least four years away. In the meantime, Cobra seems like the best lifeline for the jobless. But even with the government subsidy, for many, the reduced cost is still too much and they prefer to go without insurance altogether. The Wall Street Journal says that only half of the seven million eligible for the subsidy have tapped into it.

Also, Cobra doesn’t reach everyone. If your company went bankrupt, you are ineligible. Or if you were fired. It is only for people who were laid off. While we’re waiting for the final shape of health care reform, the Cobra subsidy is better than nothing.

If you can’t afford it, there’s always the emergency room.

Alyssa Giachino is an economics writer for TheLoop21.com. She has worked as a reporter in New York, New Jersey, Mexico City and California covering stories on labor, the environment, immigration and politics.