Families USA report on COBRA
Squeezed! Caught between Unemployment Benefits And Health Care Costs
Families USA
January 2009
By November 2008, more than 2.7 million people had joined the ranks of the unemployed since the recession began in 2007, and 10.3 million people were unemployed. Many of those people (and their families) lost their health coverage when they lost their jobs.
Some workers who had insurance through their former employers may be able to continue to purchase the same coverage — but they must pay the full cost out of their own pockets. This continuation coverage, called “COBRA” (from the Consolidated Omnibus Budget Reconciliation Act of 1986), could provide a vital health care lifeline for many families. Unfortunately, for most individuals and families, the cost of this coverage is prohibitively high, especially when compared to average unemployment benefits.
$1278 - Average monthly unemployment income
$388 - Average COBRA premium for an individual
30% - Premium as a share of unemployment income
$1069 - Average COBRA premium for a family
83% - Premium as a share of unemployment income
Conclusion
As our nation faces a severe recession, growing numbers of unemployed workers and their families are coping with the loss of health insurance. The short- and long-term physical and financial consequences of such a loss can be devastating. COBRA continuation coverage can be a crucial health lifeline for newly unemployed workers. But while many workers have the right to purchase such coverage, the cost is often prohibitively high. To make COBRA coverage truly affordable, a meaningful subsidy should be provided to recently unemployed workers. For those who do not have a COBRA coverage option, Congress should provide a temporary Medicaid benefit to recently unemployed, low-wage workers.
http://www.familiesusa.org/assets/pdfs/cobra-2009.pdf
Comment:
By Don McCanne, MD
Families USA has continued to be a source of highly credible studies demonstrating the severe deficiencies in health care financing in the United States. A prime example is this study of COBRA benefits. Although the intent of COBRA was to allow individuals and families to maintain their employer-sponsored coverage after losing their jobs, this study demonstrates that this is yet another failed policy as unemployed individuals are unable to pay for that coverage.
Unfortunately, the conclusion of this study also represents yet another inadequate policy recommendation of Families USA. The obvious conclusion is that health insurance must be automatic, for life, and comprehensive enough to prevent financial hardship regardless of income or health status. Instead, Families USA would leave this flawed COBRA program in place, and merely tweak it so that a few of the 46 million uninsured could receive coverage. Temporary Medicaid? Come on!
It is no secret that PNHP and Families USA have had their differences. The leadership of PNHP has demonstrated that a single payer national health program would provide affordable health care for everyone throughout life. The leadership of Families USA has continued to insist that single payer is not feasible, and that reform must occur in incremental steps - increments such as subsidies for COBRA benefits.
We have been following for decades their preferred course of incremental reform, and all parameters are worse. We have an outrageously expensive system with increasing numbers of uninsured and underinsured, and ever greater financial hardship for those individuals and families with health care needs. Of nineteen industrialized nations, we have the worst rate of amenable mortality (premature deaths which are preventable). Incrementalism has been a cruel, miserable policy failure in the United States.
The leadership of Families USA understands this. Thus for the past decade they have supported “strange bedfellow” coalitions, bringing together organizations that traditionally have been at odds on the reform issues. Each of these efforts has been introduced with considerable fanfare, with the obligatory statements from each participating organization to the effect that finally we are coming together to fix our health care system.
What happens? Behind the scene the opponents of reform continue to sabotage the efforts. The opponents are using the reputation of Families USA to burnish their own tarnished images, while gaining additional years before they must face the inevitability of a bona fide national health program.
The opponents will never support a program that is contrary to their selfish interests or their right-wing ideology. NEVER!
For those who believe that we are close to bringing all interests together on reform, think about this. The leading reform proposal is based on private health plans which everyone knows are no longer affordable, and the Republicans will never approve an adequate “tax on the rich” that would be needed to pay for those plans. The supporters also have recommended the creation of a public insurance option which individuals could purchase (even though it wouldn’t be affordable either). Yet the opponents have blasted the proposal because it is an incremental step towards single payer. AHIP, USCOC and some of the Senate Republicans have made it clear that this is a non-starter.
Forget incrmentalism! Forget sleeping with the enemy!
Ronny, sorry, but what you’ve been doing just hasn’t worked. It’s time for you to get up out of that bed and join us in our crusade for the real thing - health care justice for all.
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Note of Clarification: What is the fundamental disagreement? One side wants an affordable, high-quality health care system that really does include everyone. The other side is opposed, either because of anti-egalitarian ideology or simply because of selfish self-interest. That is where the battle must take place.
The debate over an incremental versus comprehensive strategy for reform has been an unfortunate digression that has splintered one side - the supporters of health care justice. PNHP, Families USA, UHCAN, Healthcare-NOW!, Health Care for All, the HCAN coalition, and all of the other individuals and organizations that share the common goal of health care for everyone must unify in support of truly comprehensive reform that does not compromise on the policies that will get us there. This goal must have precedence above all others and must represent the primary thrust of our efforts.
That does not mean that there is no place for incremental measures. The Children’s Health Insurance Program (SCHIP) is an incremental measure that must be renewed and expanded immediately, but only as an urgent, temporary measure until we can enact a comprehensive program for everyone, including children.
It is absolutely crucial that we all pull together now, pulling out all the stops, especially while we are in this political window. Once we have a comprehensive system, the incrementalists can have a field day tweaking the inevitable glitches in the system.