There are few new ideas when it comes to ways to help those without health insurance gain coverage. But there is one included in the economic stimulus bill now working its way through Congress: providing subsidies to help those recently laid off afford to continue their job-based health insurance.
The idea is to help people take advantage of a program known as COBRA continuation.
COBRA is named for the 1986 budget bill that originally created the option for those who lost or left their jobs to keep their employer-provided health coverage for up to 18 additional months — if they paid the entire premium themselves.
Lose A Job, Pay For Health Care
But the program doesn't get used much — less than 10 percent of those eligible took advantage of the chance to keep their employer coverage when they left their jobs in 2006, according to a recent report from the Commonwealth Fund.
That's almost always because of the high cost, says Karen Pollitz, a research professor and health insurance expert at Georgetown University. Typically, she says, "the combination of losing the employer subsidy" for health insurance premiums "plus losing your job means the sticker price for COBRA is too much."
Yet experts agree that COBRA coverage is often the best health insurance available.
"It gives you continuous coverage, so there are no exclusions, no waiting periods, things like that," says Helen Darling, president of the National Business Group on Health, which represents large employers. On the other hand, she says, "If you've lost your job, you probably can't afford even half of COBRA."
When COBRA Costs Too Much
That's exactly what happened to the Hicks family of Warren, R.I. — and with dire consequences.
Bill and Bernadette Hicks are the parents of nine children — two biological and seven adopted out of foster care. Bernadette Hicks says it was never their intent to have such a large family but that "out of the 35 or 40 children that have been in our home, seven never went home; they just stayed."
Until two years ago, the family was getting along fairly well. Bill Hicks owned his own business, repairing and sealing driveways. Bernadette was a nursing home administrator. The family was covered by insurance from her job. Then the nursing home closed, and she lost her job.
"It would have cost us over $800 a month for the COBRA," she said. "There was no way we could come up with that kind of money."
Luckily, the children were eligible for Medicaid. But she and Bill, who has diabetes, opted to go without insurance and prayed they wouldn't get sick.
Sick Without Health Insurance
Their prayers weren't answered. In February 2008, Bill suffered a cerebral hemorrhage. He was hospitalized for five days, "and it was only five days in the hospital because I talked them into letting him come home because we had no coverage," Bernadette says.
She was told to bring him back to be checked in two weeks. But when she called the hospital's outpatient clinic to make an appointment, she was told the next one available wasn't until June. A month later, Bill had another stroke. Now the Hickses have more than $100,000 in unpaid medical bills and still no health insurance.
Looking back, Bernadette Hicks says if the COBRA coverage had been perhaps only $300 per month instead of $800, she would have jumped at it.
"Three hundred [dollars] is so much better than $800," she says. "Eight hundred dollars for a family like mine is like a national debt. But bringing it down to $300, you can manage that so much better."
Short-Term Fix: Subsidizing COBRA
And that's exactly what Congress is hoping to do in the stimulus bill. The House version of the bill would provide a 65 percent subsidy to purchase COBRA coverage for workers who have been laid off from their jobs since last September. The subsidy would last for up to 12 months or whenever they get a new job with health coverage. The Senate version of the bill also includes a 65 percent subsidy retroactive to last September, but only for nine months.
The business community is cautiously supportive of the subsidies, as long as they are short-term.
"It is something that works and people are familiar with," says Darling of the National Business Group on Health. "And, as often happens in a crisis, you want to find mechanisms that are easy to execute, that can be done quickly."
But backing for the idea is not universal. Tom Miller, of the conservative American Enterprise Institute, says he would prefer giving people the option of buying a more bare-bones policy when they lose their job, rather than helping them keep their gold-plated employer-sponsored plans.
He also says that it's a myth that people who take COBRA don't affect the insurance pool for the rest of their former company, unless it's a very, very large firm.
Because COBRA is so expensive, "the only people who will take it are those who are most likely to need the insurance," Miller says. "You don't get healthy people who can get by [without it] signing up for COBRA coverage."
Still, as a stopgap measure, providing COBRA subsidies has fairly broad support as a way to prevent the number of uninsured Americans — now in the neighborhood of 46 million — from ballooning even more as the economy weakens still further.