JONATHAN COHN AUGUST 31, 2011
Some Americans who lost their jobs in the recession are about to lose something else: Their access to affordable health insurance. And it's thanks to the same backwards thinking that's preventing broader action to boost the economy.
Ever since February, 2009, the federal government has been subsidizing COBRA premiums. COBRA is the program that allows people to keep their job-based insurance even when they lose their jobs. The premiums tend to be very expensive, particularly for people out of work, so the subsidies make a big difference.
Studies vary on just how many people were helped. Hewitt, an employee benefits consulting firm, reported in 2009 that COBRA enrollments had doubled, from 19 percent of eligible individuals to nearly 40 percent. In contrast, Ceridian, which administers the COBRA benefit for many employers, found that COBRA enrollment increased from 12.4 percent to 17.7 percent.
The Treasury Department last year reported that up to a third of eligible unemployed workers took advantage of the subsidy—helping as many as 2 million households at a cost of $2 billion in 2009. But the nonpartisan Employee Benefit Research Institute questioned that figure, suggesting it was likely inflated because employers may have counted the same worker twice.
What is not disputed is that the COBRA subsidy made a big difference in the price of coverage. The average price for family coverage is about $1,137 a month, according to the Kaiser Family Foundation. With the subsidy, COBRA coverage costs an average of $398.
Offering COBRA subsidies, like extending unemployment insurance, is the kind of anti-recessionary action lawmakers once undertook without hesitation. And when the initial subsidy program was set to expire, Congress renewed it through the middle of 2010. But while yet another renewal had support from both President Obama and key Democratic leaders, including then-Speaker Pelosi, Republicans and some conservative Democrats opposed it because it would increase the deficit.
And that's true: It would have increased the deficit by several billion dollars, depending on the length of the extension, although centrists and conservatives showed no enthusiasm for proposals that would have offset the cost with other spending cuts or tax increases. But even if extending COBRA would have increased the deficit, it would have been money well spent -- providing a (very very) mild boost to the economy while making it easier for people to get health care. As a recent Commonwealth Fund study demonstrated, people who lost insurance during the downturn have been much more likely to postpone or skip recommended medical treatments.
Of course, this is becoming an old story. Millions of Americans are struggling. And Congress, in the name of austerity, is doing its very best not to help them.
Note: This shouldn't be such a problem after 2014, once the Affordable Care Act takes effect. That law will make it possible for the unemployed to get affordable, comprehensive insurance with subsidies for those who need them.