Stimulus Update: Read It and Weep
This is from Sarah Rubenstein, writing in the Wall Street Journal:
COBRA: The bill provides for subsidies for 65% of laid-off workers’ premiums for COBRA for up to nine months, at an estimated cost of $24.7 billion. Gone from the bill is a House proposal that would have lengthened the Cobra coverage for laid off workers who are 55 and older or had worked for their employer for 10 years or more. Under that proposal, those workers would have been able to stay on Cobra until they qualified for Medicare or got coverage through another employer’s plan.
Medicaid: Another casualty is the House’s proposal to allow unemployed workers to qualify for Medicaid regardless of their income or assets – an idea that Republicans had criticized. But the bill still has $87 billion in funding to help the states pay for their Medicaid programs.
Health care is toward the end of the document. The Kaiser Family Foundation also offers a summary of health provisions.
Huge waste of money. Even the CBO (which is controlled by Democrats,right?) says in the long run the stimulus package will do more harm than good.
It is good that the COBRA expansion was scaled back. It was going to encourage employers not to offer health insurance at all.
The ‘finance.senate.gov’ link seems to be broken.
It’s a relief to know that over-50 workers are still marginally employable, but the 65-percent tax credit is still excessive. It’s also unfair to the workers who are not eligible for COBRA for various reasons:
– your employer has fewer than twenty employees,
– your employer went out of business or dropped all health coverage,
– you never had employer-sponsored insurance to begin with,
– you were laid off before the tax credit became available and allowed your COBRA eligibility to lapse in the belief that it would be too expensive.
As for the notion that COBRA is ‘brutally expensive’, I suppose it depends on your point of view. It’s exactly the same insurance as the employee received before being laid off. Because employers are trying to cut costs, the tendency is toward stingier plans with higher deductibles and thus closer to what an individual would purchase with after-tax dollars. But since these are group plans, additionally subject to anti-discrimination laws (thus not segmented by sex). Additionally I think large, self-insured employers don’t even use age-banding. As a result,
– If you are young, male and have a clean medical history, COBRA is extremely expensive compared to private insurance.
– If you are older, female and/or have pre-existing conditions, COBRA may be extremely cheap.
– The first two points lead to adverse selection, leading to the third point of view: if you are a self-insured employer, COBRA is expensive in that received premiums will likely not cover actual costs due to adverse selection (a tax credit to replace the lost tax exclusion should help this).