Posted on : June 22, 2010 | By : Mona Lisa Vito | In : Politics
Obama administration officials and some Senate Democrats are optimistic that the federal subsidy of COBRA benefits passed by the economic stimulus bill will be extended by inserting a provision to this effect into the “extenders” package of jobless benefits working its way through the Senate this week. This bill is co-sponsored by Senators Bob Casey Jr. (D-PA) and Sherrod Brown (D-OH). As discussed in my last post here, it is estimated that over 2 million families who would have lost their employer-sponsored health insurance as the result of a lay-off took advantage of the COBRA subsidy. Instead of losing their coverage, COBRA has allowed them to keep their previous employer’s health insurance and the federal government’s subsidy has paid for 65% of the total cost of maintaining that coverage. This subsidy was a huge help for families who otherwise would have had to assume 100% of the total cost of premiums (including the portion their employer used to pay) to maintain their coverage under COBRA.
As of June 1, 2010, the 15-month COBRA subsidy has expired for those who took advantage of it when it first became available in February 2009. The National Employment Law Project estimates that more than 144,000 households each month will be dropped from the subsidy as these families hit their 15-month mark. Many families whose COBRA subsidy has not yet expired hope the Senate will pass this extension of the COBRA subsidy beyond the 15 month mark so that they can continue paying just 35% of the total cost of their previous employer’s insurance premiums and keep their old coverage. Here are five reasons why I don’t think an extension of this subsidy will make it into the final jobless benefits package which should come to a vote this week:
1) Centrist House Democrats rejected a similar proposal to extend COBRA subsidies in May 2010 because of concerns about continuing to run-up the national deficit.
2) Last week, the non-partisan Congressional Budget Office evaluated the Senate’s trimmed down version of the proposal which is in currently in the works. Extending the COBRA subsidy again is estimated at $4.1 billion, which is much higher than supporters had anticipated.
3) Congress already extended the subsidy once in November 2009, allowing COBRA beneficiaries to continue receiving the 65% subsidy of their total premium cost for a maximum of 15 months. The original subsidy as passed in the American Recovery and Reinvestment Act of 2009 was set to expire after 9 months.
4) There are few other areas of the bill from which co-sponsors Sens. Bob Casey Jr. (D-PA) and Sherrod Brown (D-OH) can pull funds for the subsidy. The subsidy extension is only part of a package of provisions the Senators are trying to attach to the must-pass legislation. Their whole package has a total cost estimated at nearly $7 billion. Other parts of their provisions would extend unemployment benefits and make changes in dozens of federal programs, and these are not areas from which the senators could easily justify cutting funding in order to make room for another COBRA subsidy extension.
5) A similar proposal to extend the COBRA subsidy was dropped from the House-passed bill. Additionally, Senate Democratic leaders omitted it from their version when the bill was originally drawn up.
Unfortunately, it seems that given the strained economy and need for budget-consciousness in Washington families who have relied on the federal subsidy to keep their coverage under COBRA will have to reevaluate their options.