low COBRA response may trigger health insurance requirement

Kim Morris | March 17, 2009

CNN news today reports that more than half of people in the U.S. without health insurance are not eligible for COBRA. Of the minority who are eligible, only about 9% select the COBRA option. These tend to be those with the greatest health care costs and serious ongoing medical conditions according to COBRAplan.com. We do not know how the federal subsidy will affect the numbers who opt for coverage, but we suspect that the small response to the 65% COBRA subsidy will surprise lawmakers and hopefully underscore the need for a health insurance requirement. Based on our experience and published statistics for other non-COBRA plans, it would be safe to assume that most people who are eligible for the 65% subsidy will not enroll for coverage. The combined effects of losing employment income, the high price of this type of health care and the limited benefits of COBRA policies (usually including a high deductible) make this an unattractive option even if the government is paying 2/3 of the cost.

The only measure proven effective in significantly increasing the number of people covered is a law that requires health insurance. Currently Massachusetts is the only state that requires everyone to maintain health insurance. Polls throughout the rest of the country show that public opinion is evenly divided on this measure. If, in fact, the COBRA subsidy turns out to be a dud, then we may need to address the tougher issue of a health insurance mandate if we expect to make further progress in solving the health care crisis.

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