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Health Insurers Welcome COBRA Subsidy, Leery of Privacy Rules
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| Copyright: | A.M. Best Company, Inc. | | Source: | BestWire Services | | Wordcount: | 585 |
The federal government would subsidize up to 65% of COBRA health insurance payments for many individuals who have lost their jobs since Sept. 1, 2008, under an $825 billion stimulus package unveiled by House Democrats.
COBRA provisions are supported by health insurance groups, including America''s Health Insurance Plans and the National Business Group on Health. However, AHIP said other parts of the plan tying increased investment in health information technology to stricter scrutiny of how health IT records are handled would make it more difficult for plans to coordinate care and streamline administrative costs.
Dubbed the American Recovery and Reinvestment Act, the House bill allocates $39 billion to aid individuals attempting to continue paying health insurance premiums through the 23-year-old Consolidated Omnibus Budget Reconciliation Act program. COBRA allows employees who are terminated or leave their jobs voluntarily to remain in their former employer''s group health plan for up to 18 months, which can be extended to 36 months for those with extenuating life circumstances.
However, because COBRA enrollees can be charged up to 102% of the full cost of coverage, many find the plans prohibitively expensive and, according to Hewitt Associates Inc., only about 20% enroll. A recent report by the consumer group Families USA found monthly COBRA premiums for family coverage were $1,069, or 83.6% of the average monthly unemployment insurance benefit of $1,278. In nine states, average COBRA payments exceeded unemployment benefits, the group found.
Health groups have been largely supportive of the proposal, with AHIP President Karen Ignagni writing in a letter to House Speaker Nancy Pelosi that the group believes the move would "help ensure continuity of coverage and serve as an important lifeline for many workers who do not qualify for Medicaid, but still need help paying their health insurance premiums."
"Recognizing that Congress will be addressing comprehensive health care reform in the coming months, it is critically important to ensure that we maintain a strong employer-based system as the foundation for broader reforms that expand health insurance coverage to all Americans," Ignagni wrote. "Focusing on COBRA improvements at this time will help achieve this goal and, at the same time, address the immediate priority of providing health care assistance to unemployed workers in a timely and efficient manner."
The NBGH, which represents large employers, also voiced support for up to two years of COBRA subsidies, and suggested Congress consider permitting separated employees to choose one of their former employer''s less expensive packages, rather than being locked in to their current plan.
"Congress intended COBRA coverage to provide temporary assistance and it should not be regarded as a source of long-term coverage. Nor should the implementation of federal COBRA subsidies increase employers'' costs to administer health benefits," the group said in a statement.
However, AHIP did raise concerns about some of the strings it said were attached to the stimulus bill''s $20 billion investment in health IT. While noting that "investing in health information technology will make the health care system safer, more efficient, and more effective," Ignagni warned that provisions that would tie the funds to privacy controls much more restrictive than those already required by the Health Insurance Portability and Accountability Act could be counter-productive.
"If Congress enacts provisions that inhibit the secure exchange of health information, it will turn back the clock on efforts to coordinate patient care, improve health care quality, promote prevention and wellness, conduct comparative effectiveness research, and streamline health care administration," Ignagni said in a statement.
(By R.J. Lehmann, Washington bureau manager: raymond.lehmann@ambest.com)
This is a news service of Thomson Business Intelligence Service ©2006. This content is for your personal use only, subject to Terms and Conditions. No redistribution allowed.
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