COBRA Subsidy To End Unless Congress Acts

Millions of people who lost their health insurance when they lost their jobs have benefited from an extension of COBRA benefits and subsidies to help pay for the usually expensive insurance. Congress is now likely to extend the subsidies for a few more months, but that wouldn't really solve the long-term problem.

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Getting laid off is one way to lose health coverage. Another is becoming less poor. In a moment, how a young woman who became the first in her family to go to college ended up having to choose between books and medical treatment.

First, this report by NPR's Joanne Silberner on a woman who is unemployed and coming to the end of the federal assistance that has helped her keep her health insurance.

JOANNE SILBERNER: Last year, 62-year-old Ann Hess of Atlanta was two decades into a job as a gal Friday at a mergers and acquisitions firm. Gray-haired and twinkly, she thought her main challenges were learning to live as a widow - her husband had passed away - and figuring out how to deal with her elderly mother who has Alzheimer's disease.

Ms. ANN HESS: Then last year, we were told that the office was closing and we were all out of a job.

SILBERNER: Hess opted to take advantage of COBRA. That's a law that allows people to buy health insurance from their former employers for up to two years. The people who've lost their jobs pay their full health insurance premiums, but do get the benefits of the employer's discounted group rates.

Despite the cost, Hess signed up. She didn't want to go without health insurance. But then she got a bit of a break. Last March, the federal government offered to pay 65 percent of the monthly premium for people like Hess who had been laid off recently.

Ms. HESS: With the subsidy, I went down $186, approximately, and now that it has finished, I think it's going to be $510 a month.

SILBERNER: Finished? That's because the subsidy is currently scheduled to last only nine months - that's until December 31st for Hess, unless Congress extends the program. Otherwise, in a couple of weeks, Hess will be faced with coming up with $510 a month for health insurance. When she loses her unemployment benefits, also at the end of this month, she'll be making less at a part-time job than what it would cost her to buy health insurance.

So, what will you do?

Ms. HESS: I don't know. I really honestly don't know.

SILBERNER: She and her husband had money in the stock market. That's gone. Her savings are disappearing, and she's got to care for her mother. Ann Hess is facing a life where health insurance, if she can find any in the tough individual market, could bankrupt her.

That's left her feeling vulnerable and´┐Ż

Ms. HESS: Angry - angry that I worked so hard all my life to wind up where I am. My life used to be going out with friends, you know, buying nice Christmas presents for family. All that's gone now because I can't afford to do any of that. Health insurance has a lot to do with it.

SILBERNER: The loss of the federal subsidy that Hess was depending on shows a gap in the safety net, according to Ron Pollack. He's executive director of Families USA, a consumer advocacy group.

Mr. RON POLLACK (Executive Director, Families USA): The average COBRA premium for family coverage consumes more than 83 percent of the average unemployment insurance check.

SILBERNER: Pollack's organization recently did a study that shows that without the federal subsidy, most people who've been laid off can't afford the health insurance coverage.

Mr. POLLACK: This, which is the best alternative for people, is unaffordable unless they get help, and that's where the subsidies come in.

SILBERNER: And the federal subsidy has been good for businesses. James Gelfand of the U.S. Chamber of Commerce says the subsidies are a cost-effective way to keep people insured. Critics of the entire health care system and the changes now under consideration say the need for a subsidy shows how weak our whole general approach to health care is.

Michael Cannon is with the libertarian Cato Institute.

Mr. MICHAEL CANNON (Cato Institute): The problem with the COBRA subsidies is not so much the subsidies themselves as the fact that they're a band-aid on a much bigger problem that the government created, and they aren't stanching the bleeding.

SILBERNER: The current plans to overhaul the health system could help people like Ann Hess, but wouldn't kick in for a few years. There is a chance Hess could get another break - at least temporarily. The House of Representatives passed a spending bill yesterday that includes an extension of the subsidy for another six months and expands the program to include people laid off through next February. The Senate is taking it up later this week.

Joanne Silberner, NPR News.

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