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The Democrats’ Terrible Health Care Solution for the Newly Unemployed

Subsidizing stopgap insurance may enrich providers, but it's not a solution for this crisis. I know because I’m on it.

Chip Somodevilla/Getty Images

Earlier this week, I received a letter whose return address immediately alarmed me. It was from COBRA, the simultaneously awkwardly and aptly named institution through which I currently get my health insurance. (It’s an acronym derived from “Consolidated Omnibus Budget Reconciliation Act” that reminds one of a dangerous snake.) The last time COBRA had written to me it was to tell me my premiums were going up on March 1, from $934.31 to $1038.68 per month. That letter notified me, in the midst of an unprecedented pandemic where some 40 percent of the workforce faced the possibility of near-term unemployment, that my last premium payment had fallen “insignificantly short”—by 68 cents. “Failure to pay the insignificant amount by the due date will result in the termination of your COBRA coverage,” the letter warned.

My COBRA coverage is more expensive than my rent. I don’t have my premium payment on auto-pay because I’m always afraid it’ll overdraw my account. But I’d better pony up that 68 cents if I want to keep my health insurance.

That same day that the federal government was spending postage to bill me 68 cents, House Democrats announced a new bill, the Worker Health Coverage Protection Act, to help workers who will lose their employer-sponsored health insurance as a result of being laid off or furloughed due to the pandemic. COBRA typically allows those who lose employer-sponsored insurance along with their jobs to stay on their employer-provided plan for 18 to 36 months, but they have to pay the full price of the insurance; the employer covers none of it. Under the “solution” that House Democrats have put forward for the pandemic, the government would assume the costs that laid-off workers would normally have to pay, and would extend this benefit for six months following the official end of the public health emergency. That’s a lot of money. It’s estimated that employers in America spend $15,000 per household per year on health insurance coverage. COBRA is managed by an outside administrator, which collects payments and acts as an intermediary between the relevant insurance company and the consumer.

In essence, what’s being proposed are incremental changes that will continue to bankroll the bloated private health insurance industry. Congress tried the same thing during the last financial crisis, but only covered 65 percent of COBRA premium costs, which most people couldn’t afford. This time, Congress will cover 100 percent, following to a tee instructions that the insurance industry’s lobbying arm sent to Congress recommending they “provide temporary full federal subsidization of COBRA premiums, as well as help subsidize premiums for marketplace plans.”

This course of action is expensive for the government—not to mention taxpayers—but won’t disrupt insurance profits, not even in a time like this. “COBRA expansion, at its core, is an insurance industry bailout,” wrote Alexander Sammon this week at The American Prospect. The money it will spend paying insurance companies exorbitant premiums, he suggests, could be better directed towards expanding Medicaid eligibility, or making permanent improvements to the health insurance system. Senator Bernie Sanders and Rep. Pramila Jayapal, for example, have proposed a bill for Medicare to cover all medical costs for the duration of the crisis.

It seems unlikely this idea, or any idea that truly measures up to the moment into which we’ve been plunged, will get a hearing. Even in a moment of unprecedented calamity, Democrats are determined to stick to their old moves—and these will blend the fresh pressures of the coronavirus pandemic with the stresses that are all too familiar to those of us who have used COBRA as the insurer of last resort.

Democratic lawmakers who back this bill say that covering COBRA costs for laid-off and furloughed workers will allow them to have continuity in their care. Switching insurance means the headache of enrolling into a new plan, navigating a new network that will likely require having to disrupt care plans with existing doctors and establish relationships with new ones, not to mention resetting progress towards meeting a previous deductible.

But in addition to the expense, these promises of a “seamless” transition to COBRA are a myth. I signed up in January, after leaving a job in early December that I’d taken in large part because it offered health insurance coverage—the first and only job I’ve ever had that did. I made the decision based on the fact that all of my options were, at the time, bad. The Affordable Care Act’s marketplace, my only real alternative at the time, only offered plans with outrageously expensive premiums, coupled with stratospherically high deductibles that I could never meet. (Neither COBRA nor the marketplace plans cover certain critical care needs, like vision, dental, or therapy.)

The math told the story: I wouldn’t actually save money opting for a marketplace plan over COBRA. I go to the doctor fairly regularly for a handful of minor medical conditions like migraine headaches and allergies, and primary care visits on my employer-sponsored plan were just $15 and specialists cost $35. From my past experiences in health insurance hell, I know that bills that low are cause for veritable celebration. I also know how hard it is to find a good doctor in the first place, and I didn’t want to switch up my roster of care providers unless it was unavoidable.

So I bit the bullet and signed up for COBRA. I told myself it would be only for a few months until I got a new job that provided insurance. More to the point, I adopted the same line of thinking that lawmakers have touted in announcing their new bill: that the great benefit of COBRA insurance was the comfort of seamless continuity.

I now have considerably more experience with COBRA than our legislators, who have operated under the assumption that the information provided by lobbyists from the health insurance industry comports with real-world experience. It doesn’t. The supposed “seamless” transition actually took me six weeks of labor to engineer, and that was only due to my unyielding persistence that ate up hours of valuable job-hunting time. Over the course of dozens of phone calls, I was volleyed back-and-forth from COBRA customer service reps to UnitedHealthcare customer service reps, who each blamed the other for the delay in sending me information about how to enroll in COBRA, and then about how long it would take after sending my $934.31 payment to get my plan up and running.

In the meantime, I was due to pick up my birth control, and even though my COBRA insurance would apparently apply retroactively to Jan. 1, I needed the prescription before my plan finally went into effect, so I ended up paying for it out-of-pocket (not after many unfruitful efforts to speed up the COBRA enrollment process) without insurance, but with a coupon, making the bill a cool $175. Even though the plan didn’t become active until the very end of January, I still owed the full monthly premium amount.

And yet I’m one of the lucky few who, though it’s difficult, has managed to make paying for COBRA work for me as a temporary measure. None of my conditions are life-threatening. I don’t have a spouse or children whose COBRA premiums I would also need to cover. I was lucky enough to get a job right before the coronavirus crisis hit, that is possible to perform remotely, and—while it doesn’t include benefits because it’s a temporary position—pays me enough to write that painful $1,038 (sorry, I mean $1,038.68) check each month. I have the privilege of a family that could help me out if I really found myself in a jam.

While covering the cost of COBRA temporarily will be helpful in the short term to the 3.5 million people who had lost their jobs and employer-provided health insurance as a result of the coronavirus crisis as of April 2, less than half of the country is on employer-sponsored insurance. Moreover, the most significant job losses have occurred in industries like hospitality, food service, and retail, sectors where employers are far less likely to provide health insurance (and even then, only to full-time employees). Seventeen million people have applied for unemployment benefits since the pandemic began. At best, this bill will help a fraction of that newly-unemployed workforce.

For those who won’t benefit from this bill if it passes, some may be eligible for Medicaid. A number of (blue) states have reopened enrollment periods for applying for marketplace plans, which means many of the newly unemployed may already be discovering the high premiums and deductibles that await them. At the federal level, President Trump has callously refused to enable even this option. Those who reside in states that have limited Medicaid eligibility in recent years will have the fewest options for coverage; the 11 million undocumented people who are excluded from the coronavirus stimulus package will have even less.

By contrast, UnitedHealthcare is set to report $21 billion in profit this year, and insurance companies are discussing ratcheting up marketplace premiums by up to 40 percent next year. They’re expecting Congress to defray some of those costs. Meanwhile, insurance companies like Cigna and Humana have painted themselves as caring benefactors by waiving the costs of coronavirus treatment. All in all, the insurance industry is getting a substantial return on the $736,000 investment they’ve made this year donating to the Democratic Congressional Campaign Committee (DCCC).

In a time in which the coronavirus is sending millions to the hospital, subsidizing COBRA—and in doing so, lining the pockets of insurance companies that take months to activate coverage but five days to tell you your payment was short 68 cents—is laughably inadequate. We can only hope it’s just one stopgap measure that will precede a much broader overhaul of the health insurance system. But with Joe Biden as the Democratic nominee, that’s probably not likely.

The bill is also an indictment of the absurdity of employer-sponsored health insurance. I left a job because I needed health insurance, and when I received my new benefits package, I almost cried in relief. It shouldn’t be like that. Taking, or leaving, a job should have nothing to do with how often you need to go to the doctor—and my situation isn’t nearly as grave as the one most Americans face: In 2019, before coronavirus was a word anyone knew, over half a million people filed for bankruptcy because of medical bills.

Employer-sponsored insurance only prevails because insurance companies profit from the arrangement. Any disruption to that system would also disrupt their profit margin. But it’s clear, and some 70 percent of Americans agree, that the only solution to this crisis is to remove insurance companies out of the equation entirely. Until then, it will be insurance lobbyists, and not you, who call the shots.