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Yet More Reasons To Get Mad About The Stimulus

Directly below, public health specialist and regular Treatment contributor Harold Pollack chronicles efforts to strip smart public health investments out of the stimulus. And if that doesn't make you sufficiently angry, here's some more distressing news, via the Huffington Post:

The sifters found some noteworthy nuggets in the bill. Combing through his section of the bill, law professor and health care author Timothy Jost noticed that the Senate had removed the House provision that would allow people 55 and over who are laid off to continue COBRA coverage at a subsidized rate until they're 65 and eligible for Medicare. The House version also made folks who were laid off temporarily eligible for Medicaid; the Senate version strips that out, Jost found. Every one percent increase in unemployment throws more than a million people into the ranks of the uninsured.

The case for both measures as economic stimulus seems pretty strong to me. In short term, both measures give health insurance to people that might not otherwise have it. Give people health insurance and they'll use medical services they might otherwise postpone. And as they use those medical services, they'll pay for them.

In addition, studies have also shown that when people know they have health insurance, they're more likely to spend money rather than save, 
since if you're uninsured you'll probably want to hold some back in case of medical catastrophe. (As well you should!) I imagine this is particularly true of the newly unemployed and uninsured, since it's more likely they're accustomed to having the protection of insurance and, thus, more likely to be nervous about the risk they run without it.

To be fair, I can imagine why critics might question making the COBRA eligibility permanent, since that will outlast the two-year window for the stimulus. But, off the top of my head, I can also imagine one pefectly plausible argument for why such an expansion makes sense. 

Consider how COBRA actually works. Although the program allows you to maintain the insurance you had while employed, it is very expensive, because you have to pay not only the premiums you were already paying as an employee but also the "employer's share." If you're suddenly out of work and without a steady paycheck, you might think twice about making that sacrifice, particularly if--a year or two down the road--you'll no longer be eligible for the coverage anyway.

On the other hand, if access to COBRA were guaranteed, you might decide it was worth spending the extra money for it now. And so extending COBRA eligibility might very well increase the liklihood you opt into the program and pay premiums--which, don't forget, is its own form of economic activity. Premiums are payments to insurers, after all. And with those payments, the insurers have more money to pay their employees and cover their overhead.

Yes, someday I might prefer to get rid of the private insurance industry, or at least diminish it, but that's a long-term project. Right now I just want to get people insurance--and get the economy going. These measures seem like a very good way to accomplish that.

Note: This item was updated shorlty after posting, to clarify/expand upon the justification for these measures. 

--Jonathan Cohn