House Dems Charm the COBRA

With unemployment at an all time high, a growing number of Americans are facing the terrifying prospect of getting sick with no safety net. No more health insurance from their ex-employers, and no income to purchase coverage on their own. And let’s ignore for the moment the high co-pays and deductibles those who’ve managed to keep their insurance still face. 

In an attempt to alleviate some suffering earlier this month, the House of Representatives passed the HEROES act, which among other things, promises subsidies for COBRA continuation coverage. COBRA, which allows people whose employment has been terminated to maintain their previous insurance, is a total swindle. Beneficiaries have to pay out of pocket what their employer had previously covered, and their group health plan can charge up to 102 percent of the cost to the plan for individuals in similar circumstances who are not qualified beneficiaries. 

Under the HEROES act, COBRA premiums would be 100% subsidized, so the government would be making payments on the individuals behalf to corporate insurance companies. If the projected 35 million Americans lose their employer-provided coverage, subsidizing these premiums would cost as much as $472 billion a year.

This money would go directly to companies like UnitedHealth Group, which in April revealed it had earned $5 billion in the previous three months - up 3.4% from the same quarter of the previous year. They used some of that extra cash to buy back their own shares to the tune of $1.7 billion -- instead of spending that on reducing patient premiums. In the middle of a pandemic, they were also demanding doctors take a 60% pay cut or risk being thrown out of their provider networks. 

Given this thirst for profit, it’s not surprising to learn that just before House Democrats unveiled their latest relief plan, Blue Cross Blue Shield and America’s Health Insurance Plans (AHIP) -- the lobbying group for healthcare insurance companies -- sent a number of policy proposals that included a recommendation to fully subsidize COBRA premiums. 

This is only the latest instance of House Democrats conceding to corporate healthcare interests. After the CARES act was passed by Congress in March, representatives for the American Hospital Association (AHA) met with Eric Hargan, the deputy secretary at Health and Human Services (HHS) in charge of overseeing the distribution of funds. HHS then developed a plan to dispense tens of billions of dollars to thousands of hospitals -- but it wasn’t the hospitals most in need who received the bulk of the funds. Instead, the cash was funneled to wealthier hospitals who already had decent reserves. It’s worth noting that AHA is a member of Partnership for America’s Healthcare Future, a lobby group that has been actively fighting against healthcare reforms like Medicare for All, and even more moderate plans like building on the Affordable Care Act.

From a purely budgetary perspective, the choice to subsidize COBRA, and by extension wealthy CEOs, simply doesn’t make sense. Compare the $472 billion price tag to the $400 billion a year it would take to expand Medicare to cover out-of-pocket expenses for everyone.

It’s also ineffective. Subsidizing COBRA only helps those who were receiving employer-provided healthcare, a demographic that already tends to have higher incomes. Meanwhile, low-income people and families go completely ignored. 

The Senate will soon take a vote on the Worker Health Coverage Protection act which enjoys support from the Democratic Leadership, including Nancy Pelosi. This bill mirrors the House plan and would fully subsidize COBRA premiums. However, there is another proposal introduced by Sen. Sanders - the Healthcare Emergency Guarantee Act. Instead of bowing to corporate interests, this bill would expand Medicare to cover every uninsured individual until a covid-19 vaccine is widely available. It would also cover co-pays and deductibles for everyone with private or public health insurance. 

While it’s unlikely any health reform will pass the senate, Democrats should still send a message: We will not cave in to the healthcare industry CEOs. We will demand coverage for the essential workers, the artists, the families, those working from home. We will demand coverage for everyone.