COBRA coverage adoption falls short despite subsidy

Although the federal government heavily subsidized the COBRA benefits of those who lost their jobs as part of last year's huge stimulus package, cost spurred coverage uptake less than originally estimated, possibly portending a similar outcome for healthcare reform, a new study suggests.

The Employee Benefits Research Institute concludes that "far fewer" than the estimated 7 million people who qualified for the subsidy actually used it to purchase insurance.

EBRI used data from the U.S. Census Bureau, specifically the Survey of Income and Program Participation. It concluded that the percentage of non-working adults who purchased their coverage via COBRA rose slightly, from 8.7 percent to 9.4 percent by August 2009. Based on that increase, EBRI estimated that 5.7 million people were using the COBRA subsidy for their coverage, 1.3 million less than originally forecast.

Cost may be one factor: Even with subsidies, many workers would still have to pay as much as $5,000 per year out of pocket, a difficult expense to meet when unemployed.

As a result, the EBRI report suggests "this finding has implications for the impact of the subsidies that will become available in 2014 under provisions of the Patient Protection and Affordable Care Act and may mean the number of uninsured may not fall as much as predicted."

For more:
- read the EBRI article
- read the New York Times blog post

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