Budget could extend COBRA subsidy

Gregory Warner Feb 8, 2010
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Budget could extend COBRA subsidy

Gregory Warner Feb 8, 2010
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Bob Moon: Congress is going to take up President Obama’s jobs bill this week. It’ll likely include the usual array of tax breaks and stimulus measures. Among them: a popular subsidy for COBRA health insurance for the unemployed. Gregory Warner reports.


Gregory Warner: COBRA is a federal program that lets people who lose their jobs hold onto their health insurance. The ex-employee must pay the entire premium, usually over a thousand dollars a month.

Last March, Congress began offering a 65 percent subsidy on COBRA premiums. Obama’s proposed budget would extend that subsidy through the end of the year.

Tom Buchanan is a health economist with of the University of Michigan. He says with health care reform now uncertain:

Tom Buchanan: It’s a very limited policy, but I think it’s probably one of the few levers that the administration had to push on.

People who opt to pay for COBRA typically have medical problems. Insurers pay out twice as much in medical claims as they get in premiums.

But Karen Frost, a benefits analyst with Hewitt Associates, says the subsidy has encouraged healthier people to sign up for COBRA.

Karen Frost: Because we’re getting a broader group of people than we often do on COBRA, the risk is a little bit more spread than it normally would be.

Congressional researchers estimated last year’s subsidy covered 7 million people and cost the government $25 billion.

In Philadelphia, I’m Gregory Warner for Marketplace.

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