The Conservative Case for COBRA Subsidies

The economy is starting to bounce back from the coronavirus, but a full recovery will take years. About 30 million Americans remain unemployed. And the Federal Reserve expects the jobless rate — which currently exceeds 13 percent —  to remain above 9 percent through the end of the year, far above the historic low of 3.5 percent we recorded in February.

Simply put, Americans are struggling. Through no fault of their own, millions have lost their jobs — and with it, their health insurance. Many are signing up for Medicaid or Obamacare.

Conservatives like me cringe to see so many people flocking to these deeply-flawed programs, which all too often trap people in poverty thanks to "benefits cliffs" that discourage enrollees from earning more.

Fortunately, there's a better way. My former colleagues in Congress could offer temporary subsidies to help Americans stay on their employer-sponsored health plans, even when they've lost their jobs. That'd be expensive, of course — but realistically, government health insurance spending will rise no matter what during this crisis.

Helping people stay on their private coverage rather than turning to Medicaid or Obamacare is the least-bad, most-conservative option.

There is a system already in place to administer these subsidies thanks to COBRA, the Reagan-era program that allows employees who leave their jobs to stay on their existing health plans for as long as 36 months.

Currently, most employees with employer-sponsored health insurance pay only a fraction of their premiums. On average, employees are responsible for 30 percent of the cost of family premiums and 18 percent of the cost of individual plans. Employers cover the rest.

When people go on COBRA, they must pay the full cost of their insurance. In 2019, individual premiums averaged $599 a month, while family coverage cost a staggering $1,715. Plus, Americans who go on COBRA normally face a 2 percent administrative fee on top of that.

For many who have just lost their jobs, this coverage is unaffordable — especially since premiums withheld from workers' paychecks are tax-deductible. In most cases, COBRA payments are not.

During the global financial panic in 2009, Congress subsidized COBRA premiums for many who lost their jobs. That subsidy lowered the cost of COBRA by nearly two-thirds for up to 15 months. But the program ended in 2011.

If ever there was a moment to bring back COBRA subsidies, it's now. Tens of millions of Americans are out of work, largely due to government-mandated lockdowns that curtailed economic activity across the country. Those measures may have been necessary, medically speaking. But they caused immense economic carnage. It's only fair that the government help repair that damage.

In the absence of premium support for COBRA, many of the newly unemployed will be forced to seek coverage through either Medicaid or the Obamacare exchanges.

They won't like what they find. Only two-thirds of primary-care doctors accept new Medicaid patients. And the least-expensive Obamacare plans often "feature" very limited provider networks to keep costs down. That means that unless Congress takes swift action, many Americans will lose their doctors at the worst possible time.

More than 180 million Americans rely on employer-sponsored health insurance, and nearly three out of four feel satisfied with their coverage. Forcing workers and families victimized by the COVID-19 economic crisis to drop health insurance they know and trust for deeply flawed government programs would add insult to injury. While not perfect, the employer-sponsored health insurance system still works better than either Medicaid or Obamacare. And we already have a template for subsidizing COBRA premiums from the Great Recession.

As Congress debates the next coronavirus relief package, helping unemployed Americans afford their health insurance ought to be a top priority. COBRA subsidies would minimize the economic fallout of the pandemic. And they'd keep millions off government-sponsored insurance programs. They deserve conservatives' support.