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New Flood Of Uninsured Feared When Feds Cut Off Subsidies For Cobra

The state’s already record high number of people without health insurance is expected to surge when subsidies for the federal government’s COBRA coverage expire, putting another strain on the state’s already taxed health-care system.

Unemployed workers have rushed to take advantage of the federal government’s 65 percent subsidy on COBRA premiums, with one estimate saying that 38 percent of workers have coverage under the program – double the 19 percent rate before the subsidies were approved.

As part of the American Recovery and Reinvestment Act – the stimulus package, or ARRA – the federal government has been paying 65 percent of the cost of COBRA, a program established in 1985 to help Americans maintain health insurance during short periods of unemployment.

Although no expiration date has been set for the subsidies, they will not last forever. The 15-month subsidies are available to those who become unemployed before March 1.

The initial plan was to provide subsidies for nine months, and the first enrollees lost support in December. The federal government extended the subsidies to 15 months, and those who had lost their subsidy could sign up for another six months. But once the federal subsidies are gone, it’s likely many people will drop their COBRA coverage and become uninsured.

“People really will not be able to afford the coverage when the subsidies expire,” says Cheryl Fish-Parcham, deputy director for health policy with Families USA, a Washington, D.C., nonprofit organization that advocates for health care for all.

COBRA premiums are expensive because recipients are required to pay the entire cost of their insurance, including the part that had been paid for by their employer. In North Carolina, the average COBRA premium is $1,112 a month per family, according to Families USA study. The federal subsidy reduces that cost to $389 a month.

That’s a big help, especially when it’s considered that the average monthly unemployment insurance check issued in North Carolina is for $1,280 – an amount that barely covers the unsubsidized average COBRA premium.

Dr. Tim Carey, director of the Cecil G. Sheps Center for Health Research at the University of North Carolina at Chapel Hill, says he’s already seeing patients coming in who are having trouble affording COBRA, even with the subsidy, and he expects the number of uninsured to rise once the subsidies expire.

North Carolina’s estimated number of uninsured as of January 2009 was between 1.75 and 1.80 million, according to the North Carolina Institute of Medicine. That translates to 21.2 to 21.7 percent of all non-elderly North Carolinians.

Mark Holmes, vice president of the North Carolina Institute of Medicine, says the uninsured already are taxing the state’s health-care system, with lines and wait times growing at safety-net care providers, primarily hospital emergency departments.

That will result in an even larger financial hit to care providers such as UNC Hospitals, which wrote off $138 million in uncompensated care in fiscal year 2009, up nearly $49 million from 2008.

Karen McCall, a UNC Hospitals spokeswoman, says hospital staff has been working to get people who are eligible enrolled in COBRA to avoid adding to the uncompensated care costs.

Going forward, the jobs outlook is not bullish. The Employment Security Commission of North Carolina reported last week that the unemployment rate in December was 11.2 percent, the highest level in 34 years.

Fish-Parcham says COBRA is a good program for short-term gaps between jobs because people often have enough in savings to cover a few months of the higher-cost care. But, given the lack of jobs in the current economy, it is a financial burden that’s proving unsustainable for many, even with subsidies.

“It provides a lot of protection if it’s a short period of time,” she says. “But in this kind of economy, where they expect to be unemployed for a long period of time, it just doesn’t work.”

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