Linking health insurance to employment acts as a filtering mechanism preventing the chronically ill from obtaining private health coverage. In general, those who were able to work are not sick.
For those who are too sick to work, “you get lousy Medicaid,” says a patient who blogs at Duncan Cross. When COBRA and FMLA were passed, it allowed sick people who “previously have been ejected from the system could stay in, with or without working. This was good for sick people, but bad for employers and insurers.”
It may not be only factor driving up costs, but it’s noted that the cost of care really exploded after COBRA became law in 1986.
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{ 5 comments }
Insurers assume that COBRA participants are more expensive than working employees. However, the reason is not that a person on COBRA was too sick to work and therefore lost their job. The usual thinking is that COBRA is available for a time definite period (use it or lose it when eligibility ends) and since your are not working you have time to go to the doctor. Therefore, you take care of all those nagging issues that you ignored when you were working everyday (e.g. arthroscopic procedures).
Medicaid is not available to everyone.
Assuming you meet the financial requirements (no money, no income basically), in my state to receive Medicaid you must be either pregnant, a child, or disabled.
COBRA coverage requires the individual to cover the entire cost of insurance. How can you afford that if you’re unemployed?
I wouldn’t blame anybody who was unemployed and paying the premium (with what?) for taking care of their nagging health problems. They’re paying plenty!
I think there are far more people who when becoming unemployed find that they can’t pay the rent and purchase COBRA so they become uninsured.
As an HR professional, I’ve administered COBRA benefits. As the above poster noted, many individuals cannot afford the full burden of the cost of their COBRA premiums (the full premium plus a 2% administrative fee). Therefore, the ones who elect COBRA tend to be high utilizers – either because they are making sure to get their “money’s worth” by scheduling delayed care or because their chronic condition(s) would be even more costly without the cushion of COBRA coverage.
That said, I do not that that COBRA legislation had any significant effect on the rapid rise of health care costs. Try taking a look at trends in managed care.
As mentioned, COBRA requires the unemployed to pay the monthly premiums – and the couple of times I was on it pre-medical career, it wasn’t at all cheap: In fact it was far more expensive than my employeers paid for my coverage…
Look elsewhere for the cause of the problem. In the mean time, separating insurance from employment is probably a good idea…
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