With little notice or fanfare, today marks the end of federal subsidies for COBRA health insurance, the program that allows recently laid off workers to stay on their former employers’ health insurance. Traditionally, workers pay the entire premium, but as part of the stimulus package, Congress created a 65 percent COBRA subsidy, which was then extended repeatedly to stretch through the end of this month. That brings down the average family’s monthly premium from $1,137 to $398, according to the Kaiser Family Foundation.
So, did the subsidy work? Did more Americans decide to enroll in COBRA and remain insured because of this federal funding? For that, we turn to the research.
Only a handful of researchers have looked into the issue and, unfortunately, none have produced peer-reviewed articles. But here’s what we’ve got:
Study 1: It worked a lot. Hewitt Associates, a consulting firm, conducted what looks to be the first study of COBRA subsidies in June 2009. They saw a doubling in COBRA health insurance enrollment, from 19 percent before the ARRA subsidies to 38 percent afterwards.
Study 2: It worked a decent amount. The Treasury Department did its own review of the COBRA benefit, using the unemployed in New Jersey as a case study. There, they saw “between one quarter and one third of eligible unemployed workers enrolled in subsidized COBRA for continuing health insurance.”
Study 3: It worked a little. Ceredian is the country’s largest administrator of COBRA benefits, meaning that employers contract out the management of COBRA to the firm. They found about a 5 percent take-up increase in COBRA benefits, from 12.4 percent before the subsidy to 17.7 percent afterward. Ceredian notes that enrollment was particularly low because, even with a 65 percent subsidy, health insurance was still pretty expensive.
Study 4: It didn’t work. The nonpartisan Employee Benefits Research Institute has issued the most recent report on COBRA subsidies, finding that they did “not appear to have had an immediate impact on the percentage of individuals with coverage through a former employer” but also that it was “too early to tell from nationally representative surveys if and when take-up of COBRA accelerated.” Take a peek at their chart looking at the percent of individuals with coverage through a former employer, which looks to stay pretty steady even with the introduction of subsidies:
What to make of this research? It seems to indicate that the COBRA subsidies have helped some people get insurance, but how many, exactly, is still difficult to tell. It also does not take into account any stimulus provided by those who took advantage of the COBRA subsidy, and then had additional money to spend on non-health care costs. It’ll be important to watch out for a Department of Labor study, scheduled for release next March, that will provide a review of the entire COBRA subsidy program.