I had to read this article a couple of times to make sure I fully understood what I was reading. The good news is I think I finally figured out what the stimulus proposal is and what it is intended to do (still need many details). The bad news is I have no idea how this proposal – specifically the 25% directed towards COBRA subsidies – can be included in a stimulus plan.
First of all, I completely sympathize with anyone who is out of work while facing average family health insurance premiums of over $1,000 per month. With additional out-of-pocket costs associated with care, I truly cannot imagine how a family budget could sustain these kinds of expenses without some kind of help. It is certainly a situation that must be addressed.
Unfortunately, subsidized COBRA premiums and extensions of maximum durations of these plans can ONLY increase COBRA participation within groups. Since a COBRA participant is generally a higher utilizer of healthcare than an active employee, this would seem to drive loss ratios and therefore premium increases for the entire group over time. This is not exactly the intended result – not to mention this employs tactics (similar to union mandated retiree medical coverage for the auto industry) which have had no historic success in reducing or even curbing escalating healthcare costs.
Given current economic conditions, we all need to make sure we spend public money in a way that provides incentives for collectively beneficial personal choices like healthy living, preventative care and informed healthcare spending. With the money associated with healthcare, “band-aids,” like this COBRA legislation, are extremely expensive. They provide temporary relief without addressing the root cause of the problem. The healthcare industry is too large and complex to be meaningfully impacted by anything less than systematic strategic change.