The unemployed have a lot to fear, including losing COBRA itself.
Congress is considering passing an extension of COBRA subsidies for the unemployed. But a bigger problem is not just the subsidies running out, but COBRA itself running out.
COBRA allows people to continue to buy the same health insurance they had on the job, at full price (plus 5% to cover the administrative overhead of handling the paperwork.) COBRA lasts 18 months. It is very expensive, but the way insurance works in the U.S. many of these unemployed people would not be able to buy health insurance at any price.
Everyone had assumed that Congress could get its act together and pass health insurance reform by now, so the problem of COBRA’s 18-month period has been ignored. But Congress didn’t and that 18 months is running out soon for many, many of the people initially laid off after Wall Street deregulation caused the financial crisis. A subsidy does no good if it subsidizes insurance that you can’t get.
These millions of people were not laid off because they scammed people and sold them CDO bonds fraudulently rated AAA. They didn’t run “free” credit-card scams with incredibly small print or the ability to change the terms of the contract at will. They don’t hold payments and then charge “late fees.” They don’t charge huge “fees” that drain your accounts. These millions of people don’t get million-dollar bonuses paid for by taxpayer dollars and Fed guarantees or zero-percent “windows.” So maybe this means they don’t qualify for consideration by our Congress .
Congress: EXTEND COBRA FOR AN ADDITIONAL 18 MONTHS. There is no cost for doing this, it only allows people to buy health insurance that they would not be able to buy otherwise. AND pass another extension of the subsidies.
