COBRA Subsidies: A Compelling Narrative of Policy Impact on the Unemployed, Uninsured

• Main Author: Gregg, Hannah N.
• Format: Others
• Published: Scholarship @ Claremont 2012
• Subjects: Health Care Policy; COBRA; Health Insurance; Health Law; Insurance; Legislation
• Online Access: http://scholarship.claremont.edu/cmc_theses/441; http://scholarship.claremont.edu/cgi/viewcontent.cgi?article=1448&context=cmc_theses

This paper analyzes a 2009 U.S. policy which provided short term federal subsidies for COBRA health insurance premiums. COBRA allows the recently unemployed to continue purchasing health insurance through their employment-based insurance plan for a short time period after they become unemployed. Early analysis found low take-up rates for COBRA insurance due to the exceedingly high cost of full health insurance premiums, especially for those who have just lost a steady employment income. A short term 65 percent federal subsidy for COBRA insurance was implemented as a part of the American Recovery and Reinvestment Act in 2009. Subsidy policy proposed to increase take-up rates of COBRA and to keep national insurance rates from dropping during a time of rising unemployment. This paper finds a 3.09 percentage point increase in insurance rates for the unemployed when subsidies became available in 2009. It also finds that the gains made in 2009 were lost by 2010, suggesting that subsidies may have provided temporary relief but did not represent a long-term solution for many of the unemployed. Demographic analysis within the unemployed population determines that educated, middle to upper income earning men saw the greatest increases in insurance rates during this time. My analysis affirms previous research finding that COBRA eligibility requirements do not allow the majority of the low income, uninsured to receive federal assistance for health insurance through this policy. I also provide a positive analysis for the impact of direct-purchasing federal subsidies on insurance rates.