Saturday, December 6, 2008

COBRA is a Different Kind of Snake

The Consolidated Omnibus Budget Reconciliation Act of 1986, known as Cobra, in most cases allowed terminated employees to remain in the former employer’s health insurance plan for a limited time and at the terminated employee’s expense. That of course assumes that there was a health insurance plan and that the terminated employee had the resources to pay the exceptionally high cost of health insurance.

But what if the employer in question terminated the employee as part of a liquidation or reorganization under bankruptcy law? I’ve noted in earlier blogs that within even large to midsized companies (valued at over $100 million), experts project 10 times the number of bankruptcies in 2009 as there were in 2007. Surprise! The employee’s Cobra rights would no longer provide the continuing health insurance option, since the employer’s plan terminated at the bankruptcy.

The Census Bureau has already told us that in 2007, over 15% of America was uninsured – 45.7 million people (almost 30% of those children), and with 2.8 million recorded job losses in 2008 and many more predicted for 2009, the disaster in health care is obvious. According to the Kaiser Family Foundation, “The average annual premium for single coverage in 2008 is $4,704 and the average annual premium for family coverage is $12,680. These amounts are each about 5% higher than the premium amounts reported in 2007.” For older folks, not yet covered by Medicare, the numbers can even double. Big numbers for folks who just lost their jobs.

People are skipping required medications because they just cannot afford the high cost of pharmaceuticals. Others are living with easily curable diseases or wracked with easily correctible pain because they cannot afford the treatment and fall just short of the economic status to qualify for government assistance sufficient to pay for health care. Hospitals have seen huge escalations in “charitable” write-offs (as much as 40%) as more people fall into the health care abyss. Maybe that’s why the new Administration has not removed restructuring our national health care policies from the highest of priorities.

When people try to reassure you in bad times, they often say, “Well at least you’ve got your health.” Too bad they aren’t able to say that so much anymore.

I’m Peter Dekom, and I approve this message.


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