Expensive COBRA Rates Make a Good Case for Obamacare

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Republican opposition of the Affordable Care Act has become a standard party position. Some have argued the law is a “jobs killer.” Others have said that the founding fathers would not approve it. Senator Orrin Hatch wrote in a piece for the Hill that he has to come to “any other conclusion” than that the mandate is unconstitutional, “requires treating the Constitution as the servant, rather than the master, of Congress.” Still others, including Mitt Romney, who passed an individual insurance mandate as governor of Massachusetts, have asserted that Obamacare is an “unconstitutional power grab from the states.”

When President Barack Obama signed the health care reform into law on March 23, 2010, fourteen state attorney generals filed lawsuits against the law’s requirement that most Americans to purchase health insurance, on the ground that it was unconstitutional, even though it had been central to the GOP’s health-care reforms for two decades.

In response to the legal opposition, Erwin Chemerinsky, the dean of the law school at the University of California at Irvine, told The New York Times, “There is no case law, post 1937, that would support an individual’s right not to buy health care if the government wants to mandate it.” Indeed, in July 2012, Chief Justice John Roberts sided with Justices Ruth Bader Ginsburg, Sonia Sotomayor, Stephen Breyer, and Elena Kagan in deciding the law as a valid exercise of Congress’s power to tax.

The Republican Party continues to staunchly opposed the law even though the individual mandate made its first legislative appearance as part of the party’s alternative to President Clinton’s health-reform bill. It was included in the 1993 Health Equity and Access Reform Today Act that was sponsored by John Chafee, of Rhode Island, and co-sponsored by eighteen Republicans, including Bob Dole, who was the Senate Minority Leader at the time.

Since the individual mandate was essentially a Republican idea, it follows that the root of the party’s opposition is based in politics, meaning the problem with Obamacare is not that it requires that Americans who can afford to buy healthcare insurance must do so. While it can be argued that Obamacare might not be the most well-crafted legislation, the concept that all Americans should have basic insurance is not outlandish.

“Many states now require passengers in automobiles to wear seat-belts for their own protection,” Stuart Butler, a health-care expert for the Heritage Foundation, wrote in a 1989 brief titled Assuring Affordable Health Care for All Americans. “Many others require anybody driving a car to have liability insurance. But neither the federal government nor any state requires all households to protect themselves from the potentially catastrophic costs of a serious accident or illness.” The idea expressed by Butler was seen as a counterpoint to the single-payer system and the employer mandate, which were favored by Democrats.

Just as legally mandated insurance makes economic sense for automobiles, it makes sense for health care as well. For example, when a person without insurance requires medical attention in the event of a serious injury or illness, the resulting problems are disastrous on a personal level and on a systemic level. If costs cannot be recovered from the individual, healthcare providers and taxpayers are hit with the bill.

That may be an extreme example of the problems with the American health system, but it is hard to argue that Obamacare, as flawed as it may be, does not provide more coverage options to broad spectrum of Americans. Many of the Americans who go without insurance are the unemployed, and that includes the temporarily unemployed.

Currently, the only insurance option for many laid-off workers is to continue their employer-provided coverage under the federal law known as COBRA, or the Consolidated Omnibus Budget Reconciliation Act. The problem is that COBRA insurance will only last 18 months and enrollees will have to pay the entire premium plus a 2 percent administrative fee, a weighty financial burden for an individual who is unemployed.

As Kaiser Health News reported, many of those people would be better off shopping for health insurance in online marketplaces, known as insurance exchanges, that are scheduled to open on October 1.

As mandated by the Affordable Care Act, policies sold on the exchanges must cover a set of 10 essential health benefits, consumers will be able to choose among four plan types with different levels of cost sharing and tax credits to offset part of the premium cost will be available to individuals and families whose incomes fall between 100 percent and 400 percent of the federal poverty level, or $11,490 to $45,960 for an individual in 2013. Due to those factors, exchange coverage can be much more affordable than COBRA, according to Kaiser.

The Congressional Budget Office has calculated that the premium for a 40-year-old in the second lowest cost silver plan would average $320 per month nationally, and a study authored by the Kaiser Family Foundation found that premiums in certain states could be even lower. By comparison, the average monthly cost for single coverage in an employer-sponsored plan is $490, according to the Kaiser Family Foundation’s 2013 employer health benefits survey, and the employer will cover 83 percent of that amount on average. However, once that individual signs up for COBRA, they are typically responsible for the whole premium.

In an analysis of poverty in the United States, Reuters offered a case study of how prohibitively expensive COBRA can be for some unemployed Americans. “There is the lack of affordable healthcare, with real-life consequences,” wrote Sister Simone Campbell in an opinion piece for the publication’s series “The Great Debate.”

“Like Margaret Kistler, who became poor when she lost her job in Cincinnati during the 2008 recession. No job meant no health insurance, and she couldn’t afford COBRA. When she finally got so sick that she had to go to the emergency room, she was terminally ill. Margaret died last year at age 56 of colon cancer. Had the expansion of Medicaid in the Affordable Care Act been fully implemented in 2010, Margaret could have received screening, treatment, and been a contributing member of society today rather than a tragic burden on our healthcare system.”

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