What’s happening to COBRA?

History is sometimes surprising. It’s too easy to assume particular laws must be Democrat or Republican. Take the Consolidated Omnibus Budget Reconciliation Act of 1985 as an example. Better known as COBRA, this provides a safety net for people to keep their group insurance plan in place after leaving employment. Employees can maintain health cover for up to eighteen months if they pay a subsidised premium of 35% of the original cost. The period of cover is extended if the employee is disabled or divorced. This is an excellent bridge between employer-provided health plans and private coverage at the full premium rate. During a period of unemployment, many could not afford to pick up the bill for full private coverage. They have to wait until a new employer provides cover or a sufficient pay check to pay the premium on private cover. Yet for all this law mandates protection for employees, it was signed into law by President Reagan.

Until the latest recession, this law worked well but, as unemployment began to rise and employers stopped hiring, a funding gap began to emerge. With little or no chance of finding alternative employment, too many people were looking at continuing monthly payments that were going to eat away all the family’s savings and add to the already barely manageable debts. In some states, the 35% premium was more than the state’s unemployment benefit. So, when the stimulus package was launched in March, it contained a subsidy representing nine months cover for those entitled to COBRA benefits. That means the subsidy disappears in December and several million of the unemployed will suddenly lose their COBRA benefits. The expectation is that the Republicans will oppose any attempt to extend the subsidy program. The reasons are not hard to identify. The proposed reform of the healthcare industry motivates the Republicans to oppose anything connected with healthcare that might add to the already massive federal deficit. If the Democrats can maintain some degree of unity, it might be possible to force new legislation through to continue the subsidy, but this may not be a sufficient priority despite the still rising level of unemployment.

Health insurance is caught in a perfect political storm and instead of discussing issues with a bipartisan spirit, the political class is polarising. Despite the efforts of the White House to focus attention on the plight of the unemployed and their families, it seems likely that a wave of uninsured people will wash up and be left stranded on the beach as the nine month subsidy slowly ebbs away. Given the insurers have been increasing the premium rates on private plans over the last year, even those who remain employed are beginning to struggle. Although the use of sites like this helps people find the still affordable policies, the percentage of uninsured adults will keep rising. Health insurance should be a basic right for everyone, but it has become a political football leaving people exposed. The hypocrisy of the politicians is ironic. All treatment at emergency rooms for the uninsured is partly paid out of federal funds and partly by the insured. It is impossible to avoid subsidising the healthcare for the unemployed. All that changes is the name on the account sourcing the subsidy.

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As the health care bill debate gets heated up there are many lawmakers who are threatening not to support it unless some changes are made. This is a direct result of Senate Majority Leader Harry Reid working out a number of compromises just to get the votes needed to push the legislation forward.

While the bill has gone this far it could be stopped in its tracks very quickly if some key issues are not resolved. Here are some of the key points that may gum up the works:

• Public Plan: The Senate bill will create a federally sponsored medical insurance plan for those who cannot get coverage through their work. As it stands now, each state will have the ability to opt out of such a plan. Several conservative Democrats have voiced concerns over this point and will not support the bill in this form as they feel it expands the government too much. Instead they want to see trigger points that will create these options only in areas of the country that do not meet affordability standards. However, any such move will weaken support from the more liberal Democrats who will not support such triggers and instead want a government sponsored plan to pass ASAP.
• Abortion: The hot topic here is that the conservatives will not support a bill that allows for taxpayer dollars to pay for abortions. This will be the case if someone is receiving federal subsidies to pay for their medical insurance and the conservatives are calling for strict measures to take place to ensure this doesn’t happen. But the liberals say they will not tolerate any further restrictions on abortion services and this is ultimately going to lead to some gridlock on the floor.
• Subsidies: The Senate bill will provide those who cannot get health insurance through work with a subsidy to help pay for insurance costs. This subsidy will only be made available to those who are making between 133 percent to 400 percent of the poverty level. The conservatives say this will not be enough as almost everyone will be required to buy insurance under the bill’s current form. This puts Reid between a rock and a hard place as he cannot lose any more liberal votes but if he caves in on more subsidies then he threatens to push the entire cost of the plan up and that will effectively eliminate its ability to lower the deficit.
• ‘Cadillac’ Health Insurance: The Senate bill now imposes a 40 percent excise tax on high-end, or ‘Cadillac’ medical insurance policies that are worth more than $8,500 for individuals and $23,000 for family policies. This is not sitting well with many labor unions as they have negotiated better health care plans in the past instead of increased pay. These labor unions are pushing for higher thresholds to save middle income American money. However, if the bill gives in on this point then it will have to figure out another tax to impose in order to gain the $149 billion that the ‘Cadillac’ tax is expected to generate over the next decade.
• Malpractice Lawsuits: The bill does not change medical malpractice laws and only encourages states to look at different alternatives to civil litigation. Republicans want a limit on the amount of money that can be won, which they say, will save $54 billion over the next decade. If the Democrats give in on this point they risk angering their long-standing allies in the trail attorneys.
• Prescription Drugs: The current bill requires drug makers to provide a 50 percent discount to seniors for brand name drugs after they hit the Medicare Part D coverage gap. One proposal is to import drugs from other countries in an effort to make them more affordable.

Yes the debate will rage on and somehow it is almost certain that these issues will find a way of working themselves out. But if Reid can’t find a way to pacify his constituents on both sides of the table, he risks seeing the entire bill be stopped dead in its tracks.

What is this antitrust status?

In the midst of all the heated debate about healthcare reform, there is one element that tends to get slightly less publicity. Yet, when it comes down to making the reform work, it is one of the most important changes to push through both the House and the Senate. To understand the issue, we need to go back to the Supreme Court decision in United States v. South-Eastern Underwriters Association which, in 1944, allowed the federal government to apply antitrust laws to insurance companies by extending the Commerce Clause in the US Constitution to break up abusive monopoly control. For many years, the lack of competition had allowed South-Eastern to fix outrageously high premium rates and to defend their monopoly through intimidation and coercion in six US states. When the Supreme Court finally signalled a potential end to these abusive practices, the McCarran-Ferguson Act of 1945 appeared. The key provision exempts insurance companies from the general run of federal laws imposing antitrust limits so long as each state puts local regulations in force. This has produced a patchwork of state laws which, to a greater or lesser extent, encourage free competition between insurance companies.

Why should this matter? It is an undisputed fact that, as competition declines, the remaining one or two suppliers in a market have the power to abuse their dominant position. The results are usually higher prices, lower quality products and poor service standards. The interests of the consumer are lost in the rush to extract the maximum possible profit. In the healthcare industry, consumers have been penalised as insurers refuse to accept people with pre-existing conditions and refuse renewal of policies if expensive longer term treatment appears necessary. You cannot have failed to notice the steady increases in the premium rates – in fact, there has been a slightly faster rate of increase over the last year despite the fact of the recession. This is made possible because there is a lack of real competition between insurers in the majority of US states. The House has already included provisions in the bill to repeal this exemption from federal regulation. The Senate is now about to debate the same issue. Without this repeal included in the final law, insurance companies will be able to continue fixing prices and dividing up the market as it suits them. You will remain helpless victims. With the repeal in place, insurers will suddenly have to compete with each other. This should drive down premium rates and improve the quality of the service delivered. However you look at it, you will benefit directly.

Unfortunately, it is unclear whether there is sufficient support among the Senate Democrats for passing this repeal. It seems possible that the special interests that persuaded the original legislators to pass the exemption law in 1945 may prevail in preventing its repeal. In many ways, this is an extraordinary situation. With the majority of adult Americans victimised by the health insurance industry, you would imagine there would be a groundswell of angry voters insisting their pain should end. Yet the reverse has been happening with most of the obvious anger aimed at preventing any positive reform of the health insurance market. It seems insurers can fool most of the people all the time.

Buying Private Health Insurance

As the cost of medical care continues to rise it is vital that we protect both ourselves, our families and our children and that means finding good affordable health insurance.

For individuals in employment low cost medical insurance cover is often provided by their employer but, as a growing number of businesses seek to reduce their costs, there are increasingly gaps or limitations on the cover which is provided by employers group schemes. In many cases therefore it is necessary to take out additional cheap medical insurance cover to meet the shortfall. Additionally, many group health insurance plans arranged by companies will not cover an employee’s family.

There is an enormous range of companies competing for your business today and the cover provided under different plans varies widely, so that finding an affordable health insurance company which has the right low cost medical insurance to meet your needs is not easy. However, the competition between health insurance providers also means that, as long as you are prepared to put in a little bit of effort and shop around, you can almost certainly find an excellent cheap medical insurance plan quote.

Your starting point in finding suitable affordable health insurance plans is to define exactly what coverage you want or, more importantly, what coverage you need. For complete peace of mind you might decide that you want to cover every possible eventuality known to man and, in this case, tracking down a cheap health insurance plan is going to be extremely difficult. On the other hand, you might consider that you are in pretty good health and only need to worry about coverage for the cost of hospital care in the event of an accident or severe medical emergency, in which case finding an affordable health insurance plan will be far simpler.

Unlike buying life insurance, where premiums are normally set at the outset and remain fixed for the term of the policy, health insurance plans are usually only valid for a period of one year and your premiums are reviewed at each annual renewal. This picture of potentially rising costs year on year results in many people choosing to limit their cover to just those areas which they feel are necessary and following this strategy can allow you to keep costs down considerably.

Once you have decided what you want it is then a question of approaching different health insurance companies, or asking an agent or broker to do this for you, and comparing the cover provided by each and their costs. You should note that many insurers will reduce your premiums as long as you are prepared to meet a proportion of each claim or to claim on your policy only when your medical bill exceeds an agreed figure.

Having narrowed your choice down to a handful of suitable plans, read through the information contained in each insurance plan quote carefully and make your choice based not only on cost, but also on the cover which is being offered.

A cheap health insurance plan does not have to mean a low quality plan and, if you take your time and do your research, you will undoubtedly find the right plan providing you with cover at an affordable price. It is then simply a matter of getting a quote and there is no better place to find free affordable health insurance quotes than right here online.

Throughout this website we cover all aspects of health insurance from cheap family full coverage health insurance and medical insurance for pre existing conditions, through short term health insurance and expat medical insurance to the best Medicare supplemental health insurance and even international long stay travel health insurance.

Get a FREE no obligation health insurance quote today…

But, perhaps the best starting point is to take a look at our growing collection of our own in-house health insurance articles.

A few of the many articles which are currently available to our visitors:

• Exactly What Is Health Insurance?
• Where To Start Looking For A Low Cost Health Insurance Plan
• What Do You Do When Your Insurance Company Will Not Pay?
• What Do You Do If You Are A Victim Of Health Insurance Fraud?
• The Best Way To Apply For A Health Insurance Plan

Today there are more than 47 million Americans without any form of health insurance and this figure not only includes the poor but encompasses people across all income bands and from every state. As if this were not bad enough in itself half of all the personal bankruptcies seen in the United States today result from an inability to meet medical bills. This is shameful and we should not have to read stories day after day in the press about individuals and families suffering in the richest nation on Earth because they are unable to enjoy the benefits of affordable health insurance. Medicare and Medicaid are both excellent programs for those individuals who qualify but they are no substitute for a system which allows us all to access basic private medical insurance cover at a cost which we can afford.