The Amazing Maze of US Health Care

The Society for Human Resource Management (SHRM)has approximately 250,000 members representing the varied disciplines and commercial interests within the  human resource profession.   As a benefits professional with expanded human resource responsibilities, I recently joined SHRM.

No one there {Photo by JLM}

So I was disappointed to learn that SHRM does not support the recently passed House health care reform bill, HR 3962, The Affordable Health Care for America Act.

My readers will know I consistently argue that relying on employment as the primary gateway to the health care system is outmoded and ultimately harmful to the American economy.   Part of that argument is because employer sponsored health care limits the flexibility of employer human resource policies and the mobility of the workforce.

Does SHRM share those views?

Apparently not.

What does SHRM say? Read the rest of this entry »

To Chris Farrell

Chris Farrell is Economics Editor for American Public Media’s Market Place which airs on approximately 330 public radio stations including WAMU in Washington, DC.

You almost had a break through moment.  Then you broke down. Your straight story took a nose dive.

On June 19th, your Straight Story opined on health care reform.  Health care needs to be de-coupled from employment, you stated boldly.  Your words were, “sever the link between your job and your health care.”  You went on to say:

It makes no economic sense to me  that if someone loses their job their family loses their health care insurance  and don’t tell me that COBRA covers it, because COBRA is so expensive very few people who lost their job can pay for it even with the new subsidy.  It makes no sense; it is so inefficient; and it is immoral.

But wait a minute.  You also said that by “severing the link between your job and your health care” you could lose your job and still have health insurance. Read the rest of this entry »

An E-mail came across my desk recently.  It was from one of the many employee benefit-consulting firms and information services that have uncovered my e-mail address and bombard me with information.

This one had some startling advice.

It advised employers to deny all applicants for the COBRA subsidy.

Why, you ask.

Well, it seems that our federal government speaks with forked tongue on whether to make it easier for recently unemployed workers to continue their health insurance.

The American Recovery and Reinvestment Act (ARRA) says that employees who are involuntarily terminated can apply for COBRA continuation coverage.  If they have been involuntarily terminated, they become an Assistance Eligible Individual (AEI to the cognoscente).

An AEI (you are now part of the cognoscente) pays 35% of the normal COBRA premium – a fairly substantial premium subsidy, although for the unemployed, still a hefty burden. Read the rest of this entry »

Does Congress really think they are doing anyone a favor with the new COBRA subsidy provision in the recently enacted stimulus package?

Why can’t they make it simple?

Conservatives who fear “socialized” medicine because it will make medicine more bureaucratic should acquaint themselves with COBRA regulations. Litigation over COBRA keeps lawyers and judges busy all over the country.  And what does any of it have to do with the delivery of care?

What is COBRA anyway?  The Consolidated Omnibus Budget Reconciliation Act of 1986 was one of those huge (thus the word omnibus) budget bills that included everything from tobacco price supports to fishing fees for foreign fishing vessels.   But it will be remembered because Title X (of XX) included provisions to permit those who lose their health insurance under an employer sponsored health plan to continue their health insurance under certain conditions (called qualifying events) and provided they pay the full cost of the coverage.

Because, the person without coverage is also usually without a job, and because the person must pay the full cost (actually 102%) of the coverage, very few people elect the coverage and those that do are more likely chronically ill individuals.  In insurance parlance, that’s called adverse selection.  The plan sponsor will usually end up paying more than they receive in premiums.

So what did Congress and President Obama do with COBRA? 

The new law makes the cost of COBRA premiums slightly more affordable.  Normally, a 65% discount would seem pretty attractive.  But the average cost of one of our family plans exceeds $1,000.  $350 – 450 per month for a family with one less breadwinner is still a stiff price.  Imagine selling a Lamborghini at 65% off!  $70,000 for a $200,000 car is a huge bargain.  But for someone without a job?

The new law allows those terminated between September 1,2008 and February 17^, 2009 and who initially declined their COBRA election, another opportunity to elect the coverage at the reduced rate.  And they can begin their coverage March 1 instead of the date of the qualifying event.

Unlike regular COBRA, the subsidy is limited to those who are “involuntarily” terminated and their family members.  The plan sponsor can rely on the employees’ attestation that they were involuntarily terminated. Read the rest of this entry »