COBRA – Stimulus or Bureaucracy?

March 14, 2009

Does Congress really think they are doing anyone a favor with the new COBRA subsidy provision in the recently enacted stimulus package? capitol_art_160_20080314161058

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. images_2 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 »


The Stimulus and the right wingers on health care

February 7, 2009

In discussing the nation’s health care system, “broken” is the most common descriptive term.  Almost all stakeholders seem to agree on the adjective.  Not Mr. Tevi Troy, writing recently for the Weekly Standard.

Health Care Reform Can be a Stimulus

I have argued that a major overhaul of health care would be a significant stimulus to the economy by leveling the competitive playing field for both employers and workers – those currently working, those out of work and those working on the margins.  In the long term, it would free up capital, both the monetary kind and the human kind, for more productive investments.

It does not surprise me that Congress might see things differently.  The major health care provisions in the stimulus package that will be approved by the Senate have very little to do with stimulus and everything to do with safety net.  Support for state Medicaid programs and provisions related to COBRA.  There are two small provisions in the package that do attempt to push the reform agenda a tiny fraction of an inch.

There is a provision in both House and Senate versions of the bill for for further development of electronic medical records and there is money for “comparative effectiveness research”.

These are hardly earth shaking provisions, unless you are listening to the likes of Mr. Tevi Troy.  To Mr. Troy and his ilk, these measures are the Ft. Sumter of the liberal war on the US health care system.

What planet to these people live on? Read the rest of this entry »

10 Health Care Reform Principles for 09

December 27, 2008

The blogosphere is buzzing with discussions about the promise of health care reform.  For a weekly poster like me, it is impossible to keep up.  As 2009 approaches, and more importantly, as 1.20.09 approaches, I thought I would offer my insights into the topic from the perspective of the administrator of an employer and union sponsored health benefit plan

If there is one thing that unites the comments it is their oppositional posture.  Insurance companies are the most common enemy, but hardly anyone escapes.

So I would like to go on the offensive and tick off a few positives that I would like to see in health care reform.  Please indulge my autocratic use of the term “will”.  

1. Every individual will be required to have health insurance.  Read the rest of this entry »

Health Care Reform in Germany

December 20, 2008

This past spring, Health Affairs, the premier health policy journal, had an interview with the German Minister of Health, Ulla Schmidt.  The interview focused on reforms to Germany’s health system instituted principally in 2007.  Minister Schmitt was asked what were the goals of the reforms. Her answer – she wanted to preserve the principles of social solidarity and affordability that had always been a part the German health system.

In comparison to health care in the United States, the Germans system could hardly be called a system in crises.  The per capita costs were about half of  what they were in this country $3,200 per person in Germany compared to $6,400 here.  But they did have too many uninsured – about 0.2% of the population.  The United States, by comparison has 15% uninsured. 

So the question is, What do Germans understand by social solidarity?   Read the rest of this entry »

Auto Bailout

December 13, 2008

A column in Tuesday’s New York Times raises an issue not raised by many who opine on the bailout of the auto industry – the relationship between health care financing and the bailout.  David Leonhardt  examines the much discussed wage disparity between the unionized autoworkers and their non-union counterparts employed by foreign manufactures in the US like Toyota and Nissan.

Ezra Klein in his blog picks up the same theme.  Apparently the Republicans in the US Senate missed their helpful analysis – as did most of the talking heads on the news shows.


They make two relevant points. Most of the disparity between the wages is in legacy cost, and secondly, wages are not the significant cost driver in the cost of an automobile.  They both agree that Detroit’s troubles are not related to costs, but to their inability to design and build cars that the American public wants.

Personally, I do not think the car makers deserve all of the criticism they received; a lot, just not all of it.  Until a couple of months ago, our family had two American made vehicles in our driveway.  Their combined mileage was almost 350,000.  Our high priced foreign car cost more per year to repair than the other two combined.

But I digress. This graphic reveals yet an another example of how the inequity in health care financing distorts the marketplace.   Read the rest of this entry »

QMCSO – Say what?

December 6, 2008

In my last post, I wrote that health care reform proposals need to focus on the patient side of the health care delivery system by designing systems that eliminate the cumbersome, even tortuous routes that patients must travel to enter that increasingly privileged space – a person with health insurance.

An illustrative example is the Qualified Medical Child Support Order (QMCSO).  QMCSOs apply to those children who live with one parent but the court orders the other parent to provide the health insurance.  The parent who has custody of the child is called, logically, the custodial parent.  The other parent is called, can you guess, the non-custodial parent. Read the rest of this entry »

Administrative Cost Savings Is No Myth

December 3, 2008

Since November 4th, interest in health reform proposals has understandably intensified.  I like to flatter myself that this blog might make a small contribution.  But I do have a day job and so the horn I blow here only has one note; if we simplify the system we can find the money we need to cover the people without health insurance and increase product satisfaction among all stakeholders.  

I am not a policy wonk who views the health care system wonderfully distilled through the glorious abstraction of statistics; nor am I encumbered by practical politics.   I view the system from the bottom looking up.  I have a stake in the present system, but that stake is poorly represented in these musings.  I am a gatekeeper to the health care maze.  In my ideal world there would be far less need for the work I am doing.

I know from daily encounters just how daunting that maze is for people needing care.  I tend to demonize piece rate physicians who are too quick to deny care rather than trust the maze.

So when I read others who write about health care reform I look for my theme.  On Sunday, November 23, 2008, the Washington Post published an opinion piece by Shannon Brownlee and Ezekiel Emanuel, 5 Myths About Our Ailing Health-Care System.  The authors are right on target with four of the five myths that they debunk.  They drive home the point that we are paying a lot of money for our health care, that we are paying a lot of money for not particularly good health care, that we really are paying the price through premiums, taxes, and lost wages, and that Americans are ready for a change.

I take issue with myth #3 – we would save a lot of money if we could cut the administrative waste of private insurance.  The authors don’t think much of that notion.  Since administrative complexity, and consequently costs, is my central theme, I need to take issue with the authors on this one.   Read the rest of this entry »