When COBRA is de-fanged

Too expensive coverage is leaving job-changers unprotected

They say everything is bigger in Texas, and sadly, they’re dead-on when it comes to this depressing statistic: that no other state in the nation has a larger percentage of residents who don’t have health insurance. According to the United Health Foundation’s 2008 report, America’s Health Rankings, 24.9 percent of Texans didn’t have health insurance. That’s more than 5 million Texans just waiting for a health care catastrophe.

What could possibly be keeping so many Texans from purchasing health coverage? An article in today’s Star-Telegram shed some light on the daunting obstacles to affordable health coverage.

Since the economic downturn kicked into high gear, the media has been spitting out stories left and right about layoffs and what folks are doing to keep their health insurance after they’ve been let go. An obvious first turn for the newly unemployed has been COBRA, the federal law that allows you to continue to purchase the coverage from your employer-sponsored plan.

COBRA’s a safety net, but as so many reporters continue to point out, it’s an expensive safety net. It’s so expensive, in fact, that a recent estimate revealed that less than 10 percent of eligible workers were opting to continue their employer-sponsored coverage through COBRA.

It’s so expensive that Congress took a huge step toward cutting the cost of COBRA coverage as part of the economic stimulus package signed into law by President Obama. The package provides a nine-month subsidy that covers 65 percent of COBRA premiums for folks who qualify. Good news, right?

Tell that to folks whose companies have decided that it’s just too expensive to continue to offer group coverage. Today’s article by Teresa McUsic revealed that, for folks whose employers have decided to discontinue group health coverage entirely, COBRA is de-fanged. The federal law apparently does not apply when a company drops its group health coverage OR when the coverage stops because the company is filing for bankruptcy. Ouch.

Who’s really feeling the pain? The newly “uncovered” employees who either have pre-existing medical conditions themselves or who have family members with pre-existing conditions – and who try to get coverage in the individual private market. For those who can get coverage, it’s expensive – and for those who can’t …

And that’s where it doesn’t get much better in Texas, according to the article: A fallback option for those whose COBRA coverage has expired – or who now apparently don’t even have the option of COBRA coverage – is coverage under the Texas Insurance Risk Pool. The risk pool was created by the Texas Legislature to provide a means to individual health insurance coverage for those who’ve been bumped from a group plan or who may have been denied coverage.

But this other “safety net” is expensive, too. McUsic notes that Texas law requires that the premiums the risk pool charges are twice the rates available in the Texas commercial  insurance market.

We don’t mean to pick on Texas (though with so many uninsured, it’s an easy target). We know that as reporters in other states really start digging into stories about health coverage, they’ll find no shortage of health care nightmares.

We look forward to reading these stories – in the hope that more Americans can truly understand that the health care issues we all face will require Texas-sized solutions.