Unless Congress decides to make some retroactive, last-minute changes to the jobs bill that went from the House to the Senate recently, the COBRA subsidies from the government will end with people who were laid off as of May 31, 2010. The subsidy was initially slated to provide assistance to people laid off between September 2008 and December 2009, but it was later extended to May 31st, 2010. Now there may no longer be government assistance with COBRA premiums for people laid off starting last week.
For people relying on unemployment, COBRA is unlikely to be financially possible without the subsidy. Individual health insurance is a more affordable option, but for the next few years (until 2014) it will still be medically underwritten in most states, which means that applicants need to be relatively healthy in order to qualify for coverage.
A WSJ article about the possible end of the COBRA subsidies quotes Edwin Park, co-director for healthy policy at the Center on Budget and Policy Priorities as saying
“Cobra coverage is so expensive, but the alternatives are either going without coverage or having to go to the individual market. As long as there’s not a gap of 63 days or more in coverage, you’re guaranteed access to the individual market so insurers can’t deny you. But it may not provide the same comprehensive benefits.”
In most states however, this is not correct. In Colorado, a person who qualifies a business group of one (basically someone who has been self-employed for at least a year and has no employees) can get guaranteed issue health insurance, but those policies have group rates (higher than individual rates). People with pre-existing medical conditions can get guaranteed issue coverage through Cover Colorado, but are definitely not “guaranteed access to the individual market”. When a person with pre-existing conditions applies for an individual policy in Colorado (and in most other states), the insurance company can deny the application, place exclusions on the pre-existing conditions, or offer the policy at a higher initial rate based on medical history. It doesn’t matter whether the applicant has had continuous coverage or not.
If the co-director for health policy at the Center on Budget and Policy Priorities isn’t clear about how medical underwriting and the individual health insurance market work, it’s no wonder that people in general find the subject a bit confusing.