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Archive for the ‘COBRA’ Category

The Patient Protection and Affordable Care Act was signed into law last week by the President. According to estimates it will afford coverage for an additional 31 million legal US residents; an estimated 24 million remains uninsured.

The most significant changes to the current health care system are:

1. Elimination of pre-existing conditions limitations.
2. Elimination of calendar-year and lifetime maximums.
3. Establishment of community rating with variation for age and geography.
4. Permitting young adults to remain on their parent insurance plan until age 26

The Congressional Budget Office (COB) estimates that the coverage provisions in the bill will cost 848 billion over ten years. Most of the major provisions will not take effect until January 1, 2014. Therefore, the current COB estimate uses 10 years of revenue to cover 6 years of coverage. In contrast, Republican staff on the Senate Budget Committee estimates that the total spending in the bill for 10 years will exceed 2.5 trillion.

The bill creates an estimated 150 new government entities to the teeming bureaucracy and countless new additions to the already overly complex tax codes.

More regulations will force everyone involved to spend more money on administration, driving the ultimate cost of health care even higher.

Large business entities and insurance companies will pay higher taxes, and those not providing insurance will be penalized. Small businesses, with less than 25 employees, will receive subsidies.

Extended coverage will be achieved by extending Medicaid for lower income individuals and families, providing tax credits for people above the Medicaid income threshold and by interstate insurance exchanges for the presently uninsured.

The law is promising protection from exorbitant out of pocket costs in the form of yearly caps on co-payments and co-insurance charges. However, it does not address the small print, such as usual and customary rates and non-covered (medically needed, but excluded from policy coverage) charges. It appear that the burden is entirely left on the insurance companies, but in reality the public will remain unprotected from overcharges and non-covered expenses. We are still at the mercy of deals made by insurance companies and large hospitals.

Physicians, the backbone of health care, are still affected in several ways. They are still forced to take contract of adhesions, limiting their ability to negotiate fees with insurance companies. They are still waiting for the permanent fix to the faulty Medicare formula, that was removed from the bill and replaced with a temporary fix. Tort reform, a major player in health care cost, hasn’t been addressed.

This legislation missed the mark of real reform. It only added several layers to an already fragmented system. It missed the opportunity to address real cost control, both by insurers and medical providers.

Regulatory authority between the federal and state governments is still divided and will be clarified via regulations in the coming years.

Regardless of what we think about this bill, it has been passed. Now it is time to move forward and make it work, hopefully, for all Americans.

Consolidated Omnibus Budget Reconciliation Act of 1985, commonly called COBRA, is a federal law providing continuation of group health coverage that would otherwise be lost due to life events such as termination of employment, death of an employee, and divorce. The original bill allows coverage continuation of full employer cost.

Due to economic difficulties and significant job loss across the nation the federal government passed a law which became in effect in February 2009. The American Recovery and Reinvestment Act of 2009 provided subsidy for eligible former employees, enrolled in their employer’s health plan at the time they lost their jobs. This subsidy allows them to pay only 35 percent of the cost of COBRA coverage.

Last December congress passed and the president signed a defense spending bill that included a COBRA subsidy extension through the end of February 2010. This bill provides continues medical insurance coverage for involuntary terminated workers, at a same reduced premium.

A new bill is pending to further extend COBRA subsidy for those still without jobs. Votes expected early next week.
The 65 percent subsidy has been a big help for millions of laid-off employees and their families who, in many cases, would have been hard-pressed to pay the entire monthly premium, which typically is about $400 for individual coverage and $1,200 for family coverage.

Congressional researchers estimate that the new subsidy would benefit about 7 million former employees and their families and cost about $25 billion.