Examination of the Short-term Impact of the COBRA Premium Subsidy and Characteristics of the COBRA Population

Abstract:     
On Feb. 13, 2009, Congress passed the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5), which included a provision for the federal government to pay 65 percent of the premiums for individuals covered under the continuation of employment-based health insurance by COBRA who incurred an involuntary job loss between Sept. 1, 2008, and Dec. 31, 2009. The subsidy was made available for up to nine months, and has been extended by Congress three times. At this writing it now lasts 15 months, having been extended through May 2010, and eligibility has been expanded to individuals who first became eligible for COBRA due to a reduction in work hours and then experienced an involuntary employment termination between March 2, 2010, and March 31, 2010. This paper examines trends in coverage through a former employer. It examines recent trends and also compares the characteristics of individuals with COBRA coverage with those of individuals having employment-based coverage through a current job. Current data indicate that the COBRA subsidies that became available in April 2009 do not appear to have had an immediate impact on the percentage of individuals with coverage through a former employer, but it is too early to tell from nationally representative surveys if and when take-up of COBRA accelerated. Data through August 2009 (and limited data through November 2009) are expected to be available in September 2010, when it will be possible to examine the impact that the premium subsidy has had on take-up of COBRA.

The PDF for the above title, published in the June 2010 issue of EBRI Notes, also contains the fulltext of another June 2010 EBRI Notes article abstracted on SSRN: "Income of the Elderly Population Age 65 and Over, 2008."

Number of Pages in PDF File: 18

Keywords: Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), Employment-Based Benefits, Health Insurance Coverage

JEL Classification: I1, I18, J3, J32

Accepted Paper Series