COBRA extension: “Immediate” health care reform

With all the hoopla surrounding health care reform, you might think the health care system will transform on the very date President Obama signs a final bill. That’s not the case: transition time built into all the bills up for consideration means that the Health Insurance Exchange and other key provisions won’t take effect until 2013. That’s why a set of “immediate” reforms (effective in 2010) is included in the Affordable Health Care for America Act (H.R. 3962), the latest version of the House’s legislation (unveiled with great fanfare last week by Speaker Pelosi (D-CA)).

These immediate reforms are designed to some extent to increase coverage options in the short term. One such short-term measure, approved by the House Education and Labor Committee in mid-July, would expand COBRA benefits to help bridge the transition to near-universal coverage.

Currently under COBRA, former employees may generally continue their former employer’s coverage for 18 months. Under H.R. 3962 (scroll to page 70 to find Section 113 of Division A), those same employees could remain on COBRA coverage until the proposed Health Insurance Exchange is up and running. COBRA coverage would be cut off before then if the individual gains access to other “acceptable” coverage or to Medicare, or if the individual fails to pay applicable premiums.

Will this provision make the cut into final legislation? It could face a tough fight. Senate proposals don’t include a comparable provision. Employers probably won’t like this provision: COBRA notice requirements cause headaches for many businesses. One larger insurer is already complaining about a spike in claims after watching the portion of its customers enrolled in COBRA-related plans grow (albeit to just over 2 percent) since COBRA premium subsidies started in February.

And, while those premium subsidies will begin to expire in December, legislation just introduced by Congressman Joe Sestak (D-PA) would, among other things, make the subsidy available to those laid off through June 30, 2010.