COBRA Health Insurance - A Big Government Joke

A Bit Of Background

COBRA stands for Consolidated Omnibus Budget Reconciliation Act of 1985. As far as its health insurance portion is concerned it is a prime example of lousy big government legislation coming out of Washington, DC.

Essentially it allows an employee to keep his/her employer-sponsored health insurance if a “qualifying event” like lay off occurs as if the qualifying event did not occur. This coverage is available for a maximum of up to 18 months. Great idea, but big government is what it is incapable: monstrosities instead of designing practical, cheap, and free market solutions.

This law is also a fine example of what ails the US health care system, where big government has essentially taken over health care to an extent that it resembles national health care services like in the UK or Germany.

COBRA Health Insurance Is Very Expensive!

Having been recently laid off myself, I received the usual notice letter from my former employer about my “right to continue health care coverage” under COBRA.

The catch: It would cost me $386 for single and $829 for employee & spouse coverage per month. These premiums include the employer share as well. While I was employed, I used to pay $208 per month.

On the market of individual health insurance, I would be able to obtain health insurance with a similar coverage for significantly less than $386. My unemployment benefits here in Arizona are $240 per week (the maximum benefit). What were the legislators in Washington, DC thinking or smoking to come up with such a lousy law?

Employer-Sponsored Health Insurance Is Too Expensive

Given my example above, it is clear that at $386 the employer-sponsored coverage was way too expensive compared with what is available to the individual on the market of individual health insurance. The company, I worked for was small.

I venture to guess that my example is typical across the country irrespective of the size of the employer. Thus, I would presume that health insurance for most employees in the US is significantly overpriced thanks to this prevalent employer-sponsored group health insurance system.

Better Solutions

Apart from a fundamental, free market reform of health care insurance, which I would prefer, federal legislators have had at least two choices for a more sensible reform:

1.       Abolish the tax deductibility of health insurance for companies or

2.       Allow individuals to enjoy the same kind of tax deductibility as companies