Medicaid, COBRA Provisions Expand Health Insurance Coverage

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Under the two-year economic stimulus package released last week by House Democrats, recently laid-off workers could receive health coverage assistance through an $8.6 billion expansion in Medicaid or $30 billion in federal COBRA subsidies, the Washington Post reports.

The Medicaid expansion would be the "largest step ever taken beyond [the program's] original purpose of insuring people who are poor or disabled," according to the Post. House leaders said that under the proposal, the federal government would pay in full all benefits and administrative costs for all unemployed Medicaid beneficiaries through 2010. The proposal would allow states to choose whether to extend Medicaid coverage to unemployed residents, and it would allow states to determine who would qualify for the program. States would have the option of expanding Medicaid benefits to people using or who have exhausted unemployment benefits, no matter what their income is; unemployed people who qualify for food stamps, which in many states are available to residents whose incomes are too high to qualify for Medicaid; and people who have been laid off and have incomes up to 200% of the federal poverty level who otherwise would not qualify for Medicaid.

House leaders said that under the COBRA proposal, health insurance premiums would be subsidized up to 65% for one year for recently laid-off workers. According to legislative sources, the level of assistance could change depending on the results of congressional budget analyses, the Post reports.

The "boldness" of the provisions "reflects a precipitous rise in the uninsured," and "including insurance help for the unemployed in a fast-acting economic stimulus package is part of a strategy by congressional Democrats and [President Obama] to place attention on health care right away," according to the Post. The provisions, in coordination with recent moves to reauthorize and expand SCHIP, signify an "effort by Democrats to create momentum for the more difficult work of broad health reforms that they and the Obama administration plan to undertake soon," the Post reports.

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"The twin ideas ... would represent sharp departures in two long-standing programs and already are sparking debate along the ideological continuum on Capitol Hill and beyond," the Post reports. According to the Post, conservative health care policy experts are "critical of expanding an entitlement and are predicting that states would have a hard time shutting the spigot of help once the federal money stopped." Nina Owcharenko, an analyst at the Heritage Foundation's Center for Health Policy Studies, said that states will feel mounting pressure to maintain the Medicaid expansion when the federal funds run out in two years; otherwise, it's "seen as kicking people off the program."

In addition, Stan Dorn, a health policy researcher at the Urban Institute, said that even with the COBRA subsidies, health insurance premiums might be unaffordable for some residents. According to Dorn, 12% to 15% of a small group of dislocated workers eligible for a similar tax credit worth 65% of insurance premiums have taken advantage of the benefit because premiums still are too high. He said that if COBRA subsidies were for the same amount, "there is a very good chance the program will be a major failure."

A House aide said the extent of the federal government's help, and how many people might use the subsidies or Medicaid expansion, will remain unclear until the budget analyses are completed. The aide added that "this is far from a perfect solution, but it is going to help some people" (Goldstein, Washington Post, 1/17).

Presidential Agenda

In related news, the New York Times on Monday examined how "to a remarkable degree" the economic stimulus package "reads like an Obama campaign checklist," including an expected $20 billion toward the cost of a $50 billion nationwide health information technology expansion. Rahm Emanuel, Obama's chief of staff, said that the stimulus package "will advance every one" of the president's policy goals, including reducing health care costs and helping low- and middle-income workers. However, the Times reports, "Once the economy does start to recover, long-term financing will be in question for Mr. Obama's energy, education and health care initiatives as he and Congress turn to reducing budget deficits" (Calmes, New York Times, 1/19).

Reprinted with permission from kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, and sign up for email delivery at kaisernetwork.org/email . The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation. © 2007 Advisory Board Company and Kaiser Family Foundation. All rights reserved.

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