Democratic COBRA Plan Denounced as Costly Taxpayer Gift to For-Profit Industry

by Jake Johnson, published on Common Dreams, May 13, 2020

For weeks, progressive lawmakers and advocacy groups pressed the House Democratic leadership to support an emergency expansion of Medicare coverage to the tens of millions of people who have lost their jobs and their employer-provided health insurance during the coronavirus pandemic.

But in their newly introduced 1,815-page coronavirus relief bill, House Democrats opted instead for a more expensive alternative that progressives and public health experts warn would provide inadequate care while lining the pockets of the insurance industry, which is already making a killing during the Covid-19 crisis.

The Heroes Act proposes fully subsidizing COBRA, an existing health insurance program that allows laid-off or furloughed workers to remain on their employer-provided insurance plans. Under normal circumstances, COBRA is extremely expensive for individuals—recipients have to cover both their own and their employer’s premium payments—but the Democratic plan would cover 100% of the premium costs through next January.

COBRA expansion has the backing of a bizarre alliance of interests, including big business and some labor unions, but critics say the proposal is wildly inefficient and does not come close to matching the scale of the nation’s current healthcare crisis.

Subsidization of private COBRA plans would “leave so many uninsured, and many more burdened with the high-deductibles of these plans,” said Adam Gaffney, a critical care doctor and president of Physicians for a National Health Program, an advocacy group that supports Medicare for All.

We’re facing the biggest economic crisis since the Great Depression—subsidizing the insurers is not going to cut it,” Gaffney said. “We need emergency Medicare expansion for the uninsured, and coverage of out-of-pocket costs for the insured, now.”

As Akela Lacy and Jon Walker reported for The Intercept on Tuesday, COBRA expansion

“has gained traction among private insurers as they lose customers at an alarming rate, and especially among hospitals because they often charge people with employer insurance more than twice as much as those with Medicare or Medicaid.”

“That’s why, for the federal government, fully subsidizing COBRA on a per person basis will actually be one of the most expensive ways for the federal government to keep coverage numbers up and also one of the worst ways to target it.”

“While fully subsidizing COBRA has the popular appeal of simplicity,” Lacy and Walker wrote, “it is inefficient, unfair, poorly targeted, could end up hurting some people, and does not even work toward closing the gaps in the nation’s health care system. It is inequitable because much more help will go to people who previously made higher incomes.”

“Not only would health insurance corporations make massive profits off the plan—profits that come at the cost of the American taxpayer—but it would still leave tens of millions uninsured or underinsured.”

Progressives who advocated for ambitious Medicare expansion voiced dismay after discovering that Democratic leaders who directed the crafting of the Heroes Act—pitched as a bold, even “Rooseveltian,” solution—decided to propose a policy pushed by the insurance industry and big business.

Warren Gunnels, staff director for Sen. Bernie Sanders (I-Vt.), tweeted Tuesday that “subsidizing COBRA is a massive giveaway to health insurance CEOs that will leave tens of millions behind.”

Jake Johnson is a staff writer at

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