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Health care coverage for laid-off workers splits Republicans

Debate over providing a federal subsidy for COBRA coverage could pit two key groups of GOP supporters against each other

Anti-abortion demonstrators hold a protest outside the Planned Parenthood Reproductive Health Services Center in St. Louis, Missouri, in 2019.
Anti-abortion demonstrators hold a protest outside the Planned Parenthood Reproductive Health Services Center in St. Louis, Missouri, in 2019. (Saul Loeb/AFP via Getty Images file photo)

As Senate Republicans write their next pandemic relief bill, they’ve run into a dilemma of how to provide health care support to workers who have lost their jobs because of COVID-19.

The divide pits two key groups of GOP backers — business interests and abortion foes — against each other, according to several people with knowledge of the deliberations who were not authorized to speak publicly.

One option being discussed is a federal subsidy for premiums that unemployed workers pay to continue their employer-provided health insurance after losing their jobs. Known as COBRA, the coverage is named for the law that established the program: the Consolidated Omnibus Budget Reconciliation Act.

Under that 1986 law, employees at firms with 20 or more workers are eligible for the continuation of coverage for up to 18 months after they lose their jobs but they have to pay the full, and usually costly, premium to keep the insurance.

But that proposal has led to a tug of war between the business community and anti-abortion groups, who note that the proposal would likely allow federal funds to be used to pay for abortions. Federal funding of abortion is currently prohibited by riders attached every year to the Labor-HHS-Education appropriations bill under the so-called Hyde amendment, but the prohibition doesn’t apply to private COBRA insurance.

Another option is to provide expanded subsidies for insurance policies purchased on the exchanges established under the 2010 health care law or expanded Medicaid benefits. Those ideas are also controversial because Republicans fought and tried to repeal the health care law, and they are wary of increasing the cost of the fast-growing Medicaid program.

GOP lawmakers and staff have declined to comment on the internal deliberations over the bill, but they acknowledge the issue is still in play.

“Right now, discussions are ongoing,” said Michael Zona, a spokesman for Senate Finance Chairman Charles E. Grassley of Iowa. Republicans on the Finance Committee are working up sections of the GOP bill with other panels of jurisdiction. Senate Majority Leader Mitch McConnell is expected to share an outline of the legislation with Republican senators when they return next week.

Business groups weigh in

The U.S. Chamber of Commerce and other business interests are urging the Senate to subsidize continuation of COBRA premiums. In a letter to President Donald Trump and congressional leaders Thursday, the chamber proposed that lawmakers finance a 90 percent reduction in COBRA premiums, which would still require laid-off workers to pick up part of the tab. House Democrats want to subsidize 100 percent of the premium.

In a May report, the Kaiser Family Foundation, a nonprofit organization that provides health information, said most people who have lost their jobs do not elect to pay for continuation coverage under COBRA because of its cost. In 2019, KFF said, the average annual cost of coverage was $7,012 for single coverage and $20,599 for family coverage. In 2017, only about 130,000 unemployed adults had continuation coverage, out of more than 11 million adults who were unemployed.

House Democrats included a 100 percent subsidy of COBRA premiums, provided through a tax credit, in the $3.5 trillion pandemic relief package that the House passed in May. The subsidy would last through Jan. 31, 2021. The Joint Committee on Taxation estimated that the provision would cost $106 billion in lost revenue. 

The House bill also would eliminate Medicaid cost sharing for COVID-19 treatment and vaccines, waive Medicare cost sharing for COVID-19 treatment and provide a two-month open enrollment period for the 2010 health care law’s exchanges.

But lawmakers and groups that oppose abortion are pressuring the Senate to keep the insurance subsidy out of the bill and avoid any policies that would allow federal funds to be used for abortion.

In the House, 152 Republicans co-sponsored a bill offered by Republican Rep. K. Michael Conaway of Texas in May, which would bar pandemic-related funds from paying for abortions or abortion-related coverage and prevent federal tax credits from being used to pay for continuation coverage.

An aide to Conaway said his office has asked McConnell to include the anti-abortion language in the pandemic bill. “We’re certainly pushing for it to be included,” Conaway spokeswoman Emily Hytha said. She added that the bill is supported by the National Right to Life Committee.

Hyde amendment

Federal funding of abortion has been prohibited under most circumstances since 1976, when Republican Rep. Henry J. Hyde of Illinois offered an amendment to bar the use of Medicaid funds to pay for abortion in most instances. The amendment with some variation has been passed as part of appropriations bills ever since.

It is unclear whether the Hyde restrictions could be applied to the subsidy. Some states require private insurance plans to cover abortion, for example. Even if the Hyde amendment could be applied to the subsidy, Democrats would likely oppose it.

“The Democrats would need to go along with that,” Brian Blase, who served as an economist and health care expert on Trump’s National Economic Council, said about extending Hyde restrictions to the subsidy. “I think the odds that they would go along with that are zilch.”

Blase, who operates his own firm, Blase Policy Strategies, doubts it is “practical” to apply the Hyde restrictions to the insurance subsidies, in part because some states require insurance policies to cover abortion.

Blase argues against subsidizing insurance premiums in any case.

“It is a massive discouragement for people to work if the government’s picking up 100 percent of the cost of their health insurance premium if they are not working,” he said. Blase also calls the proposal a subsidy for health insurance companies, which he said now are “more profitable than ever.”

Blase instead supports expanding access to health savings accounts and directing federal subsidies into those accounts for people who lost their jobs and employer-provided health insurance.

What happened in 2009?

Lawmakers provided a partial subsidy for insurance premiums as part of the 2009 stimulus package enacted during the Great Recession. The subsidy covered 65 percent of COBRA premiums for up to 15 months. Unemployed workers were required to pay 35 percent of the premium, and their former employers were reimbursed for paying the other 65 percent through a credit against their payroll tax liability.

COBRA presents a separate problem for Democratic leaders, however: Progressive members on their side don’t like it, particularly when cheaper federal programs are available to directly cover the cost. For example, independent Sen. Bernie Sanders of Vermont, who caucuses with the Democrats, has said federal coverage would be cheaper and would distribute benefits more evenly than COBRA subsidies, which could benefit highly compensated workers with expensive plans.

“The decision to extend COBRA benefits instead of providing the unemployed with Medicare or even [Affordable Care Act] subsidies is economic nonsense,” California Democratic Rep. Ro Khanna tweeted before House floor debate on the Democrats’ aid package in May. “COBRA won’t cover those who work for businesses that go under. Cobra is 25% more expensive than Gold plans on the [2010 health care law exchanges] and much more than Medicare.”

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