A number of prominent benefits experts and industry groups have said the creation of the Obamacare exchanges will essentially kill the need for COBRA coverage. But there may be some serious holes in their reasoning.
As HR Benefits Alert reported previously, a report by Kaiser Health News and the Chicago Tribune said it should be safe to assume that most people who qualify for COBRA will instead opt for the subsidized coverage on the exchanges.
As Vice President of Public Policy for the National Business Group on Health Steve Wojcik put it: “Offered a choice between heavily-subsidized coverage in the health act’s insurance exchanges or paying full price under COBRA, most people are going to choose the exchange.”
But the Kaiser and Chicago Tribune report fails to factor in a number of problems COBRA participants can run into should they opt to get coverage on an exchange.
Example: COBRA participants’ carriers may not be offered in some states on the exchanges. When COBRA participants reside in a state that offers a state exchange and they opt to drop their COBRA coverage, they must use a policy offered in that state’s exchange. In many cases, they can’t look on the federal exchanges for better rates because the federal exchanges are reserved for states that don’t have a marketplace of their own. And if the COBRA participant’s carrier isn’t available on his or her state exchange (carrier choice varies greatly from state to state), it’s easy to see how some COBRA participants would be reluctant to walk away from their COBRA coverage.
One COBRA participant’s experience
Of course, much like the Kaiser assertions, the above example is purely speculative. However, the experiences of Anna Imperati, a real-life COBRA participant, aren’t.
Recently, the Journal News ran a profile on Imperati, which chronicled her search on the New York health exchange for insurance and her decision to stick with her COBRA coverage. Her reasons for staying with COBRA:
Difficulty finding an in-network doctor. In addition to determining whether their carriers are available on the state exchange, COBRA participants must find out whether their current doctor is in-network in state exchange plans. For Imperati, the process was anything but simple to determine.
According to the Journal News, the following problems took place when Imperati was comparison-shopping on the exchanges:
“One plan provides a drop-down list to find a specialist — but the menu doesn’t appear to work. Another insurer has multiple plans — with no way of knowing which plan is the one featured on the exchange. Yet another provides a 2,000-page list of network doctors and specialists — not organized in any helpful way. It appears to show two in-network oncologists in Putnam (Imperati’s hospital) — neither of them her current doctor.”
Like many COBRA participants, Imperati is sick (she suffers from breast cancer), and she said staying with her current doctor is an essential component of her care.
Cost issues … even with the subsidy. One of the major selling points of the exchanges is the ability for individuals to find affordable healthcare coverage. But in order for the coverage to be truly affordable, exchange participants will generally need to qualify for a sizeable subsidy. And for Imperati, the subsidy didn’t help enough. Based on her income, which was close to $40,000-per year, Imperati qualified for a subsidy of $54 per month.
So, based on a cost-estimator on the exchange site, the Journal News determined Imperati would pay between $276 to $588 for an Obamacare silver plan, which would cover about 70% of her healthcare costs; and up to $847 per month for a platinum plan that would cover 90% of her health costs.
After examining coverage through her state’s exchange, Imperati ultimately decided to stick with her COBRA coverage.