Sunday, March 1, 2009

More on the President's Health Policy

In the March 1 Baltimore Sun, an aspect of the President's health plan that I had not noticed previously was reported today in a public interest story. Here is a direct quote from Eileen Ambrose's column:

"Under the new stimulus law, unemployed workers like Kingsbury will get some help with so-called COBRA premiums. They will have to pay only 35 percent of the cost, while the government will pick up the rest through a tax credit to employers. This subsidy lasts nine months."

So, why do I bring this up? The plan that is described above will be critical for people who lose their jobs and their employer-provided health insurance with it. For anyone who hasn't been touched by or otherwise become familiar with COBRA, the law allows people to maintain access to their health insurance when they lose their jobs. The key is that the employer does not have to pay anything and the former employee must pay the entire premium.

The law seems to say that the former employees who are on COBRA will, for nine months, have to pay only 35 percent of the premium. That means that the government will be paying 65 percent of the premium. That is an important savings for people and a way to maintain access to affordable health insurance for more people than would be the case without the stimulus plan.

However, this means that tax money will be used to support status quo programs. The premiums for insurance plans that exist include a lot of inefficiencies. Thus, while I believe it is important to find ways to protect health insurance for more people than ever in this time of economic crisis, I wonder how the government paying to support the current system with its inefficiencies will provide any incentive for necessary change?

While I may be called a pessimist for this--I'd have to say, it probably will not.

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