Impact of the ARRA Cobra Subsidy
*Names in bold indicate Presenter
This paper uses data drawn from a new survey of COBRA-eligible individuals identified from an administrative sample of unemployment insurance claimants in nine states to examine the impacts of the subsidy offer on health insurance coverage. To estimate the impacts of the subsidy, we compared health insurance coverage and other key outcomes of subsidy-eligible individuals who had lost their jobs between January and May 2010, with otherwise similar individuals who would have been eligible for the subside except for the timing of job loss (similar individuals who lost their jobs in June 2010-December 2010). All individuals we surveyed experienced a job loss in 2010, and individuals in the post-subsidy period were selected to ensure similarity in observed demographic characteristics and employment histories.
We found that access to the subsidy significantly increased COBRA take-up by about 5 percentage points (or 15 percent). However, we did not see any reductions in the total number of months these workers lacked health insurance. Thus it appears that workers who were induced by the subsidy to use COBRA may have eventually found other source of health insurance in the absence of the subsidy. There was no impact on COBRA take-up for low-income households. We also found that subsidy-eligible individuals were less likely to be employed in the second and third quarters following their job loss, but eventually end up having slightly higher employment rates a year after job loss. Overall, the impact of the subsidy on COBRA take-up was significantly lower than one would have predicted from the responses that unemployed individuals gave to hypothetical questions about their health insurance decisions. These findings suggest both that more public education may have been necessary to make eligible workers aware of the benefit and that the subsidized COBRA premiums were still too expensive for many unemployed individuals.