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Cindy's Blog

Isn't it alarming that no one can afford their own COBRA?

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Isn't it alarming that no one can afford their own COBRA?

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I've been trying to make some health insurance arrangements (in one of those ridiculous situations that can only come up in the only first world country without universal health care), and I'm learning a lot about the system.

I think it's really alarming that people can't afford their own COBRA, and often don't even consider it as an option. I've been really surprised that people have no idea how much their employer pays for their health care, and COBRA is exactly 102% of that amount. For example, at my school, the staff health care plan is really deluxe, and costs about 1000$/mo. At a big company with a lot of young healthy workers, it can be around $400 even for low wage employees. So everyone's salary and expenses are much higher than they realize. People only notice this when they see that COBRA number. (It really affects how much you need to save to have 3-6 mos expenses.) I've always thought that one should be allowed to do COBRA indefinitely (similar to how you can keep paying your life insurance at the same rate even if you get cancer). I think that would be a good start. But I've been realizing that it's the percentage of salary itself that's the problem. Not that I think there's a right number, and I could personally live with 20% (so long as I get MRIs for my headaches at that cost :) ), but it seems like most people think it's way too high given the way they react to COBRA. So something has to give.

I was wondering if it would help inject some actual facts in the health care debate if employers all sent out a notice to all their employees with how much they pay for each person per year and per month, what percent of that person's particular salary that is, and what they'd be paying for COBRA (same as above). It would also be great if people saw it coming off the top of their paycheck every month in some way. People have no idea how precarious their financial situation is (in case of a job loss) without this information.

It's pretty messed up how hard it is in the US to start a small business, or to retire early. I can see almost any health reform they could pass helping the job market dramatically. I was wondering if we could make a "buy into Medicare" option but now I see why they want to keep it separate. Medicare is a really unhealthy pool of people (the elderly) and seems to include the vast majority of people over 65. From my calculations, it costs about 900$/mo, which sounds about right for a known unhealthy pool. That pretty much has to be something that we pay into while we're young because we can't possibly pay all of it when we get old. So whatever we do for <65 people (public or private) has to go on top of Medicare taxes.
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