COBRA ARRA subsidies: was the carrot enticing enough?

To help preserve continuity of health insurance coverage during the recent recession, the American Recovery and Reinvestment Act provided a 65 percent Consolidated Omnibus Budget Reconciliation Act (COBRA) premium subsidy for workers laid off in 2008-2010. We examined COBRA enrollment levels with the subsidy and the health, access, and financial consequences of enrollment decisions.

Telephone interviews linked with health system databases for 561 respondents who were laid off in 2009 and eligible for the COBRA subsidy (80 percent response rate).

Overall, 38 percent reported enrolling in COBRA and 54 percent reported having some gaps in insurance coverage since being laid off. After adjustments, we found that those who had higher cost-sharing, who had higher incomes, were older, or were sicker were more likely to enroll in COBRA. COBRA enrollees less frequently reported access problems or that their health suffered because of poor access, but they reported greater financial stress due to health care spending.

Despite the substantial subsidy, a majority of eligible individuals did not enroll in COBRA, and many reported insurance coverage gaps. Nonenrollees reported more access problems and that their health worsened. Without a mandate, subsidies may need to be widely publicized and larger to encourage health insurance enrollment among individuals who suffer a negative income shock.