[Congressional Record (Bound Edition), Volume 147 (2001), Part 7]
[Extensions of Remarks]
[Page 9500]
[From the U.S. Government Publishing Office, www.gpo.gov]



 INTRODUCTION OF THE COBRA COVERAGE EXTENSION AND AFFORDABILITY ACT OF 
                                  2001

                                 ______
                                 

                        HON. FORTNEY PETE STARK

                             of california

                    in the house of representatives

                         Thursday, May 24, 2001

  Mr. STARK. Mr. Speaker, I rise to join with my dear friend 
Representative Joe Moakley (D-MA) to introduce the COBRA Coverage 
Extension and Affordability Act of 2001.
  COBRA is the law that allows employees who face a change in their 
work status--and would otherwise lose their health insurance--to be 
able to continue that same coverage through their previous employer for 
a period of generally 18 months and sometimes as much as 36 months 
depending upon their particular situation. During this continuation 
period, employees must pay 102% of the cost of their current health 
insurance plan. That means they pay their previous employer share, 
their own share, and an extra 2% to make up for any administrative 
costs faced by their previous employer for maintaining their coverage.
  COBRA was created in order to provide a bridge for workers to be able 
to maintain health benefits for themselves and their families. It has 
been in place since 1986 and is overdue for remodeling.
  The bill we are offering today makes three key improvements to 
existing COBRA law:
  (1) It extends the length of time that COBRA continuation benefits 
are available for all workers and their families from an average of 18 
months to 5 years with workers paying 102% of premiums as required 
under current law.
  (2) It creates a new category of COBRA continuation coverage for 
people age 55 and over. Anyone age 55 and over is eligible to extend 
the 5 year limitation on COBRA coverage. They are able to keep their 
COBRA coverage until they become eligible for Medicare. If they choose 
to extend this coverage beyond the 5 year limitation, they will be 
responsible for premium payment of 125% the cost of the employer plan.
  (3) It makes all COBRA recipients eligible for a refundable federal 
tax credit worth 50% of their premium costs.
  The attraction of the COBRA program is that it enables people to 
maintain continuity of coverage when they are between jobs, or 
temporarily in a job that doesn't offer health benefits. It also 
usually allows them to maintain much more comprehensive coverage than 
would be available in the individual health insurance marketplace at a 
similar cost. Unfortunately, 18 months is often not enough time for 
someone to obtain a new job with comprehensive health care benefits for 
themselves and their family.
  Our legislation would allow people to maintain the safety net of 
COBRA for up to five years--which should provide ample time for a new 
position with solid benefits to be found. Because the worker pays 102% 
of the premiums, there is no cost to the employee of maintaining them 
in their group plan.
  Our legislation goes even further for people age 55 and older because 
many people in this age category retire before becoming eligible for 
Medicare or find themselves ``downsized'' out of a job. These people 
are the least likely segment of our population to be able to obtain 
affordable coverage in the individual health insurance marketplace. 
And, with the aging of the baby boom generation, this is a quickly 
growing segment of our population. In 1999, there were 23.1 million 
Americans in this age group. This number is expected to grow to 35 
million by 2010 and to 42.5 million by 2020.
  For these people, we would enable them to extend COBRA coverage until 
they become eligible for Medicare. This provision would provide them 
with stable health insurance until they become covered by Medicare. The 
bill recognizes the fact that this age group is more expensive to 
insure and compensates business accordingly by increasing the cost of 
participation to the worker form 102% of the premium to 125% of the 
premium cost if they maintain COBRA more than the standard of five 
years put forth in the first provision of our legislation.
  Finally, we are especially excited about the provision that provides 
a new, refundable tax credit worth 50% of the premium costs. This tax 
credit is vitally important because health insurance is expensive! We 
are requiring people to pay 102% of the premium and these are often 
people with no job--or seriously underemployed for a temporary period 
of time. Overall premiums for health insurance have an average annual 
cost of $2400 for an individual and more than $6000 for a family.
  The tax credit will defray some of the otherwise potentially 
unaffordable new cost forced on workers who wish to take advantage of 
the COBRA continuation option. They will still be responsible for much 
more of the cost than under a comprehensive employer-provided health 
plan in which the employer pays 80% and the employer pays 20%. But, 
this tax credit will enable many more people to take advantage of the 
opportunity to remain insured until another employer-provided plan 
becomes available to them.
  Many of our colleagues on the other side of the aisle are enamored of 
a tax credit approach to solve the problem of the uninsured. 
Unfortunately, those members refuse to create a marketplace where 
health insurance would be made affordable and be fairly offered. The 
beauty of attaching a tax credit to COBRA continuation benefits is that 
you have guaranteed buy-in to a group health plan with comprehensive 
benefits that does not underwrite the price of the premium based on an 
individuals'--or their families'--health status.
  This bill has something in it for everyone. It builds on the existing 
COBRA law. It helps people who are between jobs maintain affordable, 
comprehensive health insurance for themselves and their families. And, 
it includes the favorite solution put forth by the Republicans to 
reduce the number of uninsured--a tax credit approach.
  Again, we know this bill is no panacea for solving all of the health 
insurance problems facing our nation. However, it certainly makes 
dramatic improvements on the status quo.
  We look forward to working with our colleagues on both sides of the 
aisle to enact the COBRA Coverage Extension and Affordability Act and 
make important strides to help workers maintain affordable, continuous 
health insurance coverage for themselves and their families.

                          ____________________