Transitional subsidies for health insurance coverage.

Losing or leaving a job often means losing health insurance. Of all those who have lost private insurance and become uninsured, one-third have either left or lost a job in the recent past. Continuation of coverage subsidies under the Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 mitigate only slightly this problem due to the high costs of the group coverage that must be purchased. This paper discusses a proposal to build on the successes of COBRA to extend insurance to this important population. The key components are: a doubling of the length of COBRA entitlement to 36 months; eligibility for workers in all firms, not just those with more than 20 employees, but with a waiting period of one to two years; the establishment of a new COBRA-LOAN program that would offer government loans to help enrollees pay the cost of COBRA while they searched for new opportunities; and forgiveness of repayments after the entitlement period for those with low incomes.