“The implementation of ACA exchanges appears to have somewhat mitigated adverse For Immediate Release selection against employer plans. Most newly-separated workers no longer have COBRA as their only choice for health insurance,” said Paul Fronstin, Ph.D., Director of the Contact: Health Research and Education Program at EBRI and co-author of the study. “ACA exchanges serve as a viable alternative to maintain health insurance coverage. As a Betsy Jaffe result, the ratio of spending by COBRA enrollees to spending by those covered by a full- Director, Marketing and Public Relations time worker with an employer-sponsored plan has decreased steadily over time, and Employee Benefit Research Institute press-media@ebri.org this trend holds for both individual coverage and family coverage.” 202.775.6347 Because EBRI finds, on average, people who receive coverage through COBRA are EBRI Finds Total Health Care Costs Incurred by Individuals Covered by COBRA Nearly systematically higher spenders, extending subsidies for newly-separated workers to 300% Higher Compared With Those Receiving Coverage as a Full-Time Employee enroll in COBRA could be beneficial from a public policy perspective by improving the risk pool for COBRA claimants. “The systematically higher spenders who have historically Affordable Care Act insurance exchanges slightly mitigate adverse selection; Subsidies can further claimed COBRA benefits might instead be balanced out by marginally healthier former improve employers’ risk pools workers that choose to enroll on account of receiving a subsidy,” explained Fronstin. “The ratio of spending by those covered by COBRA to those covered by a full-time Washington, D.C. – July 9, 2020 – A new EBRI study finds people who receive health employee has dropped over time, however, indicating that the adverse selection insurance coverage through the Consolidated Omnibus Budget Reconciliation Act of mechanism has already been slightly moderated.” 1985 (COBRA) use more health care services than active workers or their dependents. “COBRA: A Closer Look at Who Enrolls and the Case for Subsidies ”, can be found at In a first study of its kind, the Issue Brief, “COBRA: A Closer Look at Who Enrolls and the ebri.org. Case for Subsidies ”, finds that COBRA beneficiaries are systematically different from active workers or their dependents. The average COBRA beneficiary is older and less About EBRI: healthy than their counterparts. COBRA beneficiaries are on average 50 years old, while full-time employees are 42.6 years old. In addition, COBRA beneficiaries were more The Employee Benefit Research Institute is a private, nonpartisan, nonprofit research institute b lik ased in ely th W anash act in ive gt o w nor , Dk C, t ers hat or fo th cus eires dep one heal ndeth, sa nts to vi n hg ave s, rec tire ertm ain en h t, ea an lt dh fin cond ancial ition secur s, su ity c h as issu COPD es. E , d BRI iab do etes, es no can t lc oer bb,y h and igh do bloo es no d ptre tak ssu e r pe, olih cy igh po c siti hol on est s. The erol, w me ork no tf aEBRI i l healt s m h d ad isor e ders, possible by funding from its members and sponsors, who include a broad range of public, and musculoskeletal disorders, and spent more days in a hospital. private, for-profit, and nonprofit organizations. For more information please visit ebri.org. The study also finds that the average COBRA beneficiary uses more health care services and spends significantly more than active workers or their dependents.. In 2018, among those with individual coverage, active, full-time employees used an average of $6,724 in health care services. COBRA beneficiaries used an average of $18,752, a nearly 300 percent difference. Subsidies can help reduce adverse selection against COBRA plans. By making COBRA plans more attractive relative to alternatives, healthier people will choose to enroll in COBRA, which can help improve an employer’s risk pool. However, the ratio of spending by COBRA beneficiaries to spending by those covered by insurance via a full-time worker has decreased since the implementation of the Affordable Care Act (ACA) health insurance exchanges. Additionally, there is a subsidy mechanism already in place for households earning under 400 percent of the federal poverty limit for purchasing insurance on ACA exchanges, which calls into question the necessity of COBRA subsidies.