NU Online News Service — Jan. 22, 2009, 3:52 p.m. EST

The House Ways and Means Committee today marked up a bill that could subsidize the cost of continuing group health coverage for laid-off workers and cut workers’ share of the premiums to 35%.

Ways and Means members voted 24-13 to approve the bill, H.R. 598, the American Recovery and Reinvestment Act of 2009. Title III of the bill is the Health Insurance Assistance for the Unemployed Act of 2009.

House leaders will combine H.R. 598 with other bills to create H.R. 1, a new American Recovery and Reinvestment Act, and bring the bill up for a vote on the floor next week, committee leaders say.

The congressional Joint Committee on Taxation has posted a summary of Title III of H.R. 598 here.

The Ways and Means text of H.R. 1 is available here.

H.R. 598 was introduced by Ways and Means Chairman Charles Rangel, D-N.Y.

The current federal health benefits continuation law, the Consolidated Omnibus Reconciliation Act, requires employers with 20 or more employees that provide group health benefits to to provide access to continuation benefits for 18 months. Employers and health insurers can charge the workers who take up the coverage 102% of the usual premium.

Under H.R. 598, laid-off workers could contnue health benefits for 12 months by paying just 35% of the premiums. The government would pay the remaining 65% of the premiums.Group health plan members laid off without cause could keep subsidized continuation benefits for 12 months, or until they received new major medical coverage.

Laid-off workers receiving the subsidized benefits would not lose the benefits if they become eligible for a more limited plan, such as a dental plan or a wellness plan.

The bill also would require employers to permit involuntarily terminated individuals ages 55 and older to continue group health benefits until they become eligible for Medicare or employers discontinue health plans subject to coverage continuation requirements.

Similarly, any involuntarily terminated worker in an affected group health plan for more than 10 years could keep COBRA coverage until becoming eligible for Medicare.

A coalition that includes groups such as the U.S. Chamber of Commerce, Washington, and the National Association of Manufacturers, Washington, has objected to the provision that would expand COBRA access for older workers and workers with 10 or more years at the same employer.

Even if those workers paid 102% of the cost of the premiums for the continuation coverage, the extra 2% fee “does not cover the true costs of COBRA,” coalition members write in a letter sent Thursday to members of Congress.

Former workers who take COBRA tend to be sicker than average, and their claims costs are 45% higher than the claims costs of comparable group plan members, coalition members write.

“Allowing former employees 55 and older or who have worked for a company for 10 years or more to continue COBRA until Medicare eligibility would be even more costly for businesses,” the coalition members write. “Expanding COBRA is not a viable way of covering the uninsured. Instead, Congress should focus on creating new pooling mechanisms, encouraging research and health infrastructure, and incentivizing wellness and prevention programs.”

The National Business Group on Health, Washington, has issued a separate statement opposing the provisions that would expand COBRA access for older workers and long-tenured workers.

“Long-term extensions of COBRA are likely to significantly increase health care costs for those still currently employed and for employers,” NBGH President Helen Darling says in a statement.