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Negotiators Slash COBRA Subsidy

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Budget hawks in the Senate have persuaded Sen. Max Baucus, D-Mont., to cut $5 billion in health insurance benefits continuation aid from the latest version of the economic stimulus package.

The authors of the original draft of the American Recovery and Reinvestment Act included $20 billion in help for laid-off workers who want Consolidated Omnibus Reconciliation Act group health continuation coverage, or COBRA coverage.

Sens Ben Nelson, D-Neb., and Susan Collins, R-Maine, pushed for COBRA subsidy cuts in an effort to reduce the cost of the Senate version of the ARRA package about $100 billion, to about $800 billion.

Democrats now control 58 seats in the Senate.

Senate supporters of the ARRA package say the spending cuts appear to guarantee that the bill will get at least 2 Republican votes when the package goes to the Senate floor Tuesday.

ARRA package supporters need 60 votes in the Senate to keep Republican opponents of the package from “filibustering,” or keeping the bill from coming to a vote by engaging in an endless series of speeches.

At press time, Collins, Sen. Arlen Specter, R-Pa., and Sen. Olympia Snowe, R-Maine, were believed to be thinking of supporting the bill, or at least of voting to let it come up for a vote.

The COBRA provision changes would cut the subsidy the government would provide to 50% of the cost of COBRA continuation benefits, from 65%. Workers could collect the subsidized benefits for 12 months.

“I am concerned that a 50% subsidy may not provide enough relief,” Baucus said today during a speech on the Senate floor, according to a written version of his remarks. “In the future, I will look for ways to maximize participation in this program for people who want to keep their health coverage.”

“This bill is not perfect, but it represents a bipartisan, effective and targeted approach to the crisis facing our country,” Collins says in a statement.

The current Senate version of ARRA would provide some funding for health information technology projects, but less than the original version would have provided.

The current version keeps a provision that would provide a one-time payment of $300 for each recipient of Social Security Disability Insurance benefits.

Many private disability insurers coordinate the benefits they pay with SSDI benefits.

A summary of the current Senate version of the ARRA package is available here.