Stethoscope and cutout of people figures

Individuals who are covered by COBRA are "systematically different" than the full-time workers who receive benefits through an employer, including the fact that COBRA beneficiaries rack up 300% more in total health care costs, according to a report from Employee Benefit Research Institute released Thursday.

The study, which EBRI asserts is the first of its kind, comes in the wake of calls to expand access to COBRA coverage as more than 17.8 million Americans find themselves out of work during the coronavirus pandemic, according to U.S. Department of Labor data.

The EBRI research found that COBRA beneficiaries skew older than full-time employees. On average, COBRA enrollees are 50 years old, whereas full-time workers are 42.6 years old.

The report also contends that COBRA beneficiaries are more likely to have certain health conditions, such as chronic obstructive pulmonary disease, diabetes, cancer, high blood pressure, high cholesterol, mental health disorders and musculoskeletal disorders. This group also tends to use outpatient services more frequently, according to the study. For instance, the average COBRA beneficiary with individual coverage "used psychotherapist services nearly four times more frequently than the average person with coverage through a full-time employee and physical therapy services more than two times as frequently," the study says.

The data shows that COBRA enrollees typically take advantage of more health care services and spend significantly more than the average full-timer. In 2018, full-time employees with employee-only coverage used an average of $6,724 in health care services, but COBRA beneficiaries incurred about 300% more in health care costs, averaging $18,752.

One potential way to drive down this adverse selection is subsidies, according to the report. With more competitively priced plans, COBRA might be able to enroll individuals with fewer health conditions, lowering the employer's risk pool. Yet the study notes that the Affordable Care Act has already helped to lower the ratio of spending by COBRA beneficiaries compared to full-time workers.

"The implementation of ACA exchanges appears to have somewhat mitigated adverse selection against employer plans. Most newly-separated workers no longer have COBRA as their only choice for health insurance," Paul Fronstin, director of the Health Research and Education Program at EBRI and co-author of the study, said in a statement. "ACA exchanges serve as a viable alternative to maintain health insurance coverage. As a result, the ratio of spending by COBRA enrollees to spending by those covered by a full-time worker with an employer-sponsored plan has decreased steadily over time, and this trend holds for both individual coverage and family coverage."

Additionally, since COBRA beneficiaries spend more on health care services on average, providing COBRA subsidies to newly unemployed Americans could "be beneficial from a public policy perspective by improving the risk pool for COBRA claimants," the EBRI research found.

"The systematically higher spenders who have historically claimed COBRA benefits might instead be balanced out by marginally healthier former workers that choose to enroll on account of receiving a subsidy," Fronstin said. "The ratio of spending by those covered by COBRA to those covered by a full-time employee has dropped over time, however, indicating that the adverse selection mechanism has already been slightly moderated."

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COBRA beneficiaries pay 300% more for health care

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