It all started back in 1986. That year roughly 6.5 million people participated in Hands Across America; IBM unveiled the first laptop computer; Top Gun was the number one box office movie; and President Ronald Reagan signed the Consolidated Omnibus Budget Reconciliation Act (COBRA) into law.

The law itself has been through its share of changes and updates over the years, and includes regulations on everything from tobacco pricing to railroads, but perhaps its best-known purpose is how it allows those separated from their group health insurance benefits to continue the same coverage.

Prior to having healthcare continuation as an option, many families faced gaps in coverage when leaving their employer, which could have a devastating financial impact should a family member fall ill. Enrolling in individual health insurance options outside of the workplace presented families with problems as well.

Before the Affordable Care Act (ACA), health insurance premiums and eligibility depended largely on each applicant’s medical history. Meaning that, the higher the risk the insurance company deemed you, the more you would pay. When it came to pre-existing conditions, insurance companies could decide not to cover that particular condition, or deny coverage altogether. So, before the ACA, many would be excluded from health insurance coverage, leaving them to lean on employers for coverage.

Real-life example: Access to health insurance pre-ACA was life-changing. Take Jennifer. After graduating from college, she moved to California from the east coast to pursue her dreams of becoming a professional photographer. Her father, supporting a family of five, was only able to help pay for her COBRA coverage one year after aging out of his coverage at work. At the end of that year, her options became very limited.

Here’s why. Jennifer had been diagnosed with a brain tumor at the age of 16 and not one insurance company would cover her due to pre-existing condition clauses. Because of her ongoing follow up and medications, she couldn’t afford to be without health insurance—and she couldn’t afford COBRA. So Jennifer put down her camera and found a corporate job in Marketing, because it was the only way she could get coverage.

Given the challenges noted above, COBRA was a big stride in helping Americans continue access to health insurance—even though it came with a steep price. What else did COBRA accomplish?

  • It was a step in freeing employees from “‘job-lock’—the phenomenon of people staying in jobs they would otherwise leave, in order to keep their benefits.”*
  • Before the Affordable Care Act, group plans were typically more comprehensive than individual plans. That meant that COBRA offered more robust coverage than the individual market did. So while enrollees would be paying a much higher cost, they would be getting better coverage than they could otherwise get on their own.
  • Maternity coverage is a good example: Before the ACA, only 13 percent of plans in the individual market covered maternity. In the group market, all plans with at least 15 employees have included maternity coverage since 1979. So while COBRA included maternity coverage, most plans in the individual market did not.*
  • Prior to 2010, children aged out of their parents’ health insurance plans once they turned 19, or 24 if they were full-time students. COBRA allowed these adult children to continue their parents’ coverage for an additional 36 months.

*https://www.healthinsurance.org/obamacare/do-you-still-need-cobra-health-coverage/