Under a legislation approved by a House panel on Thursday employers would have to extend COBRA health care coverage for older employees as well as employees who have been in service for longer periods till such time that they are eligible for Medicare.

COBRA comes from Consolidated Omnibus Budget Reconciliation Act, a 1986 federal spending bill into which the health insurance requirement was inserted. As per the law any employer with 20 or more employees must offer them COBRA continuation health coverage.

Under this provision employees who leave their jobs are given the right to continue health insurance coverage from their former employer for a period of 18 months by paying the full premium plus 2 %. Experts worked out premiums under COBRA and said they came to more than 82 % of the average monthly unemployment benefit which makes it unaffordable to most.

Bob Harvell, with the North Carolina Department of Insurance said, "If they're still paying mortgages and car payments and things like that, and all of a sudden here comes the bill for the health insurance that they've got to pay on their own, that the employer used to pay, yeah, that's a real eye-opener and most of them will say, 'We can't do that.'"

Under the recent measure employees who leave work under the age of 55, regardless of how long they have worked for the employer can continue to retain their COBRA coverage until they reach the age of 65 and become eligible for Medicare as would an employee who has worked for at least 10 years.

The legislation also offers employees who are laid off between Sept. 30, 2008, and Dec. 31, 2009, a 65% federal COBRA premium subsidy for 12 months. The legislation was approved on partisan 24-13 vote and the full House is expected to take up the stimulus bill next week.

Committee member Ginny Brown-Waite, R-Fla., spoke in opposition to the expansion and said such changes could lead to more employers dropping health insurance coverage as the cost they will have to bear will go up manifold.

Mark Ugoretz, president of the ERISA Industry Committee in a letter to federal legislators said, "The purpose of the COBRA program is not and should not be, to provide long-term or permanent coverage."

For many people today who are without a job there aren't a lot of health insurance options that are affordable with the result they go without health insurance.

"If you can't afford to purchase insurance, the only government-sponsored program we have is the Medicaid system. And you and I both know that most people don't qualify under the guidelines of Medicaid," Harvell said. The two options get written off with COBRA being too expensive for many, and Medicaid only open to people below a certain income level, seniors or people with disabilities which leaves many people still scouting for affordable healthcare options.

Apart from finding another job, the only option people have is Inclusive Health, or the North Carolina Health Insurance Risk Pool
(NCHIRP). This program began on Jan 1 and covers people with pre-existing conditions, people who have completed their 18 months of COBRA as well as people who don't qualify for COBRA. The premiums vary from $200 to $1,500 a month depending on factors such as age and gender.