Congress Approves Stimulus With COBRA, Unemployment Expansion

February 13, 2009
Massive legislation designed to jump-start the economy passed the House and Senate on Friday, February 13.

House approval was nearly party-line, 246-183, with no Republicans voting for the bill and seven Democrats against it. The Senate okayed the measure, 60-38, with the support of three Republicans.

The Senate action was held open until 10:46 p.m. Friday night to allow Sen. Sherrod Brown, D-Ohio, to return from a memorial service for his mother in Ohio and cast the decisive vote. Senate rules required 60 votes for passage.

The $787 billion measure now heads to President Obama, who has made the bill his top priority and will soon sign it into law. Totaling more than 1,000 pages and containing dozens of tax breaks and spending initiatives, the bill addresses employee benefits and several other HR areas.

The legislation provides subsidies for laid-off workers to maintain their employer-sponsored health coverage, while a large chunk of the measure increases spending on infrastructure projects to create employment. It also includes $37.5 billion for energy initiatives that proponents say will generate “green jobs.”

The measure allocates $19 billion for a national health information technology system to support computerized medical records, an effort that could reduce health care costs and improve quality.

Democratic congressional majorities rushed the stimulus bill through the legislative process over the last three weeks. Republicans asserted that they were effectively shut out.

Democrats maintained that they allowed Republicans to offer amendments at the committee level and on the Senate floor. The final bill was largely influenced by a Senate compromise that passed earlier this week and brought three Republicans on board.

Obama and Capitol Hill Democrats have made the bill a centerpiece of their efforts to pull the economy out of a recession.

“It’s a plan that will ignite spending by businesses and consumers, make the investments necessary for lasting economic growth and prosperity, and save or create more than 3.5 million jobs over the next two years,” Obama said at a White House event Friday.

The bill would sharply increase spending for those who are currently jobless. It provides a nine-month, 65 percent subsidy for COBRA premiums for people who lose their jobs between September 1, 2008, and December 31, 2009. The premiums average about $1,000 a month.

The cost of the COBRA provision is $24.7 billion and is estimated to help 7 million people.

Employer groups were relieved that the final bill did not include a measure that would have expanded COBRA coverage indefinitely for workers who are 55 or older or who have been with a company for 10 or more years.

The COBRA policy that was approved might increase health care costs for employers because those who maintain coverage tend to be sicker than the average population.

On the other hand, if the unemployed have some help in paying for health care, it would increase their job-hunting options, according to John Heins, senior vice president and chief human resources officer at Spherion Corp., a Fort Lauderdale, Florida, recruiting and staffing provider.

“It gives them more flexibility to take nontraditional jobs like temporary or contract assignments,” Heins said.

But it’s hard to predict the effect of the COBRA subsidy. “It’s untested, and it’s unmodeled,” Heins said. “So who knows what will happen with it?”

Another way the bill helps the jobless is by extending unemployment benefits up to 33 weeks and increasing payments by $25 a week through 2009.

The measure also ushers in changes to unemployment policy. It would provide $7 billion to states to expand coverage for low-income and part-time workers. The total spending in the stimulus bill on unemployment insurance provisions is $40 billion.

But the cost could be borne in part by employers, potentially consuming money that might otherwise support new jobs, Heins said.

“Most companies only have a fixed [budget] for salaries and wages,” Heins said.

The House deliberation highlighted tension between those who argued the stimulus bill would put people to work and those who asserted it would only result in bigger government.

“The American people need action, and they need it now,” said House Speaker Nancy Pelosi, D-California. “After all the debate, this legislation can be summed up in one word: jobs.”

House Minority Leader John Boehner, R-Ohio, didn’t dispute that Congress should act to bolster the economy. But he doubted that the stimulus measure was the answer.

“A bill that was supposed to be about jobs, jobs, jobs has turned into a bill about spending, spending and spending,” Boehner said.

—Mark Schoeff Jr.

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