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Sunday, March 1, 2009

President Obama's Stimulus Meets Bureaucratic Reality

Among many promises of the stimulus plan was the promise by President Obama to provide relief for health care to millions of those that are out of work. The federal government has a program called Consolidated Omnibus Budget Reconcilliation Act (COBRA). This allows out of work employees to hold onto their insurance as long as they pay the premium. Of course, the problem with the plan is that those out of work would have all sorts of problems affording the premium. The stimulus provided $25 billion in order to subsidize about 65% of the costs.

While it is a laudable goal to provide health insurance to the unemployed, in this case, it has met bureaucratic reality.

The Obama administration rushed to include a health care safety net for laid-off workers in the recently signed stimulus bill, but has not told employers exactly how to make it work.

As a result, tens of thousands of jobless people could wait months before getting help paying for health insurance that their employers previously had covered.

"Too many people are still trying to figure this out," said Heath Weems, director of human resources policy at the National Association of Manufacturers. "There is a lot of confusion."


The bill gives eligible workers 60 days to apply. Then they get the reduced-cost premium for nine months.

But it's not going to happen right away.

Employers are waiting for instructions from the Labor Department and the Internal Revenue Service on how to put the program into place. Both agencies posted some information online Thursday.

Until employers get the guidance they need and notify potentially eligible ex-employees, most workers will not apply for the new benefit. Many probably will not know it exists.

In other words, upon passing the stimulus, the Obama administration didn't get around to figuring out how to apply this portion of the stimulus. Employers don't know how they will be reimbursed and so they don't know how to pass it along to their former employees. As such, so far, it hasn't been implemented. It appears it will be many months if not years before any out of work former employees are actually helped. To no one's surprise, implementation of this massive stimulus is proving much more difficult than the promises made about it.

This portion, "only" $25 billion, will likely be wasted. By the time it is implemented on anything near a mass scale, we will likely be out of the recession and so there won't be much unemployment. As such, we are witnessing the very first, of many, broken promises regarding this stimulus.

President Obama, and the nation at large, will soon come to see first hand what Yogi Berra once said

in theory there's no difference between theory and practice, but in practice there is

The country is in for many such examples regarding this stimulus.

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