My personal favorite idea at the moment is a Medicare-buy-in-with-price-reform plan with automatic enrollment and increased subsidies, paid for by phasing in equal treatment of investment income (capital gains) so itâs taxed at the same rates as earned income (yes, we currently tax people a higher percentage for money they earn by working than for money made by investing.) The idea is this:
First, create a public option insurance company called something like Medicare Exchange or Open Medicare. The key to this public option is that it is linked to Medicare in two ways: it has access to the Medicare Fee Schedule and to the network of Medicare providers. Since this public option insurance company has that fee schedule, which is on average somewhat lower than private insurance fee schedules, it can charge a somewhat lower premium than other insurance. Since the public option insurance company also has access to Medicareâs network, it can provide treatment everywhere in the US. So this will be an attractive insurance option on the exchanges, available to everyone.
Second, open up the exchanges to employers, allowing employers to buy plans off the exchanges, including the Medicare Buy In option. Many employers will do this due to the lower premiums. Between itâs likely success with both individuals and employers, the Medicare Buy In will get bigger, with even more bargaining power.
Third, we tighten up the Medicare fee schedule, allowing Medicare to negotiate harder on drugs and on all treatment generally. Between the current size of Medicare and the increasing market share of Medicare Buy In, we should be able to hold prices to the rate of inflation. Over time, this will bring medical prices âdownâ by a relative 2% to 3% per year (relative to the current cost curve).
Fourth, once Medicare Buy In is well established and has plenty of treatment access and sufficient admin staff to handle it, we automatically enroll every uninsured person in this plan, and charge them the appropriate premium (same as everybody else). They have the option of choosing a non-Medicare plan if they want, but I suspect the Medicare Buy In will out-compete the alternatives.
Fifth, we subsidize those with incomes below a certain level, on a sliding scale with no sharp cutoffs, using the money from the equalization of capital gains taxation. Right now, capital gains is taxed at a lower rate than earned income, and the differential is in the ballpark of $100 billion/year revenue we would be getting if capital gains and income from work were equally taxed. The average premium for people below 65 in the Medicare Buy In will be in the $6K to $7K / year range, so $100 billion gives us a full subsidy for roughly 15 million people, or a half subsidy for 30 million, If we use a sliding scale, plus automatic enrollment to make those who can afford pay a premium, we can get all 30 million uninsured into the system.
Over time, I believe the Medicare Buy In / public option insurance company (Iâm using those terms for the same thing b/c I couldnât think of a catchy name) will out-compete private insurance both with employers and on the exchanges such that it will be come a system thatâs not all that far from single payer. Germany has a âcompulsory health insuranceâ system with multi-payer universal coverage and IIRC about 85% of Germans use the public option with the remaining 15% using private options. I would expect our system to be somewhere in that ballpark after a few years of transition.
From there, if we want to transition to a full on single payer, the disruption will not be that great. Or, if a âuniversal multipayer with hefty subsidies and price reformâ system is working well, we can stick with that.
The advantages of this plan is that itâs not very disruptive: it allows people getting insurance through employers to continue and is also likely to save both individuals and employers money over projected costs. You could call this overall plan âphased in single-payer-adjacentâ.
There are no overt disadvantages that I can see, with the exception of two unfortunately powerful lobbies: medical providers and health insurance companies. The net result of this system will be to reduce the future cost curve of health prices down to the rate of inflation, which is going to cost health care providers a projected 2% to 3% per year of inflated pricing. In theory the better angels of my nature hope that the health care industry understands the current runaway pricing is unsustainable and that a system like this will provide them long term stability without unexpected price or patient changes (like the current ever-changing medical provider network problem). However, Iâm fairly certain that the better angels of my nature are smoking fat ganja spliffs and the health care industry will fight like this is Thermopylae. If so, so be it. Itâs a fight worth having IMO. Health care insurance is going to oppose this full stop b/c the last thing they want is a non-profit competitor with access to the Medicare Fee Schedule and Medicare network. It would reduce their market share by a huge percentage or maybe even make them extinct. Again, this is a fight worth having.
The devil is in the details and this type of plan is not the only good plan, but this is my current favorite. (Note this is not a specific entity or politician plan; itâs my own kludge of several proposals from liberal think tanks and Dem politicians, but itâs within the range of variation of the numerous Medicare Buy In plans out there.)
Anyway, something like that is IMO the best way forward, both economically and politically.
