PREMISE:
Medical service providers are just that, service providers. In that regard, doctors are no different in the market than automobile mechanics. Automobile mechanic income depends on the average income of car owners. Doctor income depends on the average income of patients. Every country, though, has figured out some way to pay medical service providers more than automobile mechanics so that the poor get some access to the care only the rich can afford and to minimize public health risks affecting all classes. Calls in the USA for market-based reforms to the health care affordability problem conveniently overlook this basic fact. This is not surprising considering the increasingly oligarchic trends within the US economy since health insurance first became popular after WWII.
Instead of floundering in our traditional economic cynicism we could instead, like every other developed country in the world, undertake simple reforms to keep health care spending down to a reasonably low percentage of GDP . No constitutional roadblocks exist.
SUGGESTED REFORMS:
1. Lower the Medicare start age to 55. This would most efficiently remove the most difficult to insure group from the suggested reform process that will be undertaken by each individual state (as suggested at item #4 below).
2. Simplify the Medicare benefit structure so that there is one simple annual deductible for all parts of Medicare (A,B,and D) based upon a progressive income and asset test; and re-structure the Medicare Part B premium so that it is also based upon a progressive income and asset test.
2.1 Make Health Savings Accounts (HSA) available to anyone on Medicare who still has active employment income regardless of the size of their new Medicare annual deductible and also regardless of the structure of any employer benefits. People will be able to draw on tax-free HSA accounts to pay these deductible amounts.
2.2 A unified income and asset based Medicare deductible would eliminate the need for Medicare Advantage, Medicare Supplement, and Medicare Prescription Drug plans; saving the government and consumers hundreds of billions year in and year out. This would also stop the disgraceful “system complexity torture” perpetrated upon our seniors.
2.3 Some percentage of current insurance workers could be leased by current insurance companies to the government during a transition phase, while those losing their jobs would get unemployment assistance.
3. Make Medicare the primary payor when coordinating with large employer group plans as it is for retiree plans and small groups today so that large employers would feel encouraged and justified to offer an option to employees to forgo actual coverage in exchange for a company contribution to a HSA.
4. For everyone through age 54 each state individually or in concert with other states could adopt some form of the proven models provided by other developed countries. Large states, who have larger populations and economies than many model countries, have the tax base and economies of scale to easily set up such model systems. If smaller states run into difficulty they can join together with other states, whether regionally proximate or not, to adopt models that work best for them as a group.
POLITICAL AND ECONOMIC FACTORS:
I believe these reforms could be politically viable because they feed into hot button issues of both the right and left. I know “Medicare at 55” is not as powerful a political phrase as “Medicare for all”, but the Medicare for All placards usually also have the catch phrases “Love it” and “Improve it”. But Medicare at 55 could be an attractive compromise since almost no right wingers would suggest doing away with Medicare so implicitly they approve of it and thus extending that approval down to age 55 to preserve the “free market” of healthcare ideas at the state level is a position right wingers could support. The left would be thrilled by the income and asset based unified Medicare deductible so they would feel like they got some extras in terms of love and improvement for Medicare. Right wingers in red states would like the individual state control aspect and the ability to push for a return to a cash-based system for the poor and concierge plans for the wealthy; while socialists in blue states will like their new found ability to push for public options. Large employers will like having most of the claims of the over 55 group removed from their plans. They will like it even more when the wide establishment of public state plans makes it unnecessary for them to bother to provide health insurance at all. Leveraging the benefits that large business will enjoy into the reforms makes it easier to build political consensus since big businesses are large political donors. Ultimately the state plans that best satisfy consumers, medical service providers, and taxpayers will also best compete for doctors and businesses. Red, blue, or purple then; each state should be able to build an adequate plan.
Though insurance companies would be able to offer policies that would cover or lower the unified Medicare deductible, most people would find it simpler and more cost effective to just save most of the premium instead in an HSA . Most middle-income people would have relatively small deductibles and thus would be willing to devote some savings to such an emergency fund. I could imagine most banks/insurance/brokerage companies offering HSA accounts that pay higher than market returns simply as an inducement to use the other services of the company.
Even though big health insurance companies would probably have an advantage over smaller firms as they find a way to profitably downsize to basic employee leasing enterprises that provide administration services to Medicare and the state model plans; they, like all companies in the healthcare market, would be faced with the need to either adapt or die. I believe the big companies seeing the writing on the wall would actually support the reform process since they would be in the best position to morph into profitable survivors of the process.
Big Pharma...well big pharma would take a hit, but so be it...they will just have to deal with bulk discounted sales to Medicare and the state plans who in turn can simply continue have the discounted drugs fulfilled through existing pharmacy outlets.
