Allcare: Universal Healthcare that Works

Compared with other developed countries, the US has the worst aggregate healthcare outcomes, the worst life expectancy, and the highest costs in the world.  Obamacare became a vehicle to provide health insurance for 20 million Americans. However, there are still 29 million Americans that are uninsured and another 40 million who are under-insured.  The Centers for Medicare and Medicaid Services (CMS) has projected that these costs could double by 2027 if we do nothing to address this glaring problem. This is why healthcare was the main issue in the last election and will certainly be the main issue again in 2020. 

There are four essential goals that the next administration must set and achieve to address this perplexing problem:

  • Develop and rollout a plan for Universal healthcare.
  • Reduce healthcare’s costs.
  • Reduce healthcare’s bureaucracy.
  • Improve medical outcomes.

Unfortunately, most of the Democratic candidates for president have announced plans to reform healthcare that do not address all of these goals.  Their proposals generally fall into two groups.  They either support some form of Senator Sanders’ Medicare-for-All (M4A) proposal or Vice President Biden’s plan to expand and improve Obamacare with a public option as was originally proposed in 2009.  The Biden plan would also add new subsidies for families with incomes under $110,000 and special premium-free support for the uninsured in the states that rejected the Obamacare expansion of Medicaid.  The Biden campaign has announced that their plan would insure 97% of the population. If the Biden plan could achieve this coverage there would still be more than 9.5 million Americans without healthcare insurance. The Biden campaign estimates that their plan would increase the cost of healthcare by $750 billion over 10 years. 

All of the Democratic candidates plans depend on expanding Medicare to provide healthcare for all Americans. However, none of the plans as presented take into account the Congressional Budget Office (CBO) report of May 2019 entitled, Key Design Components and Considerations for Establishing a Single-Payer Health Care System.  This report clearly states that Medicare does not completely cover the costs of care.  Private insurance pays up to 89% more than Medicare.  Most of the plans proposed by the Democratic candidates expand access to Medicare while reducing or eliminating the role of private insurance in healthcare.  Without increases in the Medicare reimbursement rates, this will have a negative impact on physicians and hospitals.  None of the candidates have yet publicly discussed adjusting Medicare’s reimbursement rates to cover all of the costs it would incur if M4A becomes the universal healthcare plan of the future.

This issue is further complicated by the current state of the medical profession.  Doctors face the highest burnout rate among all professions — as many as 46% of doctors in the U.S. have suffered from burnout at some time in their careers, according to Dr. Dike Drummond in his article from the Family Practice Management Journal.  More recently, a new study in the Journal of Vascular and Intervention Radiology reported that 72% of interventional radiologists have experienced burnout.  The general causes reported include administrative pressures, long and unpredictable work hours, electronic medical record and system documentation requirements.

 In 2017, the Association of American Medical Colleges projected that by 2025 the shortage of physicians could be as much as 94,000.  Expanding Medicare without involving physicians in the planning process for the future of healthcare will inevitably increase this shortage.

The Senator Sanders Medicare-for-All proposal has five significant problems that will be difficult to overcome:

  • Only 38% of Americans want Medicare-for-All, making supporting and promoting it a major threat to a Democratic Party victory in the 2020 election.
  • Taxes would have to be raised on almost every American.
  • It would likely not receive bipartisan support.
  • Today 3,000 hospitals breakeven or lose money each year.  M4A would destabilize many of them.
  • Many experienced doctors would retire.

Given the potential failure of Medicare-for-All based on these issues, we should ask the question, how do other democracies provide universal healthcare for their people?

There are basically two ways that other democracies provide universal healthcare for their people.  This goal is accomplished based on either the Bismarck model or the Beveridge Report.  The Beveridge Report was written in 1942 by Lord William Beveridge of Great Britain. The report suggested that Great Britain should provide free healthcare to all, with payment coming from general taxation rather than medical fees or health insurance.  The British National Health Service (NHS) was established in 1946 based on this guiding principle.  Ninety percent of British citizens participate in the NHS today.  The remaining ten percent have private insurance.  M4A would be very similar to this system that provides healthcare in Great Britain, Canada, Cuba, Scandinavia and some South American countries.

The Bismarck model is named for the Prussian Chancellor Otto von Bismarck who developed this approach to healthcare as a part of the unification of Germany in the 19th century. This was the world’s first universal healthcare system, established in 1883. In Germany, medical insurance is mandatory with income-based premiums that average approximately 15% of employee income. The premiums are paid by employers and employees through payroll withholding. Germans can choose from more than 100 private non-profit insurance companies called sickness funds that compete for their business. The German plan also covers guest workers and there is government buy-in for low-income earners and the unemployed.

Almost all of the Democratic candidates for president have focused on a universal healthcare proposal that is largely based on aspects of the Beveridge Report without any consideration of the Bismarck or German model. In our book, Healing American Healthcare, we present the Allcare plan based on the German model adapted to our healthcare system.  The Allcare plan would require income-based premiums for healthcare insurance collected by all employers, as many employers have done in our voluntary system for the last 80 years.  Allcare would introduce a public option based on Medicare that we estimate would be 30% less expensive than the average cost of current private insurance provided by employers today.  This would create choice and competitive pressure for private insurance companies to maintain their corporate customers that are approximately 90% of their business today.  Employers could be self-insured, provide private insurance that reduces its cost and works to meet the competitive pressure of Allcare’s public option or they could choose Allcare.  The reduction in the cost of healthcare that could be created by this competitive pressure would also create a positive cash position for the employers who currently provide health insurance for their employees.  It would also reduce the cost of co-pays for their employees.  Companies and individuals could consider Gold and Silver plans to expand their coverage options. 

Today 16% of Medicaid beneficiaries are employed.  Our plan would move them from Medicaid to coverage through their employers. The potential savings from the competitive insurance market that we envision with the Allcare public option including the increased cost of private insurance for the employers who do not currently provide coverage could lower the net cost of insurance for all employers by as much as $180 billion per year.  The change in Medicaid coverage that would result from requiring all employers to provide health insurance could reduce the cost of Medicaid by as much as $200 billion per year. Requiring all employers to provide health insurance could also eliminate the need for the initiative of some red  states that are exploring reducing their Medicaid financial obligations by establishing a Medicaid work requirement.  Under our plan, all current Medicaid recipients who are employed would be covered by employer based insurance.  Essentially with adoption of our plan these workers and their families would no longer be eligible for Medicaid, however they would be insured.   

Allcare would reduce healthcare’s bureaucracy by removing barriers to care and simplifying billing procedures for all providers and private insurance companies. These reductions to administrative costs could lower the cost of healthcare by as much as $200 billion per year. Allcare is an American plan based on the time-tested Bismarck Model that would provide universal healthcare while eliminating the need for all the Obamacare taxes.  It would also eliminate the need for the additional taxes that every American would be required to pay to make M4A a reality.  Allcare would provide Americans with cost-effective universal healthcare that, over time, would lower per capita costs and improve clinical standards and outcomes. 

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