The Affordable Care Act (ACA, aka “Obamacare”) is the most significant healthcare legislation since Medicare and Medicaid became law fifty years ago.
In our opinion, the lasting achievement of the ACA will be seen as tackling the immoral and paradoxical disqualification for healthcare known as the pre-existing condition, a disqualification unique in the developed world. In the teeth of fierce political opposition, this odious insurance provision was eliminated. The concept that every American should have unfettered access to healthcare is now ingrained, and has become the foundation stone for future improvements.
Yet Bernie Sanders and others were correct to point out that 29 million Americans remain uninsured and 43 million underinsured, so building on this foundation will require effort.
With the Covid pandemic we will see steadily increasing federal deficits over the next year, whoever the next President is. At the same time, tax receipts for the federal and state governments will be lower because many Americans are not able to work and consumer spending has declined. State and hospital budgets are experiencing deficits as they fund the expenses of the pandemic.
We can help. The Eichhorn and Hutchinson Healthcare PlanTM (E-H) would cover all Americans to a high standard while reducing the cost of healthcare by as much as $1 trillion per year. This will help both federal and state budget deficits. We propose a public option based on Medicare. However, we couple that with a requirement that all employers provide health insurance for their employees, as the Germans and Swiss do.
While Sanders has correctly criticized the iniquity of current employer-based healthcare, this opinion appears to be based on the assumption that if a worker loses his or her job, they no longer have health insurance. Our solution to this is simple: all unemployed people are given automatic access to Medicare. When the unemployment rate comes down to 3% again, this would cost only about $30 billion per year. This would be paid for by a small increase in payroll tax, but this would be a fraction of what the corporations would save (see below).
You might well ask – as many do – “but why tie insurance to employment?” Because the large majority of Americans want to keep their employer-based insurance. Denying it to them by insisting on Medicare-for-All is a vote loser, and, in our opinion may be one of the main reasons the Sanders campaign foundered.
Employers have provided healthcare as a benefit since 1942. Today, more than 60% of employers insure approximately 90% of America’s work force. We estimate that our public option would cost approximately 30% less than current costs. This could reduce employee costs by as much as 30%.
E-H is basically a plan to introduce a Medicare-style option for employees, alongside their commercial options, without raising federal taxes. E-H would create competitive pressure on private insurance companies wishing to retain their current corporate business contracts. Not only would there be no tax increase, but employers could reduce their annual costs by up to $180 billion, so E-H will likely receive strong bipartisan support.
For small businesses, E-H would represent a 12.5% tax, to be phased in over 5 years. This is rather like a minimum wage but would be partially subsidized by government – a way for government to help the very bedrock of American business.
Unlike the Sanders plan, and those of Buttigieg and Warren, E-H would not require any increase in federal taxes, and would provide large employers with the opportunity to massively reduce their healthcare costs, which will help them tool up for post-pandemic operations.
Adopting this approach would also eliminate the need for subsidies based on income that remains part of the ACA. Employer-based coverage would also lower the cost of Medicaid. Today, 16% of Medicaid beneficiaries are employed. Moving their coverage to their employers would lower the cost of Medicaid by $200 billion per year, reducing the financial burden of the states.
Adoption of E-H would:
- Provide universal healthcare of high quality
- Massively reduce bureaucracy
- Reduce costs for corporations
- Reduce costs for the states
- Most importantly, it would improve healthcare outcomes for all Americans.