Vice President Biden’s plan to improve Obamacare by increasing subsidies and offering a public option is a reasonable approach to expanding healthcare coverage for Americans. In a recent op-ed, Paul Krugman pointed out that, under the Biden plan, 20-25 million would get health insurance and premiums would fall sharply for some middle -class families. Bidencare accomplishes this by increasing the salary level eligibility for subsidies and providing Medicaid for low-income uninsured citizens who have been barred from coverage primarily in red states. It would lower premiums and provide a public option that people could buy if they do not have Employer Sponsored Insurance. (ESI) These additions to Obamacare would cost an estimated $850 billion over the next ten years. Several surveys over the last two years confirm that Americans prefer and want choice in healthcare. The Biden plan would continue to provide them choice while reducing premiums through increased subsidies.
We agree that it is possible to accomplish these important goals while maintaining choice and reducing the cost of healthcare for employed Americans. We suggest one important modification to Bidencare that would eliminate the entire $850 billion cost estimate for the program. The Eichhorn Hutchinson Healthcare plan described in our book, Healing American Healthcare would require that all employers provide health insurance for their employees. The plan would also provide a public option that could be purchased by individuals or employers for their employees.
We have estimated that the public option, based on Medicare, would generally cost approximately 30% less than the Kaiser Family Fund estimate for ESI. This lower cost option would create the competitive pressure that is needed to control the cost of insurance for both employers and their employees. Today 90% of the business of private health insurance companies is for coverage provided through employers. Many employers have provided ESI since the 1940s. Human resource departments are very experienced in managing health insurance contract bidding and explaining coverage choices and plan coverage issues to employees. Our plan builds on this expertise.
The public option that we propose will create the competitive pressure needed to reduce cost. It would retain choice. Employers could be self-insured, purchase coverage from private insurers or the public option. Some insurers will not be able to meet this challenge and will withdraw from the market, however other insurers will find ways to meet this competitive pressure. Private insurance companies could also develop new products like Medicare Advantage to “wraparound” the public option as Medicare Advantage programs do for Medicare Beneficiaries. These new services could be sold to individuals or employers.
This change to enhance Bidencare is worthy of careful consideration. Instead of increasing government costs by $85 billion a year it could reduce government costs by more than $100 billion per year by eliminating the need to provide Medicaid to current beneficiaries who are employed. Before the pandemic, more than 15 million Medicaid Beneficiaries were employed. In normal times after the pandemic, they would no longer qualify for Medicaid because their employers would provide them with ESI. The public option that we envision coupled with the requirement for employers to provide ESI could also reduce the cost of coverage by as much as $180 billion per year across all employers by creating a more competitive national insurance market.