The Congress has set the stage for real universal healthcare legislation by including important improvements to the Affordable Care Act (ACA) as a part of the American Relief Plan.
The new law extends Obamacare subsidies to higher income level Americans. For example, the Congressional Budget Office (CBO) has estimated that a 64-year-old American earning $58,000 would have his or her monthly health insurance premium reduced from $1,075 to $418. These subsidy eligibility expansions will offer coverage to an additional 1.3 million Americans at lower out of pocket costs. The CBO also estimates that this change will increase federal subsidies by about $35 billion. The American Relief Plan also provides incentives to the 12 red states to expand Medicaid coverage to their residents who are currently not eligible. It will lower the cost of COBRA benefits for Americans who have lost their jobs during the pandemic. These measures are temporary and will expire in 2022.
Dr. Zeke Emanual, a professor at Penn who was a part of the Obama inner circle that drafted the ACA, has said this new law will have a dramatic impact on reducing the number of uninsured and this may well be the largest expansion of healthcare coverage in the 10 years since ACA became law.
Now the challenge for the Democrats is how to use these improvements to the ACA to launch an expanded universal healthcare plan while they still control the congressional agenda. The options that have been considered in the past are Medicare For All and Medicare Exchange.
Medicare for All has the support of the progressive wing of the Democratic Party that numbers about 100 members in the House of Representatives. The moderate wing of the party, also with about 100 members, supports improvements to Obamacare as laid out in the American Relief Plan, including several of President Biden’s campaign proposals. If the American Relief Plan is expanded to include all aspects of the President’s campaign plan, the CBO estimates that this will cost an additional $85 billion per year over the next ten years.
Medicare Exchange (Medicare-X) was originally introduced by Senator Kaine of Virginia and Senator Bennett of Colorado as a bill in the last Congress. It was reintroduced in February and picked up the support of 11 co-sponsors. The bill would work within Medicare to establish a public option plan in every county in America for individuals and small businesses over the next five years. By doing this, it would provide a new affordable option. It would also build on the ACA and expand premium and cost-sharing support to make all exchange options more affordable for Americans who are still uninsured today.
In the Medicare-X plan, the public option would initially be available only on the individual exchanges in areas where there is a shortage of insurers causing a lack of competition resulting in higher premiums. This has occurred in many rural communities. By 2025, the Medicare Exchange plan would expand throughout the country and be added as another option on the Small Business Health Options Program Marketplace. Medicare-X would expand Medicare’s network of doctors and providers to guarantee the essential health benefits established in the ACA, such as maternity care and mental health services. Additionally, it would ensure access to affordable prescription drugs by empowering the Secretary of Health and Human Services to negotiate drug prices for Medicare Exchange plans and the Medicare Part D program.
To address the challenges of our healthcare system we must do three things: provide coverage for everyone; reduce healthcare’s cost; and reduce its complicated and expensive bureaucracy. If we could accomplish these three things, we could improve outcomes.
Medicare for All and Medicare-X improve coverage however they do not reduce the cost or the complexity of medical billing. Medicare for All would also be much more expensive than any other alternative under consideration.
The Eichhorn & Hutchinson Allcare Plan that we laid out in our book, Healing American Healthcare: A Plan to Provide Quality Care for All, While Saving $1 Trillion a Year, would reduce costs, provide universal coverage, and reduce bureaucracy. Here is how it would work:
- Much like the German plan that has been in existence since 1883, we would require all employers to provide health insurance. Today according to recent reports, 176 million Americans normally get their health insurance from their employers. Sixty percent of today’s employers provide coverage for their workers. The remaining 40 percent that do not provide insurance employ approximately 10 million employees.
- To improve competition for private health insurers we would propose a public option based on Medicare. We estimate it would cost 30 percent less than private insurance does today as reported in the annual survey by the Kaiser Family Foundation. This program would not include a Medicare Advantage option.
- We would propose a national charge master for private insurance charges for all healthcare providers that accept Medicare and Medicaid. This would mean that the charge for services provided by any hospital would be essentially the same throughout the country. This would also mean that services provided in clinics, doctors’ offices or hospitals would all have the same price reducing the costs to individuals and insurance companies. It would also reduce the cost of billing and collection for these organizations. This approach would also eliminate surprise billing issues that patients face today for out-of-network charges.
- We propose a national approach to negotiating drug pricing as all other plans propose and all other democracies do across the world. A majority of the large pharmaceutical companies are based in the United States, yet we pay more than twice what other nations pay for proprietary drugs. Some hospitals also markup drugs and supplies by as much as 500 percent. Hospital drug markups should be limited to 10 percent of their costs for their inventory expenses for these items.
If we could accomplish these four major goals the cost of healthcare would appreciably decline, as would the cost of operating hospitals and physician practices. Today 90 percent of the business of private insurance companies are with employers. In our plan employers and individuals would have choice. Employers could be self-insured, buy private insurance or provide the public option for their employees. We estimate that nationally employers could save $180 billion annually on healthcare costs that they could use to invest in their businesses or their employees. Insurance companies would have to compete with the public option to retain their book of business, however they could also create Medicare Advantage-like plans for people under 65. Individuals could purchase these plans as Medicare beneficiaries do today or employers could provide them to enhance the coverage provided by the public option if they select that for their employees.
Why would employers invest in additional coverage for their employees under this plan? If all employers provide health coverage that means changing jobs is easier. There would be no need for candidates for new positions to be concerned about the potential loss of benefits during their probation period at their new job. Today there is a shortage of at least three million specialized skilled workers in our economy. Our universal healthcare plan not only creates competition for private insurance companies, but it also creates competition for highly skilled employees.
If all employers are required to provide insurance that means that low-income workers who currently are Medicaid beneficiaries would now be covered by their employers. Transferring this cost of coverage to employers would reduce the cost of Medicaid for the federal and state governments by over $200 billion per year. Our plan would also not replace any healthcare gains made by labor unions. It would likely only lower the costs of these benefits.
If our nation adopted the Eichhorn & Hutchinson Allcare Plan as written, it would reduce our nation’s overall healthcare costs by approximately 30 percent. On a per capita basis our costs would then be about the same as these costs in Switzerland, the second most costly national healthcare system in the world.
Healthcare is a large part of our economy. It consumes 18 percent of our GDP and employees almost 16 million Americans.
Moving our nation to universal healthcare will not be easy. Powerful, well-funded lobbyists for every part of our healthcare delivery system will work against any change that threatens their clients and that challenges them to compete to maintain their market positions. The capitalistic universal healthcare system that we envision will change markets, expand competition, simplify billing and above all improve the care and coverage for almost every American.
We all need a healthcare system that delivers the absolute best results. One that is properly staffed, encourages innovation, respects public health initiatives, and costs about what other nations pay on a per capita basis. Maybe this is something each of us can advocate for in response to the pressure that lawmakers will get from our healthcare industry’s lobbying experts who will work to limit concessions and to keep the status quo. Our plan would create a more competitive landscape for insurance companies, lower drug prices and establish more reasonable costs for hospital care. Most importantly our plan would establish a universal care system that is more cost effective and would not leave anyone behind.