Affordable Universal Health Care Proposal

A PROPOSAL
REGARDING
THE BASIC PRINCIPLES
UPON WHICH
AN AFFORDABLE, UNIVERSAL HEALTH CARE SYSTEM
CAN AND SHOULD BE ESTABLISHED IN THE U.S.A.
Goal

The goal must be to build a health care system that provides high quality preventive and curative health care to every American as a right, not a privilege, and to do so in the context of a cost containment program that makes the system affordable to individual Americans and their families, and to our government at all levels. local, state and federal.

Such an affordable, universally-accessible health care system has two components: the insurance or funding component and the health care delivery component. This proposal addresses both of these elements.

The Insurance Program – The Single Payer vs. the Public/Private Partnership Issue

In an ideal world, we think the goal of affordable universal health care can be best achieved with the government acting as the single public insurer for all Americans and with all Americans free to choose their own private providers of health care. We believe that “the single payer system” can achieve the minimum administrative costs and can best provide universal coverage at affordable prices.

However, we recognize that we do not live in an ideal world and that one has to work within the historical and political context that has developed in the U.S. with regard to health care. Therefore:

  • While we advocate that such government programs as Medicare, Medicaid, S-CHIP, the Federal Employees health plan and the Veterans Administration health system all should be expanded as quickly as feasible to cover as many as possible, we also recognize that these programs will not, at any time in the foreseeable future, cover all those not now covered by any private insurance program.
  • We recognize that many of those who currently are covered by private insurance plans suffer from:
    1. inadequate coverage of many illnesses and conditions, including mental, dental, vision and hearing health needs,
    2. unacceptably high costs for premiums and deductibles, and/or
    3. a lack of guaranteed coverage at a reasonable cost if they lose their jobs or if they experience a catastrophic illness or injury that tempts the insurance provider to limit or terminate coverage.
  • We recognize that many of those who do currently have private health insurance wish to continue their coverage and want to continue to have the ability to choose their own health providers, at least to the extent they now can do so.
  • We recognize that there are hundreds of thousands of Americans currently working for private health insurance firms. These individuals could not be absorbed quickly by a new or expanded government insurance provider, should the private sector be suddenly constricted, especially given the current economic crisis.

Therefore, as a practical matter, TAIPD advocates that at this point in history President-elect Obama and his Administration work with Congress to implement a public – private partnership to provide affordable universal health insurance to all Americans and legal residents. We leave for a separate discussion the issue of health care for illegal immigrants.

We predict that over time the American people will come to support more and more the public provision of insurance that provides funding for a solid, high quality, comprehensive level of health care available to all and that the private for-profit sector will come to recognize that it can not effectively compete with a well-managed, government program of such insurance. At the same time, we anticipate that a smaller private sector will find its niche-market in providing a variety of voluntary, supplementary insurance programs to cover medical services beyond this publicly defined comprehensive level. But, if we are wrong, and strong private health insurance programs can successfully compete under the regulatory system that must be established (as described just below), then so be it—so long as the government program is there to provide subsidized, affordable insurance to all those who are in need of the subsidies and a high quality, alternative (to the private insurers) which is available to everyone at a reasonable cost. We recommend that the performance of the private-public partnership be monitored on a regular basis, and that the alternative of moving to a single payer system be kept explicitly on the shelf as a back-up to be implemented if needed.

Regulating Private Insurers within a Public-Private Partnership

TAIPD believes that the key requirement for the success of a public-private partnership is that all private firms that provide health insurance must be treated as “public utilities”; that is, any responsible, affordable, universal health care system must closely regulate the prices, profit margins, eligibility and coverage offered by all private health insurance providers. To this end, we recommend the following standards:

  • All health insurance providers, public and private, must be required to cover all health risks:
    • physical and mental/emotional,
    • pregnancy and end of life,
    • vision, hearing and dental,
    • preventive, curative and rehabilitative/physical therapy, and
    • medicines and medical supplies
  • Private insurance providers, as well as the government, must offer coverage to all persons regardless of age, health, occupational risk or employment status, both as a matter of fairness and to pool the risks.
  • The Federal Government must create a new public health insurance program that would be available, voluntarily, to any American or legal resident who chooses to participate, including individuals, families and employer/employee groups. At the same time, everyone should be free to choose to (or continue to) purchase health insurance from a for-profit or not-for-profit private firm, either in cooperation with their employer or alone.
  • However, all Americans and all persons legally resident in the United States, and their children, must be required, as a matter of law, to be enrolled in a health insurance program that is equivalent in its coverage to the one offered by the government. (Again, we leave to another discussion the issue of health care for illegal residents.) Only with such a mandate can we guarantee the broadest possible pool, and hence the broad spreading of risk, that will keep the costs of insurance, public or private, at reasonable levels. We do not exempt younger workers from Social Security, Medicare, or Unemployment insurance programs, and they should not be exempted from participation in a basic health insurance program. Aside from the matter of spreading the costs, our nation’s public health and safety requires that all participate.
  • The schedules of premiums and deductibles for all private insurance programs, as well as for the public insurance program, should not be based on prior or current health conditions, age, gender, occupational risk or employment status, as they are today. Instead the prices/fees must be based only upon the health care costs in a general geographical area. That is, the cost of insurance must only be community based. Thus, having pooled the risks, each private insurance firm must charge the same rates to young and old, the ill and the healthy, the employed and the unemployed, within a given geographical area.
  • However, within these constraints, individual private insurance companies may have different premium schedules and different deductible and co-pay schedules, subject to the limitation of a profit margin of no more than 5%.
    • The government must also monitor and set limits on allowable “overhead costs,” since this category is often used to pad profit margins
  • The geographic-based price/fee schedule set by the government for its insurance program must be subsidized on a sliding scale, from general tax revenues, to guarantee viable access to the poor and middle class and to individuals in special categories, such as veterans not covered by the Veterans Administration medical system.
    • TAIPD recommends that the source of this tax revenue be a Value-Added Tax, similar in design to that used by virtually all European nations.
  • Within the context of a public-private partnership, the same schedule of subsidies must also be made available to persons who wish to buy their health insurance from private for-profit or not-for-profit health insurance firms. The failure to provide such subsidies would effectively close off the option for the poor and middle-class to purchase private health insurance and would contradict the concept of a private-public partnership.

    However, it remains to be seen whether the regulated (as described above) private sector’s price/fee schedules can effectively compete with that of the public sector, even with the subsidies provided to the poor and middle class. If the private for-profit sector can compete, fine. If, due to the public sector’s greater efficiencies and broader risk pool, the private for-profit health insurance sector can not compete, then that sector is likely to shrink to providing only supplementary coverage.

    Similarly, if the private not-for-profit health insurance sector (which, like the Kaiser system, typically integrates insurance and the delivery of health services) can effectively compete with the public sector insurance program, then that not-for-profit private sector will likely flourish.

    • TAIPD notes that this is likely to be the case since the price/fee schedule set for the government health insurance program, and the attendant subsidy schedule, will have to take into account the costs of both for-profit and not-for-profit health care delivery in a given community or geographic area.

Containing Costs and Encouraging Competition in the Provision of Health Insurance and Care

There are two fundamental elements with regard to cost containment:

  1. how to contain the costs of providing the insurance to reimburse health care providers
  2. how to contain the costs of actually providing the health care services.

Insurance Cost Containment Measures:

  • Both public and private health insurance providers must implement mandatory administrative efficiencies, such as the use of a nationally-standardized computerized claim procedure.
  • Both private and public insurers must have the legal right to negotiate, on behalf of their subscribers as a group, price schedules with all providers of prescription and non-prescription medicines and of medical devices and supplies.
  • The public insurance program must determine the maximum amount that it will allow for each medical service; that is, the maximum total amount that will be paid to health care providers by the insurance system and by the patient in the form of deductibles and co-pays.
  • All health care providers must agree to accept this publicly determined level of payment for all those insured by the government, as a condition of being granted their state licenses to practice and in exchange for the public subsidies that already exist (in the form of forgiven taxes or direct subsidies) to some degree for all medically related education, public or private.
    • Indeed, new subsidies should be created, such as medical education scholarships and focused loan forgiveness programs.
  • Each private insurance provider must allow at least the amount the public insurance system is willing to pay for each medical service; but the private insurers may offer higher allowable payments to the health service providers, lower deductibles and/or lower co-pays in exchange for higher (or lower if they can do so) premiums than that offered by the public insurance system. Thus, the private insurance providers can test what the market will bear, subject to the limit of a 5% profit margin.
    • Note - The publicly determined payment schedule will place a floor under what providers are paid. This is particularly necessary in certain circumstances, such as the provision of primary care in poor or underserved areas.
  • All health care providers must not deny service to anyone based upon the source or nature of that person’s health insurance. A health care provider may stop taking any new patients, but may not pick and choose patients on the basis of the source or nature of a person’s insurance.
  • Thus, health care providers may earn more from privately insured persons. This will likely result in the wealthy making some medical practitioners wealthier than others, but no one will be denied a solid, high quality level of comprehensive medical care.

Health Care Cost Containment Measures:

  • All providers of medical services, including physicians, hospitals, clinics and pharmacists, must be required, as a matter of law, to participate in a standardized, computerized, medical data records system.
    • Access to that system must be open to
      • all licensed providers of medical services, but only on behalf of a given patient
      • all providers of medical insurance, but only on behalf of those they are insuring
      • all individuals with regard to their own records.
    • However, that system must be closed to
      • all employers, including the administrative staffs of hospitals and clinics
      • all physicians maintaining their own offices with regard to all those employed in that office
      • all law enforcement agencies, unless specific access is provided by court order
      • all government agencies not directly involved in providing health care services, including but not limited to law enforcement agencies, unless specific access is provided by court order
  • Individual hospitals and clinics, and associations of hospitals and clinics, must be free to negotiate price schedules with suppliers of all medicines (prescription or non-prescription), medical and other supplies and other goods and services purchased by those agencies. Associations of individual or group practitioners must also be free to enter into such negotiations.
    • The federal government must establish an independent agency that shall establish a set of high quality standards for medical care that shall include lists of reimbursable medicines, standards for the use of diagnostic tools (MRIs, etc.), and standards for circumstances under which various medical procedures are to be employed. This agency must be required to regularly consult with renowned practitioners of medicine and health care generally (to include alternative practitioners, such as chiropractors, homeopathic physicians, acupuncturists, physical therapists and plastic surgeons), to determine these standards. The agency should strive to use “evidence-based medical practices” when determining these standards. The independence of this agency from the political process should be assured by establishing it in the manner of the Federal Reserve System; that is, by having its leadership appointed to long staggered terms (14-year terms for the Fed) and by having the agency function outside the Executive Branch, but report regularly to a Congressional oversight committee.
  • All private and public insurers must agree to cover all medicines and procedures reimbursable under these standards.
  • Private insurers may provide supplementary coverage, at additional cost, to those who wish to have reimbursement for specified lists of medicines or procedures beyond these standards.
    • Every individual, whether insured under a public or private program, or whether covered by any special government program (e.g.- Medicare, or military or veterans hospitals) shall have the freedom to purchase supplementary coverage for such additional medicines or procedures.
    • Similarly, every individual shall have the right to purchase such additional medicines or procedures out-of-pocket, if they so choose.
  • TAIPD concedes that this will result in the wealthy (or those willing to so allocate scarce resources) being able to purchase insurance for the provision of medical services beyond those established by the government’s independent agency, or being able to make such purchases out-of-pocket. But at a minimum, we must guarantee all Americans and legal residents access to a publicly established, high quality standard of comprehensive medical services, at a cost that is affordable to them and to the nation.

The American Institute for Progressive Democracy believes that it is practical, politically achievable, affordable, and indeed necessary to the well-being and economic viability of our nation and its people that the Obama Administration and Congress move as quickly as possible to implement an affordable, universally accessible, high quality health care system based upon the principles enumerated above.