January 12, 2007
The Hacker Plan
I'm getting near-overwhelmed with the array of new health care plans, but I'd be remiss not to mention Jacob Hacker's new plan through EPI. And I am never remiss. Hacker's plan isn't Medicare-for-All, at least not quite. As he puts it, it's really Medicare-for-Many. The government will create a new, Medicare-style health plan that's open for enrollment to any and all individuals interested in jumping in, covers mental health and maternal care, and has strict limits on out-of-pocket spending. Simultaneously, all employers will be required to offer insurance as good or better than the new government plan. If they don't want to contract out with the private sector, they'll pay 6% of payroll to enter their workers into the government plan. The unemployed and self-employed will have to buy coverage, and there'll be heavy subsidies tied to income. Done.
You'll notice that, unlike the other plans, Hacker's took four sentences to explain. It's a simple, elegant mechanism for coverage, requiring none of the complex market restructuring and odd coverage schemes of the plans that seek to preserve the private insurance market as a protected whole. Its secondary virtue is that it offers an easy, potential path to effective single-payer, allowing the government insurer to compete with private insurers, and possibly outcompete them as well. And by using the example of Medicare, Hacker promises familiarity with what's being offered -- a crucial advantage given the dangers complexity pose in the public arena. It's worth noting that the plan also has another name: HR 5886, introduced by Pete Stark during the last Congress. The differences between the two are minimal, and Hacker boasts involvement in both.
Also at Tapped
The GOP is always harping about choice. Let's give the people a choice between public and private, and let the chips fall where they may.
I suspect that any smart person will recognize that the public health coverage choice is something that they can always count upon, but private insurance will vary over time and perhaps be withdrawn.
My major concern: Many Americans live paycheck to paycheck and when they are laid off they may not have funds in hand to pay premiums until they get new employment. It appears that this is dealt with by this comment in Dr. Steve's review: those without workplace ties would be able to buy into Health Care for America by paying an income-related premium.
That doesn't sound to me to be sufficient, and since unemployment often lasts longer than unemployment insurance, one can imagine a snafu of bureacracies to determine what their true unemployment income actually is - it may be none. Perhaps allowing the person to continue coverage without premium and reimbursing the system later might be an option (a loan of sorts, hopefully with very low interest).
The biggest advantage of this (and the biggest downside as well) is that it pits the private sector insurnace companies against the public sector, and the insurance companies will cry 'foul'. I wouldn't support this plan if the price is ANY kind of subsidy for the private insurance companies because they have to compete with the public sector. [Under Medicare, private HMO's are paid MORE (by about 12% I think) than Medicare is alloted, and that is just stupid policy.]
Posted by: JimPortlandOR | Jan 12, 2007 4:26:12 PM
Being able to describe the plan in four sentences doesn't make it uncomplicated.
I can think of several scenarios just off the top of my head that raise the level of complexity at the user end and may even result in gaps in coverage. I can also see how it can be gamed for adverse selection.
A simpler plan would be a Medicare-for-all and allow those who can and want to the option of purchasing supplemental insurance -- just like current Medicare participants do. How much harder is it to present two cards to your healthcare provider than one? Now, how hard is that to explain? Everyone I've ever mentioned it too gets it.
As JimPortlandOR points out, this plan "pits the private sector insurnace companies against the public sector" anyway so why not go for the better way?
Posted by: Emma Zahn | Jan 12, 2007 6:44:30 PM
those without workplace ties would be able to buy into Health Care for America by paying an income-related premium. That doesn't sound to me to be sufficient, and since unemployment often lasts longer than unemployment insurance, one can imagine a snafu of bureacracies to determine what their true unemployment income actually is - it may be none.
This gets to the heart of the question. This is "broader but not universal" coverage. To make a plan along these lines universal, it has to go from being opt-in to being opt-out ... every American is in the public plan who is not in a qualifying private plan.
And, indeed, once it is converted to an opt-out plan, much of the hidden complexity in the Hacket proposal, in terms of the mandates on states, can go away.
As far as what your qualifying level of income is, we do have this small bureaucracy (which it seems the Republicans would like to outsource) that has a system for determining income.
Now, if a Democrat was the one to come up with the idea that a mandatory payment to be covered in the program is a "fee" rather than a "tax", there would be all sorts of brimfire to pay, but that was the Governator, so it must be alright. Those who are not covered by a qualifying plan have their fee worked out based on their Adjusted Gross Income, and if they don't have any Adjusted Gross Income, that would push them into the "6% of $0" and "no additional premium required" categories.
Posted by: BruceMcF | Jan 12, 2007 11:18:35 PM
I think the Hacker plan sounds sensible. I'm not crazy about the funding mechanism -- payroll taxes are the the most effective job killers yet to be invented -- but I could live with such a system as the price to pay for robust universal health insurance (especially if a different, less economically damaging funding mechanism were conceived in the fullness of time). One item I'd recommend to help raise cash to pay for such a scheme would be to phase out the favorable tax code treatment of employer-provided health insurance benefits. This alone would raise many billions. Another step I'd like to see enacted along these lines is an end to what I call insurance-related compensation discrimination. What I'm talking about is the very common scenario whereby Bob down the hall, who has the same job title and salary as Sally, in reality makes more money because of the (say) $6,000 worth of payment-in-kind he receives in the form of employer-paid health insurance premiums. I'd like to see the federal government make the deductibility (to the employer) of health insurance costs contingent upon their doing away with this type of discrimination. Sally, in other words, shouldn't be penalized because she happens to be on her spouse's health insurance, but should receive the $6,000 in cash. Sally would have to pay income tax on this $6,000, of course, but Bob would likewise have to pay it on the payment in kind (the value of the premiums). I think these two reforms would go a long way toward divorcing health insurance from employment.
Posted by: Jasper | Jan 13, 2007 9:32:55 PM
Where's the rest of the money going to come from?
If health care costs about 15% of GDP, 6% of wages won't cover even half the cost--unless the coverage provided is VERY limited.
Posted by: SamChevre | Jan 15, 2007 2:18:11 PM
I think health care is such an important thing and should be made available to everyone at a low cost, something needs to happen to see this goal achieved :)
Posted by: Insurance | May 17, 2007 2:19:23 AM
Posted by: judy | Sep 26, 2007 5:14:57 AM
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