Even before the Covid-19 crisis hit the United States, I had been terribly frustrated by the health care debate because it doesn’t focus on the fact that our system of employer-provided private health insurance evolved in the immediate post-World War II era completely by accident. Employers started providing private health insurance to employees as a way to attract and retain workers, and strong unions negotiated health insurance plans as part of their bargaining strategies. It was the failure of the federal government to pass publicly funded health care when it created the Social Security system in 1937 that necessitated this trend, and Congress again missed its chance to provide universal publicly funded health care when it created Medicare in 1967 – it provided Medicare only for senior citizens, and no one else, and Medicaid was added as an option of last resort for the poor and disabled.
But that 75-year-old employer-provided private insurance system has eroded and failed us in the years since 1967, and it is long past time for a switch to universal publicly funded health care. Unfortunately, it likely cannot be done all at once, and it must be done in phases and carefully, because we will only get one shot at it and if we mess it up the backlash will be severe and we will end up with the status quo or worse for another decade or more.
I have studied all of the Democratic candidates’ health care plans, from moderate “public option for those who want it” plans to Bernie’s “Medicare for All, ” and I believe that none of them can realistically achieve publicly funded universal health care as written because they all forget one of two essential considerations.
1. It would be economically disruptive to completely end private insurance all at once. Not just the insurance and pharmaceutical industries will object, but also other businesses and the public will be resistant to radical change being forced upon them with a sudden mandated shift of everyone to Medicare for All.
That is where Bernie Sanders’ plan goes wrong, even though he proposes a phase-in period of a few years. It is still a forcible option that will be resisted strongly by the health insurance and pharmaceutical companies, and other business sectors and members of the public will lack the incentive and confidence to support it enough for it to pass into law. It also does not do enough to mitigate the economic disruption and employee displacement created by the rapid dismantling of the private insurance industry.
2. The second essential consideration is that a pathway to universal publicly funded health care must include an extremely good public option that people will want, but the pool of people within it must be large enough to make it as cheap or cheaper than current private plans while still providing high enough provider reimbursements to support specialty care. Just adding a public option while saying all private plans should remain intact if people want them (as suggested by Biden, Buttigieg, and Klobuchar) won’t achieve that. How to create a large enough pool of people while minimizing disruption and mitigating insurance and pharmaceutical industry resistance?
Do this: When rolling out a good, comprehensive public option – even one as generous as the one Sanders proposes – simultaneously release all employers with 1000 employees or less from the ACA obligation to provide insurance to their employees. In exchange, have those small businesses pay a nominal subsidy amount towards their employees’ public option premiums. This group of America’s smallest businesses would jump at the chance to unburden themselves from their current mandated and onerous health insurance and administrative costs. Most would likely not renew current private insurance contracts once they expire and tell their employees to switch to the public option.
If that option is good enough, premiums cheap enough, and providers find its reimbursements to be fair enough, then word will spread and individuals and families currently on more expensive ACA private plans will also switched to the public option. Larger employers will in turn start requesting to allow their own employees to make the switch. So then we could release all employers with 1001 to 5000 employees from the ACA obligations to provide employee insurance, and their employees can then also make the switch. After they are successfully onboarded into the public option system, release employers with 5001 to 10,000 employees, and so on until all employers of all sizes no longer are obligated to offer private health insurance to their employees. And if the public option is good enough and cheap enough, there will be many employees of even larger employers who are guaranteed employer provided plans who will opt out of their employers’ plans in order switch to the public option on their own just to save out of pocket costs for premiums and deductibles.
At first the public option will have to be taxpayer subsidized to keep premiums
low enough and provider reimbursements high enough for viability. But as the
pool of people opting for the public option grows, subsidy amounts will
decrease. Once the pool of people on the public option is large enough, both
Medicare and Medicaid can be folded into it and the public option can become a
true prenatal to death health care system for all. Private insurance should not
be outlawed – employers and individuals could still offer or purchase
supplemental private plans if they want to, but the goal should be for the
public option to be comprehensive enough that most people would not need
supplemental options.
As for provider and manufacturer reimbursements, they should be set at a rate
of fair return for what it actually costs to provide any particular
service, treatment, or product. Medicaid and Medicare already do this, but
reimbursement rates are currently set too low, especially for Medicaid. But
these two sub-pools of people tend to be older and sicker than most, and
folding them into the younger and healthier general population public option
pool will allow for higher reimbursements while still keeping premiums as low as
possible.
The Covid-19 pandemic debacle shows that the USA must achieve universal
publicly funded health care. But it must be done in a phased manner that minimizes
economic disruption and mitigates employee displacement and industry and public
resistance to the switch. Phased release of employers from small to large size
from their ACA mandates to provide insurance to employees can help facilitate
that process as long as the public option is good enough, cheap enough, and its
provider and manufacturer reimbursements high enough to make it a viable, if
not preferred option for the vast majority of people.