If I were in Congress, I would propose a healthcare system based on vouchers that would be given to every legal citizen funded by a new VAT. The dictate in the bill would be that 97% of every dollar collected will be rebated to U.S. citizens through these vouchers. The plan will insure universal coverage, maximize consumer choice and never add to the deficit. Consumers would be free to buy whatever plan is offered on the market. The value of the vouchers for each individual would be determined by a formula that considers age, pre-existing conditions and geographic location.
While it’s true that this system would increase the cost of everything purchased in the U.S., consumers would be getting something of value in return, basic healthcare. I believe most would see that as a worthwhile exchange. Also, the portion allocated to senior citizens would alleviate the funding shortfall Medicare is facing.
For those who favor a single payer system, and for those with pre-existing conditions, Medicaid would be offered as an option. Anyone could enroll via their voucher plus an income based premium. For seniors, Medicare would continue to be offered but not mandated. Seniors would have the option of using their vouchers to buy private insurance – if insurers offer them a plan. If someone goes into an emergency room without having selected a healthcare provider, they would be defaulted into the Medicaid plan so the hospital would be guaranteed a minimum reimbursement while the consumer would be liable for any co-pays specified by the default plan. This option helps control costs by guaranteeing competition and coverage for everyone. Hospitals currently set their rates high enough to cover the uninsured that they are forced by law to treat. That argument would no longer be valid.
The VAT would be set at a level that will provide only basic health care so that it has a minimal impact on the cost of goods. It would be ideal to phase it in but that might create a situation where the vouchers have little value in those transition years. The supposition is that insurance companies would compete to get basic customers so that they could sell them supplemental coverage much the way they sell Medicare supplemental plans. Every Sep 1st the government would give insurance companies the projected value of the next years vouchers so they could roll out their new plans by Oct 1st. Consumers would be able to switch plans during the Oct-Nov open enrollment period.
A second cost control measure would be retention of the state & federal healthcare exchanges. Private companies would be encouraged to offer policies and the exchanges would aggregate consumer pools large enough to achieve cost savings. States would be free to develop plans tailored to their residents if they choose. Balance billing would be prohibited for plans offered through the exchanges and people with pre-existing conditions would be protected. The program would be charged to experiment with non-traditional cost control and reimbursement programs and publish the results.
A third cost control measure would be standard pricing. All plans going through Medicare, Medicaid or the federal exchanges would have a standard price for every procedure and service provided. Hospitals would all be assigned a cost-factor that would compensate for the location and care level variables. A large urban teaching hospital might bill the standards times 1.5 while a small rural clinic might be a 0.8. This would allow consumers to shop for the provider that best suits their plan, their co-pays and their individual preferences. This arrangement would make selling insurance across state lines a practical possibility – insurers wouldn’t have to negotiate reimbursement rates with every hospital or chain. Hospitals wouldn’t like this aspect but the influx of new paying patients should offset any negative impacts.
A fourth cost control factor would be to remove all restrictions on price negotiations with drug companies.
A fifth cost control factor would be a website that collects success & failure information on doctors and hospitals so consumers can make more informed choices. The website would also allow consumers to rate their healthcare experiences. Maximum transparency would be the ultimate goal.
I expect that businesses would be on board once they see how much they could save on health care costs even if they won’t be happy about the potential impact on sales. Employers would be encouraged to provide supplemental coverage to their employees but they would have no say over the coverage the employee obtains with their voucher. This information would be considered so private that employers would be prohibited from asking what coverage an employee has. Each employee would be able to choose the best coverage for their needs and preferences and the employer would not be able to force their preferences on the employees.
While there are those who are automatically opposed to any new tax, I would remind them that almost all of the money collected would be pumped right back into our domestic economy. Foreign made drugs and medical equipment would be the only non-domestic expenditures – a minimal portion at best. To make the change (closer to) revenue neutral, it could be passed as a pre-cursor to income tax reform/reduction. Also in the equation would be the savings achieved by the value of vouchers going to senior citizens, Medicaid recipients and government employees that would offset current expenditures.
So what do we do with the savings?
The program would establish an optional catastrophic insurance option whereby participants would be covered so they would never have to worry about bankruptcy. An arbitration system would provide a reasonable reimbursement in exchange for forgiving the participants liabilities. Premiums would be based on income.
The last piece of this puzzle would be an optional program, open to all states, subsidizing the establishment of free hospitals and/or free clinics to offer a last resort to anyone who either falls through the cracks or picks the wrong coverage. If consumers choose to utilize one of these hospitals, they would be accepting a tort-free system. All claims, including malpractice and negligence, would be subject to arbitration. Promising medical students could enter a program whereby they go through a state supported medical school and spend ten years in the free system in exchange for having their loans paid off (non linear – 5% for the first 4 years, 10% for the next 4 and 20% for the last 2). The savings in malpractice insurance would be expected to offset the policy of accepting whatever reimbursement that persons voucher paid plan offers, with no limits or co-pays.
So we would achieve universal coverage, maximum choice, robust competition and (hopefully) cost control. I don’t know any other program that will give you both single payer and private systems functioning side by side. Every politician who votes for it has something to go home and brag about. Maybe it’s time to be bold.
