Some election-year topics are hotter than others, and now that impeachment seems to be behind us, many expect that the topic of health care access will heat up.

Not that this hasn’t gained plenty of press and airtime in the past few months. The Democratic presidential campaign has focused on the potential of “Medicare for All” to either spur the discussion of improving health coverage or kill it altogether. And the reasons are not simply about money. It’s also about a relatively quick closure of a massive industry and the jobs it would lose.

As of 2018, the Kaiser Family Foundation indicated that 16% of all adults 18 to 64 years of age were uninsured. Broken down by states, around one-fifth of nonelderly adults were uninsured in Texas (24%), Oklahoma (20%), Florida (19%), Georgia (19%), and Mississippi (19%). Far fewer are found in states that expanded their Medicaid programs under the Affordable Care Act. Underinsurance is a separate issue; this includes those families with unaffordable deductibles or especially who have coverage in plans that offer limited benefits and exclude benefits for preexisting conditions. The percentage of the population who are underinsured is growing.

And let’s put aside the rhetoric that such a move would amount to a socialist takeover of the country. Universal health coverage is an important, worthwhile goal. The real question remains how to close the remaining access gaps in our system and do so in a way that covers more people faster than we gain uninsured amidst rapidly rising health insurance premiums, cost sharing, and deductibles.

As many analysts have pointed out, gaining fully universal coverage through such a plan will either cost trillions more than the bloated amount we already spend on health care (over $3.6 trillion in 2018), or it will cost a somewhat small percentage more  than we already spend. The Sanders campaign believes it will save money over the long term, but there haven’t been as much support for this viewpoint. If it is phased in over a relatively short 4 years, that means that all health insurance employees and executives will need to find new occupations by 2024. I haven’t been able to locate consistent figures; the US Bureau of Labor Statistics does not specify numbers for “health service managers” that include health plans, insurers, PBMs, but of course many may overlap with physician, pharmacist, and other medical professional counts. However, if I could count all of the at-risk employees of UnitedHealthcare, CIGNA, CVS Aetna, Humana, and the regional health plans, the number of people affected could approach or surpass 750,000.

There are a number of different options, some of which have been well addressed and others have not.

The Public Option. This may have been an opportunity missed during the Obama Administration. The “public option” was originally planned as part of the Affordable Care Act but was dropped from the legislation to assure its passage. The public option was supposed to be a government-managed health insurance choice, apart from the private exchange plans. This has been raised again by certain Democratic presidential candidates, and there is polling evidence that it has more support than Medicare for all.

When first considered in 2009, the benefits of the public option were twofold: (1) the administrative costs of this nonprofit health plan would very likely be less than that for private health insurance, resulting in a lower cost alternative; and (2) with sufficient growth, it could force private plans to accept higher medical loss ratios to compete. The potential implication is that private insurance plans that have to show profits would not be able to compete in reality, and the public option would become a de facto national health insurance. And it may have driven private health insurers into narrow areas, such as integrated plans like Kaiser Permanente, which could still remain viable.

The public option remains available. If it was implemented in 2012, when the ACA took effect, consider how the coverage, cost, and deductible situation might have been different today.

Universal Catastrophic Care. This option has not been well described. It resets the definition of health insurance. In this iteration, it is more a type of reinsurance—it prevents most consumers who experience the need for expensive care from suffering medical bankruptcy. An added benefit is that it would help individuals and their dependents more easily navigate their acute care needs.

The problem for underwriters is that general health care delivery is not truly something that can be insured. Unlike auto insurance, it is a service that the majority of people utilize at some point of time, and the costs associated with that care are not limited. As it is, most people pay thousands of dollars per year on auto insurance, and do not file claims in a given year. Health care, however, is a service that most people utilize at some point during the year, and some repeatedly. First-dollar coverage for many services, including preventive care, raises rates. A wide array of services covered raises rates. Increasing provider charges raises rates.

Under this scenario, individuals would be responsible for paying for (or obtaining private health insurance to pay for) medical care up to a specific expenditure. Everyone can buy this insurance through their own resources or through government subsidies (based on a sliding scale). In simple terms, a person with incomes qualifying for Medicaid pay nothing out of pocket; a person earning $500,000 must pay themselves, again up to the level defined as catastrophic care. Beyond that level, the government pays all costs. Simple.

In our next post, we’ll detail more closely how the catastrophic care option can work.

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