By BOB HERTZ

It is not wise for Democrats to spend all their energy debating Single Payer health care solutions.

None of their single player  plans has much chance to pass in 2020, especially under the limited reconciliation process. In the words of Ezra Klein, “If Democrats don’t have a plan for the filibuster, they don’t really have a plan for ambitious health care reform.”

Yet while we debate Single Payer – or, even if it somehow passed, wait for it to be installed — millions of persons are still hurting under our current system.

We can help these people now!

Here are six practical programs to create a better ACA.

Taken all together they should not cost more than $50 billion a year. This is a tiny fraction of the new taxes that would be needed for full single payer. This is at least negotiable, especially if Democrats can take the White House and the Senate.

Program No. 1 –  Kill the Subsidy Cliff

If your annual income as a single taxpayer is under $48,560, you currently get a subsidy when purchasing a qualified plan. At age 60, your subsidy could be as much as $7,000 a year depending on the state. You would be paying $400 a month for a policy whose full price is $1,024 a month,

But if your annual income is $ 49,000  or more, you get no subsidy whatsoever.

Your premium is the full $1,024 a month –which amounts to about 30% of your aftertax income, and for what? For a policy with deductibles and copays that could easily create a $6,000 debt after hospitalization? One might be better off to stay uninsured, save the $12,000 in premiums, and just beg the hospital for discounts if you become seriously ill.

The solution is to guarantee that no one, of any income, has to pay more than 9.5 of their income for insurance. The person earning  $49,000  would get virtually the same subsidy as the person earning $1.000 less.

This could impact  2 to 3 million persons, many of them over age 50. Right now they are either getting crushed by unsubsidized premiums, or staying uninsured, or buying risky short term coverage.

The annual cost of these greater subsidies should be in the range of $8-$15 billion a year. This is equivalent to about one week of Medicare spending.  

Worth noting:

These individual market participants are virtually the only Americans who do NOT get a subsidy for health insurance. The old get subsidies, the poor get subsidies, veterans get subsidies, children get subsidies, and most employees get subsidies.  Many of these subsidies equal or exceed the $7,000 in our example here.

Program No. 2 – Kill the Family Glitch

More and more employers no longer pay for full family coverage.  They only subsidize the premium of the employee. They charge extra (and often a lot extra) to add a spouse and children.

If the employee’s spouse has a good job of their own, this may be acceptable to all.

However — if the spouse is a homemaker, or only has part time work, this can be a huge problem. It may cost $1,000 a month or more to add a spouse and children to a corporate plan. 

Due to the ‘family glitch” in the ACA, families are not eligible for premium subsidies in the exchange if the employee could get employer-sponsored coverage just for him or herself, for less than 9.86 percent of the household’s income 

It doesn’t matter how much the employee would have to pay to purchase family coverage. The family members are not eligible for exchange subsidies

The dependents can either pay full price in the individual market, or pay whatever the employer requires to cover the family on the employer’s plan, despite both options being financially unrealistic.

A spouse with children and a modest family income should get that ACA subsidy. 

Somewhere between three to six  million people are impacted by the family glitch. They are disproportionately middle income, because higher-income workers are more likely to work for companies that heavily subsidize coverage for dependents.

 The cost of new subsidies could be $20 billion a year.  But note the following:

As recently as the 1950’s, we actually wantedone parent to stay home with young children. If we  really believe in family values, we can show it by spending actual public money on families. In Europe, children’s health insurance is basically free; an expanded ACA is the least we can do.

Program No. 3 – Improve the ACA policies

We must address the high deductibles and out-of-pocket limits now found in most ACA insurance contracts.

Here are several reforms we can impose immediately:

A. Emergency care must be exempt from the deductible. (Co-pays up to $250 are acceptable. Co-insurance for emergency care is not acceptable.)

B. Drugs must have their own deductible, versus the overall plan deductible. In other words, drug coverage must start after perhaps $250  in drug expenses, and not wait until the full plan  deductible is met.

Here too, co-pays are acceptable but co-insurance is not.

If a person’s drugs cost $10,000 a month and their co-insurance is 20%, that is not acceptable.

(An appalling 40% of current ACA plans do not have separate drug deductibles.)

C. Out of pocket maximums must be related to family incomes. A family maximum of $14,300 is much too high for a $50,000 annual household income. Their maximum should be no more than $5,000.

D, Out of network care must count toward out of pocket maximums. The plan deductible must also count against out of pocket maximums.

All these steps will reduce the chance that a person with insurance will go deeply into debt.

 Granted, such provisions will raise insurance premiums by about 10%. However, if premiums go up, subsidies go up.  If subsidies are universal at all income levels, no one is worse off. The higher subsidies  should result in $7 to $10 billion of extra federal spending.

This is the most equitable way to improve the quality of health coverage. We cannot wait for better insurance plans to arise from free enterprise or competition. The only time  that insurance companies ever created attractive policies was when they could impose strict medical underwriting.

(Whereas European nations have had low-deductible, no-exclusions health insurance  for decades – primarily by using  price controls and mandates. )

Program No. 4 – Extend Medicare’s Consumer Protections to All Americans

We might not be able to give Medicare benefits to all, due to the taxes required.

However, we can extend Medicare’s protections to all, including

a. Protection from balance billing

In general, providers cannot charge  seniors more than 115% of the approved Medicare amount. Surprise bills and chargemaster bills simply do not exist in Medicare.

b. If a Medicare claim is denied – and actually this happens a lot – the patient is not automatically liable for the bill.

If the patent could not have been expected to know that the claim might be denied, then they will not owe for the care. The provider takes the loss.

Even veterans can face brutal debts if their claims are denied. We need to enforce limited liability for everyone, not just seniors.

PROGRAM NO. 5 – ASSISTANCE WITH MEDICAL DEBTS

 The ACA has shown that we cannot force, or bribe, or incentivize all Americans to get comprehensive coverage.

There is no chance that America will establish a free national health service or free public hospitals.

There is also zero  chance that all Americans will  save $10,000 for unforeseen medical costs, or just  to cover their deductibles.  We are not Singapore.

We can however  make medical debt less common and more manageable, as follows:

1. Outlaw high deductibles for emergency care and prescription drugs. (See Program No. 3 , above)

2. Lower the out-of-pocket maximums (see Program No. 3, above)

3. Wipe out patient liability if a claim is denied (see Program No. 4 , above)

4. Let the uninsured pay  Medicare rates for hospital care,   They might still have medical debt, but much less of it . Chargemaster billing would be outlawed.

5. All debts in excess of 20 per cent of household income should be forgiven.  The federal government could pay hospitals perhaps twenty cents on the dollar for their largest patient debts. Bills will be recalculated based on the Medicare rate at the time.

6. All debts over seven years old should be forgiven. (and never, ever, sold to collection agencies)

7. Surprise medical bills must be forgiven.

8. In case of emergencies, no balance bills are allowed. What the insurance company pays is all the hospital and the doctors will get….. basically this is “mandatory assignment”.

9. No lawsuits, liens, or attorney collection fees can be permitted. The state should not be complicit in immiserating its own citizens.

Program No. 6  – Enforce Consumer Laws That Already Exist

1. Out-of-network medical bills are already illegal…..

Insurers sell policies by claiming that certain hospitals are in their network. Hospitals then boost their admissions by convincing patients they are in the insurer’s network. Hoewever, when the unwary patient gets surprised at billing time, it turns out these claims weren’t exactly true.

This is fraud; the Federal Trade Commission could punish these offenses right now.

2. Chargemaster bills to emergency patients are already illegal..

When an actual contract cannot be formed – as in medical emergencies – the courts have a long history of constructive intervention. The doctrine of quasi-contract  would limit charges to the amounts that are actually and customarily paid to and accetpted by hospitals.

Courts can force hospitals to accept an average market price right now, versus the dishonest and opportunistic chargemaster rates, 

3.  Predatory pricing for drugs could already be  subject to antitrust enforcement

The antitrust laws are directed against the  harmful conduct  that   extracts money from consumers, and gives it to producers for no other reason than they are in a position to take it. 

 In hesitating to use antitrust against excessive pricing drugs, the United States is an international outlier. Governments outside the United States are using theirr antitrust laws to rein in excessive drug pricing as an abuse of dominance. Even a conservative position on antitrust would allow for any legal actions against drug companies.

SUMMARY

We will not achieve a more equitable health system without new laws and federal action.

As noted by Austin Frakt:

“Now we have conservatives advocating for “SwissCare”, while ignoring that Switzerland has an individual mandate, more regulations, price fixing, and lower caps on out of pocket spending.

Also  you see conservatives advocating for Singapore’s health care system without any real understanding of it. Singapore’s system has massive subsidies for nursing homes, rehabilitation care, and home-based care. It requires mandatory savings – 36% of wages spread over various accounts. The government also provides a basic level of care that’s heavily, heavily subsidized. And here’s the kicker – it relies on tons of government intervention in the market to keep costs down. They use centrally planned and fixed budgets, they control the acquisition of new technology, they regulate the number of students and physicians, they use purchasing power to buy drugs more cheaply, and they have an employer mandate for foreign workers.”

Eventually we may get it into our thick American skulls that ‘forced savings’ and mandatory insurance are good things. Derek Thompson commented on pensions  and health care in The Atlantic,,,,,

“In a world obsessed with the wizardry of behavioral nudges, perhaps policymakers should consider putting away the magic wand and just do the paternalistic thing: Force people to save more, by expanding Social Security or by creating new forced savings policies. It should be harder for Americans to not have financial security when they retire. Indeed, the countries that finish above the U.S. in retirement security, like Switzerland and Norway, not only have much higher taxes but also benefit from the availability of public-health options and cheaper education in their prime-age years, which means they don’t have to spend as much out of pocket on insurance and college. In Germany, social-insurance programs provide for medical care and an even more substantial level of retirement pension. It sounds counterintuitive and nearly paradoxical, but maybe the only way to make Americans richer in the long run is to take more money away from them.”

Bob Hertz is a retired insurance broker. He learned about health care from Uwe Reinhardt, Joseph White, Dr. Robert Evans, and George Halvorson a fellow Minnesotan.