Single-Payor Healthcare in the US: A Proposal

[jhunter1163]

Hello, all. My friend Terry and I have been working on a proposed single-payor health insurance plan. This plan is designed to cover all Americans, from cradle to grave, soup to nuts, whatever you want to call it. This is a work in progress at this point; stay tuned for future updates. We welcome any feedback or constructive criticism.

General Plan Provisions

The plan year runs January 1 to December 31. Each year, there will be an open-enrollment period running from January 1 to February 28: during this time, individuals may opt to change their coverage without incurring a waiting period. After open enrollment, there will be a 90-day waiting period for plan changes. There are no referral or authorization requirements; any licensed medical provider (including MDs, DOs, APRNs, PAs, chiropractors and physical therapists) may provide services under this plan.

Level One Coverage

Services designated as Level One are required as part of base plans.

Men Aged 18-64: Covered services include: Doctor visits, inpatient and outpatient hospital services, emergency services, laboratory services, diagnostic testing, prescription drugs, mental health/rehab services, vision and dental checkups, screening colonoscopy after age 50

Women Aged 18-64: Covered services include: Doctor visits, inpatient and outpatient hospital services, emergency services, laboratory services, diagnostic testing, prescription drugs, mental health/rehab services, vision and dental checkups, maternity services, annual gynecological exams, screening mammograms after age 40, screening colonoscopy after age 50

Family Coverage: Covered services include: Doctor visits, inpatient and outpatient hospital services, emergency services, laboratory services, prescription drugs, mental health/rehab services, maternity services, annual gynecological exams, screening mammograms after age 40, screening colonoscopy after age 50, pediatric services including vision and dental, childhood immunizations, sports exams up to age 18

Age 65+: Additional services covered include nursing-home services, Alzheimer's treatment, hospice/palliative care (available before age 66 with doctor's certification)

Level Two Coverage

Services designated as Level Two can be purchased as riders to a base plan. There is a 90-day waiting period before coverage purchased under these riders takes effect if not purchased during the open enrollment period.

These services include: dental services, orthodontics, eyeglasses, hearing aids, infertility treatment, bariatric (weight-loss) surgery, smoking-cessation treatment, LASIK and similar vision services.

Level Three Coverage

Services designated as Level 3 are optional; individuals may purchase these coverages as riders to the base plans. There is a 90-day waiting period before coverage purchased under these riders takes effect if not purchased during the open enrollment period.

These services include: cosmetic surgery (non-reconstructive), Botox and similar procedures, Viagra, Rogaine, hair transplantation, cosmetic dental procedures.

Non-Covered Services

Services not covered under the plan include:

Massage therapy, naturopathy, religious practitioners (Christian Scientists), homeopathy, acupuncture, acupressure, hypnotherapy, biofeedback.

We have considered a variety of funding mechanisms; we are leaning towards having each person contribute towards a "nut", an amount which would be intended to cover expected health expenses over one's working lifetime; credits would be given against this for national service, military service, and possibly other categories of exemptions.

Again, this is a work in progress, and we welcome any and all constructive criticism. Thanks in advance.

 

[Trebuchet]

I'm going to go back and actually read the proposal after posting this but:
You'd have a lot more credibility if you spelled "payer" correctly.

 

[Trebuchet]

I'm going to go back and actually read the proposal after posting this but:
You'd have a lot more credibility if you spelled "payer" correctly.

ETA:
Open enrollment should be before the plan year, like Medicare.
Level one may be a bit high. Probably should be some level of deductible. Nice to see the inclusion of dental, however, which isn't covered at any level of Medicare.
Level two: Some of that would actually reduce costs of level one.
Level three: Too much cosmetic/vanity stuff. Skip it.

 

[jhunter1163]

I'm going to go back and actually read the proposal after posting this but:
You'd have a lot more credibility if you spelled "payer" correctly.

"Payor" is the legal term:

In legal documents payor is used to describe a person required by law to make specific payments such as child support.

https://www.reference.com/business-finance/difference-between-payor-payer-79990f6aaad7636b

 

[jhunter1163]

ETA:
Open enrollment should be before the plan year, like Medicare.
Level one may be a bit high. Probably should be some level of deductible. Nice to see the inclusion of dental, however, which isn't covered at any level of Medicare.
Level two: Some of that would actually reduce costs of level one.
Level three: Too much cosmetic/vanity stuff. Skip it.

Thanks for the feedback. We're trying to be fully inclusive, cover everything under the sun; that's why we included Level Three as a buy-up. If you want to have a tummy tuck or a nose job, fine, but you'll have to pay extra premium for it.

 

[Startz]

Perhaps you could fill in more details. What will the plan cost? Who will pay how much? How will fees for service be determined?

 

[lionking]

Level one looks a lot like Medicare in Australia. Levels two and three can be covered by additional private health insurance, which I have. I have no problem with ancillary and elective medicine being covered by additional insurance premiums.

 

[jhunter1163]

Perhaps you could fill in more details. What will the plan cost? Who will pay how much? How will fees for service be determined?

We're contemplating plan premiums in the neighborhood of the Medicare Part B plus D premium (around $170 per month per person, with a family cap). Physician fees would be based on the current Medicare fee schedules with geographic adjustments. Pharmaceuticals would be a bit of a sticky wicket; we don't want to disincentivize R&D, but the skyrocketing cost of drugs has to be addressed. As a stopgap we would set drug reimbursements at average sales price plus 6% markup (Medicare's rate) but shorten patent protection from ten years to five in order to increase competition (generics would be available sooner).

 

[Startz]

That's a clear answer. And no one would expect every detail to be worked out.

But aren't almost all the items you propose to cover now paid for by Medicare Part A, not Part B?

The U.S. spends something like $10,000/person/year on healthcare now. Some argue that a single payer plan would have significant cost savings. But surely not on the order of 80%.

 

[jhunter1163]

That's a clear answer. And no one would expect every detail to be worked out.

But aren't almost all the items you propose to cover now paid for by Medicare Part A, not Part B?

The U.S. spends something like $10,000/person/year on healthcare now. Some argue that a single payer plan would have significant cost savings. But surely not on the order of 80%.

Actually, no; Medicare A covers hospital charges, while B covers physician charges, most diagnostic testing, laboratory charges, and so on. There would certainly be cost savings under a single-payor plan, due to the leverage a single payor would have in setting reimbursement rates as well as administrative streamlining; we estimate those savings at around 30% of current healthcare expenditures. So instead of $10,000 per year per person, we'd be spending around $7,000. We'd still have the most expensive system in the world, but the gap wouldn't be nearly as wide as it now is.

 

[Startz]

(Well, you did include hospital care as being covered. I'm not trying to nitpick though.)

Let's say that your figure of $7,000/year is right. Suggesting a 30% reduction isn't unreasonable, and some of the costs that make up the $10,000 aren't included in your basic plan.

How does $170 per month, with a family cap, cover $7,000?

 

[jhunter1163]

Well, you have to remember that the $7,000 is an average; many people, perhaps even most, won't utilize remotely close to that amount in a year. The per-capita numbers are skewed by the extreme costs of catastrophic illness and injury; I'm at work so I can't post links, but according to the Kaiser Family Foundation the top 5% of healthcare consumers accounted for slightly over half of all healthcare expenditures. High-cost cancer drugs accounted for about one-third of Medicare Part D expenses last year. There will, obviously, need to be some kind of mechanism to account for this imbalance; we were contemplating a risk pool along the lines of the Minnesota plan, with a separate funding mechanism to cover it (perhaps a small payroll tax, or an earmark within the funds received from premiums.)

 

[theprestige]

"Payor" is the legal term

Industry-specific jargon is usually alienating to non-industry audiences. At best, the effect is, "this guy doesn't know how what he's talking about, or even how to spell it." At worst, the effect is, "this guy is setting himself apart from us, and obfuscating his meaning, on purpose."

Consider avoiding situations where you have to explain that you're technically correct, instead of creating them. It is better communication, and is more likely to encourage a positive view of your proposals.

 

[Segnosaur]

First of all, I'm not sure if what you suggested would be called 'single-payer'. It may be universal, but not single-payer since different people are paying into it at different rates.

Secondly, your plan is missing some important details:

- How do you guarantee that everyone joins in? Insurance plans only work with a broad base of subscribers; without some mechanism to force people to join you will run the risk of the plan failing because many healthy people won't sign up

- Who actually runs the scheme? Is it a government-owned insurance system, or will it be similar to the U.S. system (i.e. private insurance companies working on government mandates).

 

[Startz]

Well, you have to remember that the $7,000 is an average; many people, perhaps even most, won't utilize remotely close to that amount in a year. The per-capita numbers are skewed by the extreme costs of catastrophic illness and injury; I'm at work so I can't post links, but according to the Kaiser Family Foundation the top 5% of healthcare consumers accounted for slightly over half of all healthcare expenditures. High-cost cancer drugs accounted for about one-third of Medicare Part D expenses last year. There will, obviously, need to be some kind of mechanism to account for this imbalance; we were contemplating a risk pool along the lines of the Minnesota plan, with a separate funding mechanism to cover it (perhaps a small payroll tax, or an earmark within the funds received from premiums.)

That makes sense, but how much would the risk pool cost? Let's take your numbers. Suppose everyone puts in $170/month (no family caps, no one who doesn't pay in). That provides $2,040 a year. So an average of $7,000 leaves $4,960 for the risk pool. The U.S. has about 320 million people, so I think you need another $1.6 trillion. I don't think that's going to get covered by a small payroll tax.

None of this means you don't have interesting ideas. I'm just trying to point out that being careful about how things get paid for is needed to design a realistic system.

 

[theprestige]

So. Is this a health insurance proposal, or a health care proposal?

 

[jhunter1163]

First of all, I'm not sure if what you suggested would be called 'single-payer'. It may be universal, but not single-payer since different people are paying into it at different rates.

Secondly, your plan is missing some important details:

- How do you guarantee that everyone joins in? Insurance plans only work with a broad base of subscribers; without some mechanism to force people to join you will run the risk of the plan failing because many healthy people won't sign up

- Who actually runs the scheme? Is it a government-owned insurance system, or will it be similar to the U.S. system (i.e. private insurance companies working on government mandates).

This would be a government-run plan, along the lines of Medicare-for-all, but with a national-service component (so a VA expansion along with the Medicare expansion). Participation would be mandatory; there would be employer payroll deductions, like there are now for Medicare. There would naturally be exemptions for disability or unemployment, but for the most part it would be a pay-as-you-go system.

And yes, I'm aware of the problems with the VA, but those problems are not institutional; they are the product of years of budget cuts and underfunding. There wouldn't be any private health insurance; the buy-up premiums for Levels Two and Three would be paid to the government.

 

[jhunter1163]

That makes sense, but how much would the risk pool cost? Let's take your numbers. Suppose everyone puts in $170/month (no family caps, no one who doesn't pay in). That provides $2,040 a year. So an average of $7,000 leaves $4,960 for the risk pool. The U.S. has about 320 million people, so I think you need another $1.6 trillion. I don't think that's going to get covered by a small payroll tax.

None of this means you don't have interesting ideas. I'm just trying to point out that being careful about how things get paid for is needed to design a realistic system.

A fair point. Health care represented about 18 percent of GDP last year, so about $3.2 trillion. However, "health care" is an extremely broad umbrella. One of the largest items under the "health care" umbrella is, of course, health insurance premiums. Things like vitamins, health club memberships, exercise equipment and so on also come under that umbrella. The best information that we've been able to find (through the Kaiser Family Foundation) indicates that the actual cost of health care rendered or prescribed by physicians is around $1.5 trillion per year. So, if we're able to reduce that number by 30 percent, that brings us down to $1.05 trillion. Premium income, as you point out, would be around $600 billion; that would cover the lower 95 percent of utilization, with perhaps $50 billion left over for reserves against future claims. The catastrophic claims would be the rub; we'd probably have to have some form of government reinsurance to cover these services.

 

[jhunter1163]

So. Is this a health insurance proposal, or a health care proposal?

It's a health insurance proposal; the government would not be in the business of providing health care, with the exception of the VA.

 

[Startz]

I suspect your 1.5 trillion is a bit low. On the other hand, even if you're "just" $450 billion short, you ought to get "credit" for whatever the federal and state governments are currently spending on Medicare/caid.