David Kendall is senior fellow for health and fiscal policy at the think tank Third Way. Jim Kessler is executive vice president for policy at Third Way.
America can insure everyone without changing anyone’s existing health coverage. It won’t require replacing Obamacare with a single-payer, government-run system. Instead, we can build upon Obamacare with two simple, game-changing features: a universal cap on premiums and out-of-pocket expenses, and an automatic coverage system that places the uninsured in a plan they can depend on and afford.
These two transformational changes align the interests of those who have coverage and those who don’t against the medical-industrial complex, which for too long has delivered high-cost care instead of high-quality care at reasonable prices. For the 156 million Americans with employer-provided coverage, this proposal answers their top concern: the price they pay. For the 29 million Americans without coverage and millions of others who fear they could lose it, this answers their prayers for stable and secure insurance.
Our proposal starts with the Affordable Care Act, which laid the critical foundation for universal and affordable coverage by protecting everyone with a preexisting condition, expanding coverage through Medicaid and private insurance and providing subsidies and limits on costs to those in the individual market with working-class incomes. More than 22 million Americans now have coverage because of Obamacare. And the growth rate of health-care costs is finally falling in the United States.
But even with the success of Obamacare, too many people still lack coverage. Among those who do have it, health-care costs remain a major kitchen-table concern.
To make coverage affordable for all, we fulfill a simple but daunting promise that has eluded other health-care reform efforts: guaranteed protection from high out-of-pocket costs for everyone. We do this by taking the limited out-of-pocket price protections from Obamacare and making those protections universal. Under our plan, out-of-pocket expenses for premiums, deductibles and co-pays would be capped on a sliding scale based on income. These caps would apply whether insurance came from an employer, the individual market or through Medicare or Medicaid. Where you get your insurance should have no bearing on how much you pay out of your checking account.
A family of four with $50,000 in household income would have their total premium and out-of-pocket health care costs capped at $5,000 in a calendar year — 10 percent of annual income. The same family earning $80,000 would have an out-of-pocket cap of 14 percent. And even a family earning $1 million a year would have a cap, albeit a high one, of $200,000 — 20 percent of their income.
To ensure everyone is insured, we automatically enroll those who right now would qualify for free care under Obamacare but, for a variety of reasons, remain unenrolled. Doing that alone would cover more than 14 million uninsured people through Medicaid or the individual market. The remaining unenrolled (most of whom qualify for subsidized, but not free, care) would receive an automatic application with the best-value plan in their area to sign on to. And for those who still don’t enroll, we create an automatic backstop — a catastrophic-like plan that kicks in the moment an uninsured person steps into an emergency room. The cost of the backstop would be covered in part by reviving the Obamacare penalty for those who don’t buy insurance. Add to that an affordable early buy-in for Medicare for those over the age of 55, and, combined with our cost cap protections, every person in the United States would be covered with a plan they can afford.
This proposal would not be cheap. Our own internal estimate places the total bill for consumer cost caps and universal coverage at $2.8 trillion over 10 years. That is still less than one-tenth the cost of the most prominent single-payer legislation, and much of the cost of our plan will be offset through aggressive measures we propose to tame the medical-industrial complex.
For example, we eliminate fee-for-service as the foundation for health-care payments because it rewards costly, wasteful and repetitive services that benefit providers and drug manufacturers over patients. Out-of-network charges will be capped, and surprise billing would be outlawed. New prescription drugs would have to prove they are better for patients compared with the old drugs, not just newer and more expensive. A la carte health care would be replaced with more cost-effective bundled payments that put patient outcomes ahead of billing outcomes. These structural reforms would bend the cost curve, provide real budgetary savings and improve the quality of patient care. The remainder of our plan can be paid for by repealing the Trump tax cuts for the wealthy and restoring estate taxes to past levels.
Democrats are united that health care must be a right that people can afford, and all of their plans are better than Republican proposals to cut people off from health care. But Democrats need a plan that covers everyone, protects them from high costs and allows the 156 million people who get their health care through their jobs to keep what they have.