I wrote a earlier blog entry on this topic prior to the passage of the ACA. Now, that we start to see the myriad problems of adding layers of government complexity and requirements onto an already complex system, it seems appropriate to share my thoughts once again.
The fundamental problem with the ACA and non-ACA concept of healthcare insurance is that it is not insurance, rather it is a prepaid health maintenance plan. Insurance should be designed to protect us against extraordinary or catastrophic circumstances.
What I believe would work is government provided Catastrophic Medical insurance that kicks in after a reasonable per person deductible, say $3-5k per individual indexed for inflation. The deductible needs to thread the path between being high enough to make us think before spending and being low enough such as to not bankrupt people for non-catastrophic medical needs. And with this allow everyone to have a before tax Health Savings Account.
Set this up for everyone under a retirement age of say 72, wherein Medicare kicks in.
Then utilize Medicaid to make means tested (determined by each state) deposits into the Health Savings Accounts of qualifying low income and differently abled peoples. Businesses could choose to make HSA deposits for employees as part of their benefits programs.
The catastrophic care insurance, provided by the government, would be funded by a tax increase. Preferably in my mind by changing the payroll tax; lowering the rate and extending it to include 100% of AGI, all income both wages and investment.
The benefit is by having each of us paying directly out of pocket for our routine needs we force market incentives into the system, and with the government’s catastrophic coverage we ensure no one goes without appropriate medical care. (There will be one ugly part to the catastrophic coverage, someone somewhere will have to decide whether a treatment or procedure is necessary or elective. No getting around this.)
I believe with this construct we provide universal coverage, achieve market incentive cost containment of the more routine treatments, equitably fund the government provided elements (everyone payment the same % of income in taxes), provide extra support to those most at risk, and free all Americans from the worry of health related financial ruin.