Jacob Hacker's "Health Care for America"
Health Care for America
A proposal for guaranteed, affordable health care for all Americans building on Medicare and employment-based insurance
by Jacob S. Hacker
The Economic Policy Institute
EPI Briefing Paper #180
January 11, 2007
As health care costs have skyrocketed and the proportion of Americans with stable benefits has eroded, health insecurity has become a shared American experience, felt by those who thought they had it made as well as those just struggling to get by.
This growing problem is pushing health care reform back onto the agenda of American politics after more than a decade of neglect. And yet, nothing guarantees that this debate will end differently than previous battles.
To avoid the dismal fate of previous reform campaigns, a successful agenda must take seriously the political constraints and organizational realities that have hamstrung reform efforts in the past. Limits on public budgets, resistance to measures that might be seen as taking away what Americans already have, and the embedded realities of the present system all stand squarely in the path of grand policy redesigns—from single-payer national health insurance, to individual mandates requiring that everyone purchase private coverage, to a universe of individualized Health Savings Accounts. Instead, the most promising route forward is to build on the most popular elements of the present structure—Medicare and employment-based health insurance for well-compensated workers—through a series of large-scale changes that are straightforward, politically doable, self-reinforcing, and guaranteed to produce expanded health security.
Health Care for America embodies this strategy. It would extend insurance to all non-elderly Americans through a new Medicare-like program and workplace health insurance, while creating an effective framework for controlling medical costs and improving health outcomes to guarantee affordable, quality care to all. It is at once comprehensive, realistic, consistent with American values and beliefs, and grounded in the best elements of the present system. It combines employer and personal responsibility with a strong public commitment to ensuring that American workers and their families and American employers can afford coverage. It promises better care, lower costs, more choice, healthier citizens, and immensely stronger guarantees for workers and their families. And it promises real savings for employers and state governments—without unraveling existing sources of health security, without forcing workers to obtain coverage on their own, and without pressuring patients into Health Savings Accounts or tightly managed health maintenance organizations (HMOs).
What Health Care for America would do is simple: every legal resident of the United States who lacks access to Medicare or good workplace coverage would be able to buy into the “Health Care for America Plan,” a new public insurance pool modeled after Medicare. This new program would team up with Medicare to bargain for lower prices and upgrade the quality of care so that every enrollee would have access to either an affordable Medicare-like plan with free choice of providers or to a selection of comprehensive private plans.
At the same time, employers would be asked to either provide coverage as good as this new plan or, failing that, make a relatively modest payroll-based contribution to the Health Care for America Plan to help finance coverage for their workers. At a stroke, then, no one with a direct or family tie to the workforce would remain uninsured. The self-employed could buy into the plan by paying the same payroll-based contribution; those without workplace ties would be able to buy into Health Care for America by paying an income-related premium. The states would be given powerful incentives to enroll any remaining uninsured.
For the PDF version of “Health Care for America:”
By Don McCanne, MD
Jacob Hacker is gifted, really (though some might contend that “gifted political scientist” is an oxymoron). Jacob Hacker cares about people. He knows that we must do something to make health care accessible and affordable for everyone.
His proposal does not break new ground in health policy. He has merely combined various concepts that have been under consideration for some time. What is very different about this proposal is that the design features comply with the perceptions of most Americans as to how they want our health care to be financed. It is just possible that he may have crossed the threshold of political feasibility.
There are some very good features in his proposal. It establishes a new and improved Medicare that competes with the existing private plans in the employer-sponsored and individual markets. Employers and individuals who are concerned about replacing their private plans with a government-run program would have the option of continuing with their current standard coverage. It is estimated that about half would switch to the Health Care for America program. It is likely that, with time, the public program would establish its superiority resulting in a massive shift in enrollment. That would bring us very close to a single payer system without having to dump it on the nation all at once. When you read his report, you will recognize that there are many other features that would help to ensure an equitable and affordable system for all.
From the perspective of a single payer advocate, there are some problems. Leaving the private insurers in place perpetuates the administrative waste of those insurers and the administrative burden on the providers. Intense regulatory oversight of the private insurers would be even more imperative since they would increase their efforts to game the system through surreptitious favorable selection and other clandestine market expediencies. The public program would likely concentrate lower-income individuals initially, risking a political transformation into a welfare program. Also his plan includes features of both an employer mandate and an individual mandate, each with its own policy problems, though he does ameliorate the impact to a certain extent with some of the other features of his plan. From a single payer perspective, it would be far better to totally cut the link between financing and coverage. A system of equitable tax funding of the entire risk pool is more efficient than a system of premiums linked to the individual. Other potential problems are evident in the report.
This is a very important contribution to the national dialogue on reform. The report should be downloaded since it will surely become a prominent part of our debate.
Since PNHP’s mission is to inform rather than to negotiate compromise, we will continue to point out specific policies in his model that could be improved. That said, Jacob Hacker’s proposal is a very welcome addition at a time that all options should be on the table. It is such a compelling model that it may shove all others off of the table - except single payer - then we can get down to a serious discussion about reform that really works.