Universal Healthcare Act
The Universal Healthcare Act (UHA) will provide healthcare coverage to all people in the United States. Costs shall be split between Individuals and the Federal Government. Individuals’ share of costs shall be in the form of Deductibles which will be based on Age and Income. Older, wealthier residents will bear the majority of the out of pocket expense.
The UHA shall substantially or completely replace coverage currently provided by Private Insurance, the VA, Medicare, Medicaid and other Government programs. The healthcare delivery system shall be fully private.
The UHA will reduce the cost of healthcare through Tort Reform, eliminating private insurers as primary payers, and by providing individuals with a powerful incentive to make wise healthcare spending choices. The incentive will be a tax free annual refund of unspent Health Savings Account dollars. The UHA will be financially predictable and sustainable by limiting the Government’s healthcare expense to no more than half of national healthcare spending.
The UHA decouples healthcare coverage from employment. However, the incentive to work is maintained by allowing employers to partially or completely cover an employee’s healthcare deductible via tax advantaged contributions to the employee’s Refundable Health Savings Account. Additionally, businesses will be relieved from job crushing healthcare mandates and regulations.
Under the UHA everyone will be covered, the young, the old, the rich, the poor, and people with pre-existing conditions, and there will be no limitations on an individual’s choice of doctors. Veterans will have access to private healthcare providers, just like everybody else.
UHA Key Elements:
Healthcare Deductibles - All families and individuals shall be subject to healthcare deductibles based on a scale that rises with age and income.
Refundable Health Savings Accounts (RHSAs) - Refundable Health Savings Accounts will be established for every American family and individual with contribution limits equal to their healthcare deductible. All contributions made to RHSAs by individuals and employers shall be tax advantaged. Any unspent RHSA dollars shall be annually refundable to the account holder tax free.
Subsidies - Taxpayers shall fund, in part or fully, RHSAs for low income, veteran and active duty Americans. Cost of living adjusted income shall be used to determine ‘low income’ subsidies. Unspent subsidized RHSA dollars shall be annually refundable to the account holder tax free.
Government Cost Containment - The 55% Solution - The total of unsubsidized RHSAs/Deductibles shall equal 55% of the prior year’s national healthcare spending, thereby perpetually limiting Government paid healthcare expense to no more than about half of the total national healthcare expense.
RHSA Income Deduction - All income shall be subject to a pretax deduction of 7% to fund Family/Individual RHSAs. The deduction shall cease once an RHSA is fully funded (RHSA balance equals Deductible). Employers may relieve employees of the 7% income deduction by fully funding employee accounts with tax deductable contributions.
Tort Reform - A Medical Error Reimbursement Schedule will replace all tortious claims. The Reimbursement Schedule shall be based on existing settlement data. A Demerit System shall be implemented to hold healthcare professionals accountable for medical mistakes. The accumulation of Demerits will trigger penalties ranging from additional training to license revocation.
Pricing Transparency - All healthcare providers shall be required to publish prices.
The Deductible Advantage
About half of Americans are covered under Employer plans. Employee premium contributions average about $1,300 for a Single plan and $5,000 for a Family plan. These premium contributions represent an annual expense for the employee regardless of whether or not they require any healthcare. If premium contributions where in the form of a deductible, unspent dollars would remain with the employee.
Dollars spent on premiums create an incentive to spend as much as possible on healthcare as it is human nature for people to try and maximize the value of their investment. Deductibles create an incentive to spend as little as possible as saved dollars are dollars that can be spent or invested by the individual elsewhere.
Healthcare deductibles have the effect of applying downward pressure on healthcare costs by incentivizing people to spend wisely in order to save their money. This effect is magnified by Refundable Health Savings Accounts which provide individuals with the opportunity to not only save their dollars, but also pocket RHSA dollars contributed by employers, tax free.
The Economic Advantage
The UHA liberates employers from the significant expense of complying with existing healthcare regulations and mandates as well as the administrative expense of sourcing and offering private healthcare plans to employees. These savings can be invested in upgrading operations and expansion which have a positive effect on employment. Additionally, the elimination of current regulations that perversely incentivize employers to limit hiring and employee hours will also have a positive effect on employment.
American businesses, unfettered by healthcare mandates, will be more competitive globally. The combinations of reduced business expense and increased global competitiveness will fuel a hiring boom. As companies compete for employees, wages will rise and companies will have an incentive beyond tax savings to contribute to employee RHSAs.
The National Healthcare Spending Advantage
Healthcare spending in the United States is currently about $3.2 trillion with Government covering about 55% of the expense, or about $1.76 trillion.
The UHA incorporates several powerful healthcare cost reduction measures. The annual National Healthcare Savings from reduced healthcare expenses would be:
10% Reduction - Saves $320 billion
20% Reduction - Saves $640 billion (Annual Medicare budget)
30% Reduction - Saves $960 billion
Facts for Consideration
About $3.2 trillion is spent on healthcare annually, or roughly $10,000 per person
Government pays 50-60% of healthcare expenditures, between $1.6-$1.9 trillion
Healthcare spending on seniors is about 5 times what’s spent on children and nearly 3 times what’s spent on working age Americans
On average, seniors’ net worth is about 25 times greater than the net worth of people under 35 and nearly 3 times greater than Americans age 35 to 55
About 155 million Americans receive healthcare coverage through an employer
Employers on average contribute about $5,000 to the premium for a Single plan and $13,300 for a Family plan
Employee premium contributions for a Single plan average about $1,300 and about $5,000 for a Family plan
The average deductible for a Single plan is about $1,500
The average employee’s premium and deductible expense is about $2,800 for a Single plan and over $6,500 for a Family plan
The Deductible Math
Assuming that the UHA results in a 15% reduction in national healthcare expense, the amount spent on health care would be $2.72 trillion. Fifty-five percent of $2.72 trillion is $1.5 trillion which is the total unsubsidized deductible amount that the deductible schedule would target.
Children would be incorporated into Family deductibles and low income people would receive taxpayer RHSA subsidies to cover their deductibles leaving about 187 million Americans to share the $1.5 trillion unsubsidized deductibles total, an average of about $8,000 per person.
As previously mentioned, deductibles will scale with age meaning that the deductibles for younger people will be significantly less than the $8,000 average while deductibles for older Americans will be significantly more than the average.
It’s important to remember that a deductible is not an expense unless healthcare services are rendered, and even then employees can expect their deductible expense to be largely covered by their employers through RHSA contributions. Plus, people under the current system are, on average, subject to a $2,800 expense for a single plan and $6,500 for a family plan.
The combination of employer RHSA contributions and individuals realizing costs only when healthcare services are used will result in less out of pocket expense for the majority of unsubsidized Americans under the UHA.
Good public policy should meet at least three criteria:
It’s in the public interest
The policy has broad public support
The cost and benefits are distributed fairly
Health is among the most important issues in most people’s lives. Universal healthcare coverage that maintains the quality of American healthcare is clearly in the public interest and polling indicates strong public support for universal coverage.
In terms of fairness, it is only fair that young people who use far less healthcare than older people pay significantly less and that older people pay more. This is particularly true considering that older Americans tend to have far more financial resources than younger Americans.
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