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I am circulating this plan at this late stage of the health care debate because most of the proposals out there are totally inadequate.  This plan is a hybrid of government provided coverage, private insurance and regional and trade association co-ops (Not as public option replacements, but as an additional choice.  I'd be very disappointed if the eventual health care bill doesn't include a public option and co-ops are inadequate alternatives).

Introduction

I am circulating this plan at this late stage of the health care debate because most of the proposals out there are totally inadequate.  This plan is a hybrid of government provided coverage, private insurance and regional and trade association co-ops (Not as public option replacements, but as an additional choice.  I'd be very disappointed if the eventual health care bill doesn't include a public option and co-ops are inadequate alternatives).

I originally came up with this healthcare plan in 2005 and never formally put it to paper because I worked for someone who advocated single payer, which I believe is a worthy goal, but impossible in today's political and economic climate.

Plans without a public option are essentially worthless.  They will inadequately extend the coverage safety net and will not put adequate competitive pressure on private insurance pricing.

Other things I dislike about the current proposals include forced consumer participation, taxing benefits and limiting charitable deductions.  Although this plan will require businesses large and small to insure all full time and most part time workers, employer mandated financial burdens in some situations will be less than half of what some current proposals require.  

The public plan would be financed by (1) premiums, (2) an estimated 30 percent in administrative and profit savings over typical private insurance handling comparable volume (New York Times July 4, 2009.  There are scores of other sources making this claim, but the Times is the most neutral) (3) repealing the Bush tax cuts, (4) treating liquid capital gains as earned income subject to whatever tax bracket the individual fits under (With an exemption for money directly and specifically allocated for job creation.  Buying a beach house, although it occasionally may create a job, does not fulfill this criteria), (5) medical care savings and (6) insurance companies paying a tax on per policy holder profits exceeding 1993 industry averages adjusted for inflation.  1993 was selected because it was the year they derailed the Clinton plan with their scare tactics.  

Federal income tax forms will also give taxpayers the option of voluntarily devoting a portion of their refunds or paying additional taxes towards maintaining public plan solvency.  However, this is not expected to generate statistically significant revenue.

Private insurance benefits would not be taxed and charitable deductions would not be limited.  Taxing benefits is regressive and limiting charitable deductions discourages positive behavior.  Aligning capital gains tax rates for liquid transactions with income taxed at higher levels helps fund universal coverage while correcting a regressive tax code component.  Exempting capital gains earmarked towards increasing employment from being taxed more progressively encourages positive behavior.  Taxing excess per subscriber profits discourages the negative behaviors of price gouging and denying service.  Limiting per person profits forces the insurance industry to increase revenue by acquiring more customers.  To gain customers, insurers would have to engage in the positive behaviors of offering lower prices and providing better service than competitors.

This proposal will discuss its effects on businesses, consumers and the insurance industry.  It will also address abortion, Gay couple and illegal immigrant coverage, while briefly suggesting ways to control general medical costs.  

Businesses

Businesses will be required to offer either the public plan or private insurance to all full time employees upon hiring and part time workers after they've exceeded $5200 ($100 per week annually) in compensation.  One person entities and enterprises hiring only nuclear family members and their spouse or spouse equivalents will be exempt from this obligation.  

Employers will be required to select either the public option or private insurance, but not both.  The public option which would require compensation based premiums by businesses and workers, will be less expensive than private insurance for lower paid employees and more expensive for highly compensated individuals.  I use the term compensated instead of paid because not just salaries are part of the calculation.  All other liquid income will also be subject to the premium.  Bonuses will be eligible, non-cash perks will not be.  Stock will only be eligible after it is sold or turned into cash.  Under this plan, Wal-Mart would probably select government sponsored insurance, while Goldman Sachs would probably elect to maintain private coverage.  

Businesses selecting publicly financed coverage will be required to pay a per employee premium of 3 percent of liquid compensation (Base salary, bonuses and other easily liquid compensation) for individuals and 5 percent for families or family equivalents (Family and family equivalents will be defined as households of more than one person).  

Employees would pay premiums of 3 percent of liquid compensation exceeding a $20,000 annual rate for individuals and 5 percent of liquid compensation over $20,000 per annum for families and family equivalents.  Both employer and employee public insurance premiums would be uncapped.  Small businesses currently providing insurance would save money in most scenarios under this program.  Employers previously unable to afford insurance would be able to offer it to workers and those still not wanting to do so out of greed would be forced to do so with negligible bottom line impact.

Companies on the government insurance dole would be required to pay their premium shares for all individual employees, regardless if that person opts in.  Employees of companies selecting the public option may opt out to use private insurance or regional and trade association co-ops.  Many highly compensated employees of public option companies will opt out and purchase private or co-op plans to avoid outrageous at their compensation level public plan premiums.  They would not be required to pay public premiums if they opt out, but their public insurance customer employers would still have to pay premiums for those opting out and forbidden to formally pay for non-public insurance for those preferring private or co-op options.  

Public option companies would be permitted to pay a portion of or all of their employees' individual premiums.  However, they would be required to pay the same percentage or dollar amount, whichever is lower, towards each employee premium.  If employers pay the entire employee premium for lower compensated workers, they would be free to cover sums exceeding contributions for lower wage earners towards the premiums of the better compensated.

This strategy enhances public plan positive cash flow, with employer paid premiums for those opting out being added to the coffers with little or no real cost, while reducing coverage expenses by discouraging the highly compensated and companies that hire them in large quantities, from public plan selection, when they can afford non-governmental options.  

There is a danger of employee paid premiums for employer supplied private coverage being too expensive for lower wage workers.  To prevent this, no employee private insurance premium would be allowed to exceed the government plan premium for individuals by more than 20 percent and 30 percent for families.  If insurance companies won't lower rates to help employers keep employee cash participation affordable, businesses unfortunately would have to pay greater percentages of premium costs.

Public plan company workers eligible for their spouse or spouse equivalent's private coverage must opt out of government insurance and enroll in the private insurance plan unless the employer coverage is inappropriately expensive based on employee compensation, a concern a provision in the previous paragraph should address in most situations.  Although few would select this option, those eligible for coverage under someone else's plan could also choose either a different private plan or co-op supplied insurance instead, but won't be able to enroll in the public program. Prohibiting those eligible for private insurance from purchasing government sponsored coverage will limit public option membership and thus reduce plan administration costs, without leaving anyone minus coverage.  

Individuals

Individuals without employer based insurance will be able to choose from the public option, private plans and co-ops.  Those choosing government coverage would be required to pay as a premium 3 percent of their income beyond $20,000, including interest and liquid capital gains for individuals and 5 percent for families.  Individuals and families with little or no income would not have to pay public insurance premiums.  

Most people under other government sponsored health care programs will be ineligible to pursue the new public option, unless their current coverage doesn't provide something available from the new public plan.

The newly unemployed with spouse or spouse equivalent eligible income and or those fortunate enough to have severance pay will have their other family income and/or prorated packages combined with unemployment payments for premium determination.  No premiums would be required if this amalgamation is less than a $20,000 annual rate.  

Those collecting unemployment without additional family income or severance may not have to pay premiums even on unemployment compensation exceeding $20,000 per year rates if their benefits are such a small fraction of their employed salaries that they inadequately cover housing costs, which will be defined as rent, mortgage + prorated taxes for home owners or mortgage + maintenance for co-ops and condos.  In New York State, which ranks high in housing costs but in the middle in maximum weekly unemployment benefits, this is a given.  The formula for unemployment insurance eligibility for compensation based premiums is the following:

Unemployment benefits are typically paid weekly or bi-weekly for 6 months.  The $20,000 threshold for 6 months is $10,000.  Although many by necessity pay more, particularly in areas with high housing costs such as NY Metro, people are supposed to spend around 25 percent of their gross income on shelter.  10,000 less 25 percent (10,000-2500) = $7500.  If the 6 month total unemployment compensation minus actual housing costs is $7500 or less, no premiums would be owed.  

Anyone selecting the public option because of income considerations will be required to enroll in private insurance instead if they are eligible under a family member or equivalent's work sponsored plan unless the premium is unaffordable in proportion to compensation.

Under this version of a government plan, no one will be forced to buy insurance, but the first $20,000 in income premium calculation exemption will remove affordability as a concern for many low wage workers.  Someone earning as much as $40,000 a year would still pay as little as $600 a year or $50 a month under the public option (40,000-20,000=20,000.  20,000x.03=600).  The maximum employee private insurance premium rule should also remove affordability as an obstacle to buying insurance.

The self employed, whether they are organized as Schedule C Sole Proprietors, S Corps, C Corps or LLCs, can choose between a public policy, private insurance and co-ops.  Businesses employing only nuclear family members and their spouses or spouse equivalents would also fall under the self employed rules.

If the public option is chosen, the first $20,000 of net profit + payroll, no matter how profitable the company is, will be exempt from premium consideration.  The next $180,000 in net profit + payroll will result in 3 percent premiums for individuals and 5 percent for families.  Net profit + payroll exceeding $200,000 will be subject both employee and employer premiums.  Premiums would be paid with quarterly returns.

Someone self employed with $250,000 in net profit +payroll would pay $9900 annually for individual coverage (250,000-20,000=230,000.  230,000x.03=6900.  250,000-200,000=50,000.  .03x2=.06.  50,000x .06=3000. 6900+3000=9900) and $16,500 for a family (250,000-20,000=230,000.  230,000x.05=11,500.  250,000-200,000=50,000.  .05x2=.1.  50,000x .1=5000.  11,500+5000= 16,500.  

Many of the self employed subject to the double premium, will opt out of the public plan and pursue private insurance or co-op options., after their profits + payroll reach the threshold where they pay employee and employer portions.  

This set-up is analogous to the self employment tax, but more progressive.  Under the self employment tax, Schedule C self employed individuals earning more than $400, pay the equivalent of both employer and employee Social Security (12.4 percent) and Medicare (2.9 percent) taxes on all activity related to the tax from up until $106,800 on the social security portion.  The Medicare portion is uncapped.  These rates and caps are identical to the Social Security and Medicare taxes non sole proprietor businesses and their workers pay.  Most people earning less than 106,800 regressively pay a higher percentage of their income than those earning more under the self employment tax.  

The public insurance option in contrast, exempts the least successful self employed from any payments, removes a considerable amount of income from premium calculation and limits dual designation eligibility to the most successful entrepreneurs, who only pay double contributions on profits beyond a benchmark most single person operations don't achieve.  Unlike the self employment tax, higher revenue one person shops will pay a greater share of profits than those earning less.  

The most successful self employed, like high compensated employees at companies using the public option, will be very likely to opt out or never select government coverage.  They will also be required to enroll in private insurance if they are eligible under a spouse or equivalent's plan.  Their discretionary or forced absence from the government plan will reduce membership and accompanying operating costs, helping to keep the program solvent.

The terms spouse, spouse equivalent, family and family equivalent are used to define relationships eligible for public insurance beyond individual coverage.

The definitions used by the insured's state of residence will be applied in each situation.  Heterosexual married couples and married Gay couples in states where Gay marriage is legal will be considered spouses.  Gay married couples in states such as New York, which don't sanction Gay marriage but recognize the legality of such when performed where it is legal, will also be considered spouses.

Couples married in states where Gay marriage is legal but residing in a state not recognizing such will be considered spouse equivalents and eligible for each other's coverage.  In states offering such, registered civil union and domestic partnership members, straight and Gay, will also be considered spouse equivalents eligible for partner coverage.  Straight couples in states granting common law marriage status after a certain cohabitation interval will also be categorized as equivalents.  Gay couples without common law legal standing in such states will be eligible for equivalency if they meet the same cohabitation criteria as straight partners.

Gay and straight couples lacking legal remedies to establish spouse equivalent status will have the opportunity to prove their relationships' equivalence.  Gay couples undergoing non-legally sanctioned marriage or commitment ceremonies will be usually granted benefit eligibility.  Non-married couples of all orientations will be considered equivalents if they share a primary residence mortgage.  Those sharing rental leases will be considered equivalent couples if they have other financial entanglements, such as joint bank accounts, credit cards or being named life insurance beneficiaries.  Those not sharing a lease or mortgage can prove equivalence by combining proof of cohabitation of 3 years or more with (1) a joint bank account minimally totaling the lesser of $10,000 or one third of the couples' combined liquid assets, (2) joint credit or (3) being life insurance beneficiaries.  

Legally adopting the natural born or adopted child of a straight or Gay life partner would also qualify people as spouse and family equivalents if residence is shared.  Genetic and adopted children will automatically trigger actual family status.  To avoid funding polygamy, married people won't be allowed spouse equivalents , nor could anyone have more than one spouse equivalent, under this proposal.

Insurance Companies

Under my plan the insurance industry isn't going away unless they choose to.  Although I've written speeches, collateral material and web content favoring single payer coverage similar to Michigan Congressman John Conyers HR 676 Bill, I've always been apprehensive about how we'd absorb the lost insurance industry jobs under a single payer system, even in an economy with better employment numbers.  

For most of the decade, the media reported near historical unemployment lows.  Although obviously painful and potentially life ruining for those out of work, if the unemployment figures the media prefers to use were an accurate barometer of financial pain, it could be argued that before the current recession, we minimized this suffering close to the widest extent possible in an economy our size.

Even when the economy was allegedly strong, way too many people were out of work if the correct metric is used.  The Bureau of Labor Statistics publishes six levels of unemployment, labeled U1-U6, with U1 being the least comprehensive definition and U6 the most.  The media usually reports the U3 numbers, which severely undercounts the unemployed.  The U6 numbers are generally 1.8 x the U3 numbers, which means the more comprehensive unemployment metric was a little bit under 8 percent during the best of times, which is way too many out of work and a mind blowing seasonally adjusted 17 percent in September 2009.  

Although U6 is more comprehensive than U3, it still leaves out many people who technically are working but in reality are not gainfully employed.  Failed entrepreneurs, who remain in money losing businesses because they have zero job prospects, are not counted.  Nor do they include forced entrepreneurs, who set up businesses performing something related to the job they lost because they can't find another one, even if these ventures attract no clients or customers.  Also not counted under U6 are those earning below minimum wage and in many instances nothing, selling Real Estate, insurance or Amway on straight commission, because they can't secure a position paying a base salary or sales draw (Although technically an advance against potential commissions, draws are generally treated like ordinary wages, with very few companies making their recipients pay back the money if sales productivity is not commensurate with the draw.).  

Many middle aged accountants, ad executives, investment bankers and factory workers may never be employed in their previous occupation and earn close to their previous earnings.  A middle aged person out of work more than 6 months even in a bad economy is often perceived as unemployable damaged goods.  

If these people are included, it wouldn't be surprising if the true unemployment numbers during better financial times would mimic the September U6 numbers and approach a third world like 25 percent in our current economy.  In a good economy, shutting down an entire industry, even one that has acted as irresponsibly (Many would describe insurance industry behavior as selfish or evil) as health insurance, would unemploy an unconscionable number of people and in our current economic environment the suffering would be beyond comprehension.

Under this public option there will be niches for private insurance to fill.  The compensation based public plan premiums will be more expensive for highly compensated individuals, companies that employ large quantities of such and the very successful self employed than private insurance.  Private insurance will compete for these groups.  

Limiting employee paid private insurance premiums to 20 percent over the public plan for individuals and 30 percent over for families, will persuade the industry to avoid setting employer premiums just below where the highly compensated pay more under the government plan and keep premiums close to 20 percent for individuals and 30 percent for families above the private plan compensation based rates for workers earning near the average wage.  

A maximum employee paid premium should control the cost of employer based private insurance, but given the insurance industry's history, they likely will try to charge the highly compensated who opt out of employer chosen public coverage and the most successful of the self employed, the smallest amount below the government sponsored rate they can get away with.  However, these individuals will be able to buy insurance from regional and trade association co-ops likely to offer lower rates than private companies.  The co-ops mere existence will create competition for the highly compensated's health care dollars and motivate private insurance to charge slightly less outrageous rates.  

Those eligible for private insurance under a spouse or other family or family equivalent are required to enroll in their relative's plan or other private coverage.  This is another automatic insurance industry customer source, unless short term greed trumps the need to attract business in a truly competitive environment and they ultimately lose employers offering private insurance because of refusal to compete enough on pricing.

Private Health Maintenance Organizations (HMOs) already administer optional Medicaid and Medicare programs.  They would continue to do so.  Although a pure public plan without insurance industry participation must be available (even a reformed by market conditions industry), we can still explore the new government program offering options administered by HMOs or other private companies if they prove they can do so within the public plan's pricing, coverage and physician payment guidelines.  The likelihood of insurance companies modifying their behavior to get a shot at some of the public insurance business is good.  Suddenly better behavior will no longer be unfriendly to their bottom lines if it means additional revenue from servicing public option users.

Self insuring businesses will be subject to the same rules as employers providing private insurance and the insurance companies themselves.  The premiums the self insured charge their employees would not be able to exceed the maximum employers can ask their workers to contribute under private coverage.  

Private insurance companies currently administer coverage for many self insured businesses.  That won't change under this program.  This is still another niche for private insurance to fill unless they decide to be uncompetitive based on price and coverage.

Insurance companies do not currently pay for vanity inspired cosmetic surgery and the government will never cover it.  This could be another niche for private insurance to fill.  The way to make this profitable from an actuarial perspective would be to target young affluent (and vain) people with cosmetic surgery policies redeemable after paying circa 20 years worth of premiums.  Well to do parents could even give such policies to teenagers as a gift redeemable in their thirties.  

Regional and trade association co-ops are technically this program's the third tier, but they are not a major part of this plan and don't merit a complete section devoted them.   They would not be adequate true public option substitutes and should not be used as such.  No federal funds should be diverted to their establishment.  However, they can offer additional consumer health care choice and their development encouraged.  

Not restrained by mandated compensation based premiums or share holder mandated profit pursuit, co-ops could be less expensive than government or private insurance for the highly compensated and self employed affected by high earner public option pricing.  Promoting co-op creation would also create additional competition for the insurance industry, keeping private prices down.  Private insurance will complain that co-ops like public funded health care, would drive them out of business.  In reality, the insurance industry would decrease prices and improve service to remain competitive.  Many coops contract out program fulfillment to private insurance companies, so their establishment will actually create business opportunity for the industry.  

All providers outside of the public option:  private insurance, self insured companies and co-ops will be required to cover pre-existing conditions and anything else the government plan mandates.  They will be required to offer de facto families the same coverage as groups of people considered to be legal families.  They will be allowed to offer better or more extensive coverage than the public option, but won't be allowed to offer less or inferior coverage.  The tax on excess per customer profits would encourage insurance companies to enhance revenue by selling more policies to more people instead of increasing per person profits with gouging and service denial.  

One of the very few Republican suggestions to lower medical coverage costs is allowing insurance companies to compete across state lines.  The only problem with the suggestion is that insurance companies and trade association plans would incorporate or reorganize in the states friendliest to the providers, just as credit card companies have done in usury friendly states such as South Dakota.  This would actually reduce real choice because most non-government run providers would congregate in certain states and offer similar plans i.e. more expensive premiums, continued service denials and less coverage.

However, this plan will permit employers and individuals to buy from any provider in the country, if all insurance companies are required to abide by the same consumer friendly rules and not be given a haven in states giving them carte blanche to behave irresponsibly and selfishly.  It would create needed private sector competition and would positively affect insurance pricing and service.  An exchange could be created to accomplish this but is not necessary to achieve the desired results.  

The insurance industry shouldn't vanish under this plan.  Progressive public option pricing and the prevention of the private coverage eligible from enrolling in the government plan guarantees them a customer base.  But they will not be permitted to continue causing financial ruin, physical suffering and even death in the name of greed and profits.  New regulations will prohibit coverage denials and strongly discouraging gouging.  Competition from public coverage, co-ops and each other will further control prices and encourage improved service.

Controversial Issues

Until April 2006, I used to be less pro-choice than I am now.  I was largely pro-choice because almost everyone allegedly pro-life didn't care about the former fetus they supposedly wanted to protect the life of, after it became a baby living outside the womb.  I used to favor some restrictions, because regardless of when a fetus becomes human, it certainly is a potential life and shouldn't be aborted for frivolous reasons.  However, after reading Pro-Life Nation(NY Times April 9, 2006), which described El Salvador criminalizing most abortions, I became much more strongly pro-choice.  That country's gynecologists degenerated into “Vagina Police”, who would report patients they suspected had abortions to the authorities, even if their suspicions were based on minor abrasions.  

That invasiveness level made me realize that no one but the woman with the unwanted pregnancy should make abortion decisions.  But even before this epiphany, when I was less pro choice than currently, I was against the Hyde Amendment, which outlaws government abortion funding.  I've always felt it was unfair to deny the poor access to medical procedures available to those better off financially.  However, unless Hyde is repealed, abortion coverage won't be included in the public option.  I won't risk government funded abortion derailing government funded general health care.  Many of the same people hurt by Hyde would suffer even more without public plan creation.  The proposal exists to expand medical coverage and shouldn't include legislation, that despite its worthiness, will prevent public insurance implementation.  

It may be legally possible under Hyde regulations to isolate government investment in this plan and add it as a surcharge to the premiums of those wanting abortion coverage.  However, this annual surcharge expense for many public option users would exceed abortion costs.  

Under this plan, public, private, self and co-op insurance will be required to cover Gays and cohabiting heterosexual couples in jurisdictions that legally recognize these relationships.  In areas that don't, Gays and straight cohabiters will have the opportunity to prove their living arrangements have enough in common with legally sanctioned relationships to merit equivalency status.  Mandatory coverage for arrangements other than formal traditional heterosexual marriage in areas where they lack legal status is not based on de facto legalization, which although I personally support Gay Marriage, is well beyond this program's scope.  The coverage requirement is based on similarities and equivalencies without taking a position on these relationships, which I hope will receive less opposition than anything closer to advocacy.  

If granting non-traditional relationships equivalent coverage status to heterosexual married couples becomes a deal killer, at the risk of be called a bad poker player (In my defense, I recently won a charity Texas Hold'em tournament), I would dilute the requirements to salvage the plan, because those who would benefit from expanded coverage, would lose more by not having a public option.  Two members of a Gay couple paying individual 3 percent premiums instead of a 5 percent family rate are better off than paying much higher private premiums or lacking coverage.

Illegal immigrants would not be covered under the public option unless they are using fake social security numbers and are being paid on the books.  Most illegal aliens are employed as day laborers or as restaurant and other low wage service industry workers.  They are usually compensated off the books, without benefits or a paper trail.  

The Republican healthcare non-solution trifecta consists of (1) Preventing illegal immigrant government health care access, (2) limiting damages individuals and families whose lives are ruined by medical negligence can legally recover and (3) paving the way for insurance companies to incorporate in states least friendly to policy holders.  Ironically, illegal immigrants cost taxpayers much more in emergency room care than they would if they were formally covered by a government program.  But that won't happen under this plan or any proposed public option.  

Illegal immigrant non-coverage presents other health problems those obsessed with the undocumented ignore.  Forced to resort to only emergency room care, an undocumented worker could be riding a packed subway while infected with tuberculosis or an illegal with a highly communicable disease could be washing dishes or busing tables at an eatery patronized by someone obsessed with illegal immigrants.  

Medical Costs

The public option will reimburse doctors and other medical professionals based on private market standards with room for negotiations with individual physicians and practice groups.  States and regions will be permitted to structure similar deals with doctors and service providers.  

Being a physician is prestigious in American society.  Doctors, are among our country's best compensated, although many less important occupations pay better, which is why many M.D.s try to land jobs as Wall Street pharmaceutical industry analysts.  Doctors in many important medical specialties earn less than those in non-critical specialties such as elective cosmetic surgery.  Physicians deserve to be well compensated and pediatricians and family practitioners particularly should earn more than they currently do.  That said, we need to eventually come up with a better way of compensating doctors.

The two current payment models leave much to be desired.  Under pay for service models, physicians and hospitals increase income by performing more procedures and charging higher prices.  This incentivizes unnecessary testing and wastes tons of money.  The non-care model employed by many HMOs, rewards doctors for not performing procedures.  This endangers health and lives.  

I would never deny physicians the freedom to maximize their income, which usually involves the fee for service model.  However, there is a third way many doctors, particularly those in specialties such as pediatrics and internal medicine, may find appealing, that will result in cost saving patient centric care.  

The federal government, individual state, regional co-ops and even private insurance can experiment with paying physicians base salaries higher than middle management, but below corporate CEO, something comparable to major company V.P. compensation.  Many doctors would earn more than they do now without malpractice insurance headaches and money would be saved from unnecessary tests.  Physicians freed from the need to generate fee income or the Orwellian HMO non-service requirements, could focus on patient care, testing when appropriate but not authorizing anything lacking medical utility.  This drastic physician compensation overhaul is not a formal part of this plan and is merely something worth experimenting with, as are all other worthy ideas that cut costs and improve care, whether they originate from government, the private sector or non-profits.  Doctors won't be required to participate in such programs and will always be free to pursue fee based income.

Further cost savings can be realized by increasing nurse practitioners and physician's assistants patient care participation in situations appropriate to their skill level.  These medical professionals will never replace doctors, but money can be saved by their greater appropriate deployment.  

Republicans like some types of lawyers.  They love prosecutors and corporate M and A specialists.  But they despise lawyers that defend consumers over corporate interests who fund their existence, and therefore demonize personal injury law.  This is why what they refer to as Tort reform is part of their non-solutions to the health care crisis trinity.  The right wing buzz term, Tort reform focuses on limiting what ordinary citizens can receive in damages for negligence resulting in severe harm or death.  Never mind that according to a 2006 Harvard study, 97 percent of medical lawsuits are meritorious or that only 2 percent of the 2.5 trillion we  annually spend on medical care is attributable to litigation, so it's not about to make health care or insurance intrinsically more affordable.  

Texas underwent Tort reform a few years ago.  It has worked so well the growing city of McAllen has a per person health cost of $14,000 and 25 percent of the state is without insurance.  

Pharmaceutical costs are stratospheric.  Prices for the same drugs vary significantly from nation to nation.  Money could be saved if patients were allowed to buy medication from any country with equivalent regulatory and quality standards.  I would never recommend buying meds from countries with standards less stringent than ours.

The following is a fairly radical idea, and thus is not part of the formal proposal, but might be worth exploring.  A tremendous sum is spent on pharmaceutical research.  That cost is passed on to consumers as medication prices unaffordable even for those with coverage.  

If the leading pharmaceutical companies eliminated or severely scaled back their research efforts and instead contributed somewhere around 25-50 percent of their current research budgets to a government run research fund, the government would save money on overhead duplicated by the existence of several research departments and produce drugs based on health care needs, not maximizing profits.  At its discretion the government could also job out this research to academia or non-profit medical institutions.

There would be no exclusive patents on government research developed products. All qualified domestic pharmaceutical companies would be granted a license to manufacture and market the new drugs without a licensing fee, creating a truly competitive U.S. market place, strengthening capitalism with what could be perceived as a socialist policy.  The prices companies could sell government research products would be highly regulated and kept affordable.  Patients and insurers would save significant amounts of money and no one would suffer or die because they couldn't afford treatment.

Pharmaceutical companies would save on research costs.  They would lose the excessive profits from patent monopoly, but gain new revenue from selling government developed drugs.   The research savings and new product revenue will mitigate patent monopoly profit loss, making the new research paradigm ultimately economically neutral and potentially more profitable than the pharmaceutical industry's current way of doing business.  .  

Many of the pharmaceutical research jobs lost under this proposal would be absorbed by the government research program.  There would be some net job loss, but not the catastrophic numbers endemic to razing the entire health insurance industry.

Conclusion

Under this plan, businesses can offer employees private insurance as they do now or government funded coverage largely financed by employee compensation based premiums.  Employers choosing the public option will pay premiums of 3-5 percent of the salary of all workers earning over $5200 a year, even if they individually opt out.  Employees pay premiums of 3-5 percent of their total liquid compensation over $20,000.  However, those employed by companies selecting the public coverage may opt out.  Those opting out will not be responsible for the employee portion of the plan, but their employers will still have to pay their share.  

The public plan is likely to be less expensive than private insurance for lower waged workers and more expensive for the highly compensated and their employers.  Elite earners and companies staffed by larger numbers of this group are likely to find less expensive insurance outside of the public option.  Businesses won't be permitted to cherry pick coverage and offer the government plan to lower paid employees and private coverage to the well compensated.

Individuals not covered by employer supplied coverage or current government programs would be able to choose from the public plan, private insurance or regional and trade association co-ops.  Those eligible for employer based private coverage would be ineligible for public insurance.  The premiums employers charge employees and their families for private coverage would not be allowed to exceed 20-30 percent above what they would pay under the public option, regardless what the insurance companies actually charge employers.  

Income below $20,000 would be exempt from public option premium calculations.  A small percentage of very successful self employed individuals would have to pay both employee and employer public plan premiums.

No one would be penalized for not buying insurance.  However, the financial disincentives to do so would be eliminated by the exemption of the first $20,000 from public plan premium consideration and maximum employee private insurance premium payment limits.

The co-ops will offer consumers additional choice, but won't be federal government funded.  They are not to replace a public option.

In addition to premiums, the government plan will be financed by repealing the Bush tax cuts, private insurance and medical care cost savings, taxing capital gains at the same rates as other income and taxing insurance per patient profits adjusted for inflation exceeding 1993 industry standards.

Private insurance companies, self insured businesses and co-ops would all be required to adhere to public option standards as minimum service levels.  They will be free to provide more comprehensive coverage than the government if they choose.  They must cover pre-existing conditions.  

The insurance industry won't disappear if this plan is enacted.  Most privately insured companies will continue to purchase private insurance.  The highly compensated and companies that employ large numbers of them, would continue to use private insurance because the public component's compensation based premiums exceed private coverage fees for that group. People eligible for insurance under spouse or other family member private coverage would usually remain private insurance customers because they would be prohibited from public plan enrollment.  

Private insurance companies currently handle fulfillment for many self insured employers and would continue to do so.  They would also continue to administer plans for current government programs and have the opportunity to bid on administering public option portions and co-op fulfillment.  They will also be free to innovate and find profitable ways of covering elective procedures they currently don't pay for and a public plan won't ever cover.

Consumers and businesses seeking to purchase private coverage will be able to do so from any insurance company in the country.  All insurance companies would be required to adhere to national standards, so there would be less incentive for companies to reincorporate in states friendlier to industry shareholders than policy holders.  

Although I personally find it morally repugnant to deny poor people any coverage available to those better off financially, I wouldn't risk public option abortion funding derailing a government insurance program.  The same people who would need assistance paying for abortion also need the government covering the rest of their medical care.  I strongly favor repealing the Hyde Amendment and allowing government abortion funding, but not as part of health care reform legislation.  

All insurance providers would be required to cover same sex couples in jurisdictions recognizing Gay Marriage or providing legal equivalent options such as civil unions and domestic partnerships.  Non-married cohabiting heterosexual couples would also be entitled to mandated coverage if they are part of civil unions or domestic partnerships with formal legal standing.  This plan attempts to cover Gay and cohabitating straight family units residing in areas not granting their relationships legal standing by creating an equivalency category, using logic from the adage “If it walks like a duck, quacks like a duck, looks like a duck, it must be a duck” to make its case.  It does not attempt to change federal, state or local status laws.  

Although I personally support Gay Marriage, this legislation is not an attempt to legalize same sex matrimony.  Unfortunately, I would abandon covering Gay and non-married straight relationships in areas where they lack legal status, if such coverage would threaten this legislation's passage.  If health care reform isn't passed, Gays and straight cohabiters would not only be denied coverage based on their relationships, but would also continue to be subjected to insurance industry whims.  Two people paying the individual public option rate instead of the family price, is preferable to the same couple paying for outrageously priced individual private insurance under the current paradigm, being unable to afford insurance or being denied coverage.

This plan does not provide additional coverage for illegal immigrants. However, it should be pointed out that any U.S. citizen or other legal resident can be infected by contagious untreated illegal immigrants.

This plan does not attempt to formally change how physicians are paid.  Doctors should always be free to charge directly for the services they provide.  However, it is worth experimenting with alternative compensation methods, such as the government, co-ops and even private insurers paying physicians salaries circa major corporation V.P. levels to holistically handle patients.  Under such a system, doctors would be free from needing to create revenue by performing procedures of questionable need.  They would also be liberated from H.M.O. mandated care rationing.

Tort reform is not part of this plan. It has been proven to have negligible medical cost impact.  

Americans should be permitted to buy pharmaceuticals from countries with equivalent regulatory and quality standards.

Although not a formal part of this plan, a way to reduce drug costs would for the leading U.S. pharmaceutical companies largely gutting their research departments and instead contributing 25-50 percent of current research spending to a government run medical research program.

This health care plan is superior to most of what's out there for a variety of reasons.  It offers a robust public option that provides affordable coverage for most of the uninsured, and fosters competition based price pressure on private insurance rates.  I am currently pessimistic about a government option being included in the final real world legislation.  

This program's financing is more progressive than current funding proposals.  On the revenue side its is funded by progressive compensation based premiums, reversing the Bush tax cuts, taxing liquid capital gains at the same rates as other income and taxing excessive per patient private insurance industry profits.  

Its costs would be partially contained by medical care and private insurance administrative and profits savings.  

It would also create two niches for private insurance that ultimately would reduce the government program's size and cost.  The compensation based premiums would cost more than private insurance for the highly paid who would likely opt out if their employers purchase public insurance.  The companies employing those opting out would still have to pay the employer share of the public option premiums.  The system saves money by not covering these individuals while still receiving more than half of the premiums that would be received under public plan enrollment.  Progressive premiums also guarantee most companies with large percentages of very highly compensated individuals, such as investment banking firms, stay with private insurance, further limiting public option potential growth.  

Anyone eligible for private insurance under a family member's plan will be ineligible for the government program.  This will decrease public option enrollment while further abating the plan's total cost.  

This plan's strengths also include what it doesn't do.  It does not limit charitable deductions or tax benefits.  It does not overly burden businesses.  Although businesses will be forced to provide either private insurance or the government program, their share of the public plan costs could be more than half of what it could be under other proposals.  No individual will face financial or criminal penalties for not purchasing insurance, but monetary disincentives to be uninsured are largely eliminated by exempting the first $20,000 in income from public plan premium math and the employee private coverage contribution cap's existence.  .

Depending on how aggressively private insurance companies pursue the high income market and co-op experiment success at controlling costs, a price bubble could develop under this plan.  The public option would be more expensive than private insurance for elite earners.   If insurance companies price their coverage only marginally below the public highly compensated's rates and co-ops fail to offer adequate alternatives, people perceived as well off if not rich, may have only outrageously priced coverage choices.  This could pose financial hardships for those at the lower end of the elite pay scale, particularly those who live in expensive metropolitan regions such as New York City or Silicon Valley.  This is regrettable, but the well off are better equipped to weather this hardship than the poor and middle class who are impoverished or decide to do without coverage by current health costs.  However, it's not impossible that increased competition from the public option and co-ops will mitigate the bubble's size and severity.  

I left out data concerning the cost of providing universal coverage, the total price of implementing this plan and government insurance revenue projections because this is a work in progress.  If this gains traction, a think tank or the Congressional Budget Office will run the numbers.  I'm also open to most other independent data analysis, as long as the individual or organization is not ideologically opposed to the public option concept.  

I would be open to some tweaking of the percentages of income devoted to public plan premiums, but not by much more than a point or two.  If they become much higher, the premiums could become too expensive for individuals and burdensome for small businesses.  I'd also be open adding a “couples” coverage category in addition to the outlined individual and family premium levels.  A couples category would likely be priced at the current 5 percent family rate, with the family premium being increased by a point or two.  

Three things I am adamant about not being part of the proposal are benefits taxing, charitable deduction limitations and treating individuals punitively if they don't purchase insurance.  Otherwise, I’m open to all other tweaking and would be very pleased if any component of this plan is included in actual legislation.  

Originally posted to Roy Moskowitz on Mon Oct 05, 2009 at 10:09 PM PDT.

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Comment Preferences

  •  No 30% savings sans elimination of billing mech. (0+ / 0-)

    Thats one of the reasons why this illusory "public option" is a false promise that can't save much,

    Experts agree that the savings won't materialize without eliminating the patchwork quilt of billing and paperwork that requires many healthcare providers to employ armies of billing clerks to haggle with insurers for their payment.

    Single payer or something similar is inevitable, -the only question is if a whole generation's savings will be looted FIRST

    Your money or your life!

    Murder by spreadsheet is pretty lucrative business... The government can't do it themselves.

    by Andiamo on Tue Oct 06, 2009 at 05:11:11 AM PDT

    •  Research in Europe is quietly leaping ahead of us (0+ / 0-)

      in area after area.

      The reason is European health care providers are focused on curing patients, not making more money out of each of them by doing as many procedures as they can.

      I do a lot of reading in the science of medicine and the obvious reality is that there is less and less basic research happening here in the US that isn't focused directly on making money for a company on some drug or procedure.

      The situation here seems to be killing basic research. Money is not God. But from where things are going you would think that they felt so.

      Murder by spreadsheet is pretty lucrative business... The government can't do it themselves.

      by Andiamo on Tue Oct 06, 2009 at 05:18:22 AM PDT

      [ Parent ]

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