At the outset of last year’s healthcare debates, House GOP leaders promised to repeal the ACA and replace it with “coverage protections and peace of mind for all Americans — regardless of age, income, medical conditions, or circumstances,” while ensuring “more choices, lower costs, and greater control over your healthcare.” They failed.
That failure has energized progressives to push for a single-payer system with first-dollar coverage for everyone, as in Sen. Bernie Sanders’ Medicare for All. Those plans poll well until voters are informed that they would require an increase in taxes. Enthusiasm then drops.
Clearly, there is room for something in the middle — something that would to protect all Americans against financially ruinous medical expenses, preserve the principle that those who can afford it should contribute toward the cost of their own care, and fit within the current federal healthcare budget with no new taxes. The policy that best fits those requirements is universal catastrophic coverage.
The basic idea of UCC is simple. For people with very low incomes, even moderate medical expenses can be unaffordable. For those below a specified low-income threshold, UCC would pay healthcare costs in full. Everyone else would get a UCC policy with a deductible scaled to their eligible income — that is, to the amount by which annual household income exceeds the low-income threshold.
For example, suppose the low-income threshold is set at $25,000 for a family of four, roughly equal to the official poverty line, and the deductible is set at 10 percent of eligible income. A family with income of $25,000 or less would then have no deductible in its UCC; one with income of $75,000 would have a deductible of $5,000 (a little less than under an ACA silver plan), and one with income of $400,000 would have a hefty deductible of $37,500. High-income families might consider supplemental insurance to help with deductible costs. Premiums on such policies would be moderate, since even upper-income individuals would still be covered by UCC in case of expensive advanced cancer treatment or costly chronic diseases.
The UCC policy could be issued directly by the government, like Medicare, or administered by private insurers subject to approved standards, like Medicare Advantage. In recognition of the old adage that an ounce of prevention is worth a pound of cure, all UCC policies would include a package of cost-effective preventive and primary-care services that would be exempted from the deductible.
More than half of all Americans now get health insurance through their jobs. In most cases, UCC policies would be more attractive, both to workers and employers, than existing employer-sponsored insurance. As individuals and companies made the transition to UCC, workers would be liberated from insurance-related job-lock, employers would be freed from mandates to provide coverage to their workers, and the government budget would recoup revenue now lost due to the tax-exempt status of employer coverage.
UCC would provide a strong base for the implementation of market-friendly reforms designed to break down barriers to competition and provide greater transparency regarding prices and quality of medical services. Implementing legislation should empower program administrators to drive taxpayer-friendly bargains over the pricing of drugs and medical services. Available evidence indicates that inclusion of such cost-saving measures would make UCC affordable within the limits of the current government healthcare budget, without the need for new revenue.
In short, why leave affordable healthcare and peace of mind for all Americans as an embarrassing unfulfilled promise when there is an alternative – universal catastrophic coverage – that is waiting and ready to go?
Ed Dolan (@dolanecon) is a senior fellow at the Niskanen Center.
