In the brief, authors Cathy Schoen, Karen Davis, and Sara R. Collins say their Building Blocks framework for expanding health insurance coverage has six core components:
- A structured choice of private plans and an enhanced Medicare-like plan (Medicare Extra) made available through a new national insurance connector; insurance would be available to all at community-rated premiums that would not vary with health risks. The same premium rating provisions would apply inside and outside the connector;
- A requirement that all individuals obtain health insurance coverage, with automatic enrollment of uninsured tax-filers through the personal income tax system;
- Financial responsibility shared between employers and employees, with a requirement that all firms cover their workers or else contribute 7% of workers’ earnings (up to $1.25 per hour) to a pool to help finance coverage;
- An expansion of Medicaid and the State Children’s Health Insurance Program (SCHIP) that would enable coverage of all low-income adults and children below 150% of the federal poverty level, with modest copayments for health care services, no premiums, and enhanced federal matching to cover additional costs to states;
- Tax credits that offset any premium cost in excess of 5% of income for lower-income tax filers (15%-or-lower tax bracket) and 10% of income for higher-income tax filers (benchmarked to premium of the Medicare Extra plan); and
- Extension of improved Medicare Extra benefits to current Medicare beneficiaries – elimination of the two-year waiting period for Medicare coverage for people with disabilities; the ability of older adults age 60 or older to “buy in” to Medicare; and the same financial protection on premiums as a percentage of income for Medicare beneficiaries as for nonelderly households.
According to the report, estimates by the Lewin Group indicate the authors’ Building Blocks framework would achieve near-universal coverage: 44 million of the 48 million people in the U.S. who are currently uninsured would have health insurance, or 99% of the total U.S. population. The authors say the Lewin Group also estimates that about half of individuals gaining insurance coverage under the Building Blocks framework would obtain their coverage through the national insurance connector and the new insurance products it makes available, while the other half would be equally split between enrollment in employer plans and enrollment in Medicaid or SCHIP.
The authors also suggest that for the 49 million people with insurance who change their health coverage, their coverage would improve or their premiums would be lower. “Small businesses (under 100 employees) in particular would likely respond to the possibility of improved, lower-cost coverage by buying coverage through the national insurance connector instead of buying it directly themselves,” the report said.
In addition, the report said an estimated 32 million insured people covered by employers would switch and now receive coverage through the connector. In addition, enrollment directly through employer plans would also increase as the authors predict that some individuals now covered by Medicaid, SCHIP, or individual insurance plans would switch to employer coverage.
“Altogether, total employer-based coverage-sponsored either directly by employer health plans or financed by employers through the connector-would increase from 158 million people to 184 million, up from 53% to 63% of the population,” the authors contend.
The premiums for the new Medicare option, for those under age 60, would be an estimated $259 per month for individuals and $702 a month for families, which the report says is 30% less than the average premiums currently charged to employers.
The voluntary shift of a substantial number of people into Medicare Extra coverage would achieve significant savings, including $15.4 billion in lower administrative costs (after netting out the cost of establishing the insurance connector and administering income-related subsidies) and $22 billion in lower Medicare provider payment rates for individuals switching from private coverage, according to the report. The savings would be even greater if the option of Medicare Extra were extended to all firms, not just small businesses.
The authors suggest their proposal could potentially generate $1.6 trillion in health system savings over 10 years if coupled with additional reforms. The reforms they suggest are:
- promoting health information technology;
- establishing a Center for Medical Effectiveness and Health Care Decisionmaking, and linking their recommendations to insurance benefit design;
- reducing tobacco use through public health measures;
- reducing obesity through public health measures;
- implementing a provider payment system based on episodes of care (for episodes involving acute hospitalizations only);
- strengthening primary care and care coordination;
- resetting benchmark rates for Medicare Advantage plans; and
- allowing Medicare to negotiate prescription drug prices.
The Issue Brief is here .