Unquestionably Constitutional Health Insurance Reform

In this paper, we submit a proposal for a future health insurance system of America. We present a novel, consistent structure that works for all Americans. In the future, all Americans can have two health insurance plans: a primary and a secondary. Primary plans are optional, private-sector, individual plans available on free-market exchanges. There is one secondary plan, which is the same for everyone. It is a zero-premium, federally funded, ultra-catastrophic insurance plan that can only be earned by having completed specific preventive care in the previous year. We call this preventive care: “A-care,” and the secondary plan: the “Z-plan.” Here’s how it would work. You go to the exchanges to buy a primary plan. You select the one that is right for you and get a price quote. You discount that price by presenting a non-transferable voucher that you received from your employer (who retains her tax break for subsidizing health insurance). The exchange then applies another discount depending on the size of the Z-plan deductible, which varies as a progressive formula of individual age, household income, and an asset test. You then disclose your Z-plan’s deductible, if you have one. Because the Z-plan is ultra-catastrophic, its deductible is painfully high, and is determined by a progressive formula. For a 50-year-old making $200,000 with $300,000 in savings, the deductible may be $150,000. For a 20-year-old making $20,000 with no savings, it may be $40,000. In an open and competitive free market, a private insurance carrier can only command a price for the risk that it bears; Americans with lower Z-plan deductibles need primary plans with less risk, so exchanges create less expensive plans for the young and the poor without handing out entitlements and without complicating the tax code — except for amending it to include tax breaks to the individual for his portion of the premium. Because the Z-plan must be earned by completing the A-care, which is free to the public, such a system implicitly (but without mandates) promotes universal prevention. If you lose your job, you lose your voucher — not your primary. If you can’t afford your primary without the voucher, you don’t lose your Z-plan. You are always insured, so you always have access. To help you save, if you have the Z-plan, you can contribute to a new, better kind of HSA, where post-tax dollars are matched by the Z-plan at a rate that corresponds to our progressive formula. In our full proposal, we explain why this structure is effective without a federally imposed individual mandate, how it works the same for families, children, and those on Medicare and Medicaid (which potentially become privatized primary plans with state or federally issued vouchers). We explain who decides what is in A-care, how it works for those who don’t participate in the Z-plan, what happens when someone seeks care at the ER or elsewhere without intent to pay, and how the Z-plan is actually operated (the government doesn’t do it). Finally, we discuss what it will cost and who might pay, how this structure may stimulate medical cost deflation, what the Z-plan covers, how the idea of death panels is completely avoided, why there is no controversy over contraceptive care, and how it is unquestionably constitutional.