This addresses directly the biggest problem we have in health care, which is the large number of people without health insurance. But it will also indirectly help deal with the second biggest problem, which is the high cost of health care. It is rather radical and will probably require changes in federal law as well as state action.
We change from most of us getting our medical insurance through our employers to all of us buying it through medical insurance cooperatives. Payments to such cooperatives would be tax-exempt. The cost to the poor or hard-to-insure would be at least partially paid by the government.
This maintains the two biggest advantages of our current system. First, group insurance requires the insurance companies to cover everyone in the group regardless of medical condition, and, second, the cost of medical insurance benefits is tax-exempt income.
It would provide a means to achieve universal coverage, yet still avoid the problems of socialized health insurance.
To start with, the employees of large companies would be formed into a cooperative. The money that employers now pay to health insurance providers would be sent to the cooperative instead, who would in turn pay the insurance companies. Once the cooperatives are established and running, members could change cooperatives if they wish.
The members would elect or hire managers of the cooperative to represent them to health insurance providers. Thus the managers of the cooperatives will be focused on getting the best possible deal for their members. The cooperatives will also act as advocates for their members in dealing with the insurance companies concerning coverage denials, drug costs, etc. Employers will probably be glad to no longer have to deal with the health insurance companies.
Other people could then join the cooperatives. This is how we achieve universal coverage. It provides a means for the self-employed, employees of small companies, part-time employees, and the unemployed to join in the advantages of group health insurance.
Each cooperative would be required to accept a pro-rata share of currently non-insured and hard-to-insure people, including those now on Medicaid. The government would subsidize part or all of the cost for these people, which will reduce the administrative costs now incurred by Medicaid.
The requirement to accept the poor would be enforced by making it a condition for the cooperative to be tax-exempt. Further , the cost of health insurance should not be tax-exempt for individuals unless it is purchased through these cooperatives.
The advantage of group purchasing would be preserved, e.g. the insurance companies have to cover all members of a cooperative regardless of medical condition.
The tax advantage can be preserved by having employers sending payments for the employee to the cooperatives and reporting it separately as tax-exempt income. Other members, such as the self-employed, could deduct the cost of payments to the cooperative from their taxable income.
Part-time workers of employers who pay for health insurance would have a proportional payment sent to their cooperative.
For most people, those who have medical insurance benefits via their employer, the change will appear minor. They can keep their same insurance provider and medical providers if they wish. The money to pay the benefits will simply be rerouted from their employer to their cooperative, then to the insurance company. Their paycheck will not change and their taxes will not change. Later on, some employers will just send a portion of the employee’s pay as designated by the employee. That will move towards a system where employees pay directly to a cooperative, but deduct those payments from their taxable income.
Cooperatives should have to offer at least two different health insurance plans from different insurance companies to their members. That would keep the cooperative from becoming too closely tied to one health insurance company. The cooperative will have more clout if they can simply encourage members to switch to the other insurance company.
After an initial period of perhaps a year or so, the original members could switch cooperatives if they desire. They just notify their employer to send the payment to a different cooperative. That will put cooperatives into competition with each other. Economies of scale will probably lead to consolidation of cooperatives into just a few in each area. We may have to establish anti-trust policies to make sure at least two cooperatives are available.
There will probably be a gradual shift to the employer just providing a non-taxable cash amount for each employee for benefits, regardless of married or single status, and letting them designate it to a health insurance cooperative, additional retirement savings, and/or other benefits.
There will also have to be some adjustment for married couples who both now receive family coverage from their respective employers.