A Multistate-based Path Forward for Universal Health Care

The notion of introducing Universal Health Care Insurance has been focused at the federal level for quite a while. Success at that level has been mixed at best, primarily focusing on improvements in the ACA (Affordable Care Act) with even the proponents there recognizing that it only helps a subset of the problem of health care funding. As is, most everyone, even independent of partisan politics, agree that what we have in this nation is badly fragmented and uneven in its fairness, but at the federal level we cannot agree on any means to resolve even the ever-increasing perception of the cost of health care. (Afterall, we cannot possibly provide any more freebies to the undeserving.) We need to reset and take a good hard look at how health care in this country is really being funded, address today's perceptions, get the needed buy in, and then fix it.

Interestingly, the dynamics of power in this country have been changing in a way that might help move Universal Health Insurance (UHI) forward. Increasingly, we see, even from our own Supreme Court's “originalists”, that power is moving out of the federal government and into the states. Part of the value add of that is that experimentation with different concepts can be tried in individual states with populations willing to try out those concepts. And that it no less true for UHI. We have states individually working to address this, with also mixed success. But, given the dynamics of health care funding, maybe we shouldn't address it at the individual state level, but instead in a confederation of states all willing to live by the same rules.

Let's define UHI as being, then, a multistate-based concept. For these member states, let's take health care funding away from the federal government and put similar responsibilities onto this confederation. Allow them to define for themselves as a group what it is that their citizenry want for the funding of their health care. Some states have already been toying with having their own; let's just have these states and many more define the rules as a cooperative.

The issue is funding, not slogans. We are only talking about funding; health care providers continue as the business entities that they are today. How do we pay for the health care of member state's citizens and do it in a way to is perceived to be fair by all?

What might Universal Health Care backed by UHI look like? Many groups with a lot of discussion including citizens will be necessary in working out the details of UHI, but a few known items leading to a solution might include the following:

• This confederation of states create a non-profit health insurance corporation. Here it is called the UHI Corporation. It is an entity separate from the member states. It serves the purposes of any health insurance company in that it pays for health care services provided. The intent is for this UHI corporation to ultimately pay the health care expenses of every citizen of the member states, but that is not a requirement. The UHI is just another of many still legal health insurance providers, but with an ultimate intent to serve all citizens. The totality of this expense represents the revenue needed. Being a non-profit entity, this total expense paying providers for health care provided must be met with at least an equal amount in revenue.


• Revenue comes from multiple sources. At its most simple, revenue comes from both taxation within the state and from health insurance premiums. Keeping it simple for now, the taxation-based portion has states being responsible to fund the UHI in proportion to the size of their population receiving benefits from the UHI, a number which may ultimately be their entire population. How they accomplish that is up to member states. Premium-based revenue is just as with any health insurance company; insurance premiums. Today's health insurance premiums are sourced from individuals, but primarily from employers with a matching but lesser amount coming from their employees.
  • Given a new UHI option, employers within member states still have the option of providing private health insurance to their employees or of paying premiums along with their employees to the UHI. Again, UHI is just another insurance provider, but with different revenue sources. Whatever the choice, either way, all employees within member states will be required to be insured. Observe, though, that given employer/employee premiums are lower and insurance of better quality than private insurance – in as much as UHI has other sources of revenue – it is suspected that employers will be switching over to UHI for their own benefit. Either way, the tax deductions to employers paying such premiums continue; they continue to be contributing to employee health insurance. Employees will similarly be expected to contribute much as today via lessened health insurance premiums.
  • As to premium costs, a simple mental model would call for employers to pay an equal amount per employee no matter the size of the company. The actual formula, though, needs to be negotiated, perhaps with smaller employers and independent contractors paying less. (Again, keep in mind that taxation contributes to revenue so various trade-offs are possible to encourage state citizens and employers to join.)


• All member state's citizens will be insurable – if not at first insured – under the UHI. Said differently, citizens have the right to opt out of the UHI, but they are – must be – insured. To have rights into the UHI, proof of state citizenship will be enabled via a UHI ID – in concept similar to an enhanced but electronic Medicare or Social Security card, enhanced driver's license, or even a Passport – but strongly ensuring that each citizen is who they say that they are within their state. One person – one benefit. Defined appropriately, this ID could be used as a voter ID. Management of each citizen's relationship to the UHI will be via offices found throughout the state, ideally at most significant health care provider offices as well as many state offices. Although, ideally, each participant is also a US citizen or with credentials sufficiently similar to warrant this service, it is ultimately up to each state to define who may be so insured.


• Since the UHI corporation could ultimately be serving all such state citizens, the intent is to have UHI replace Medicaid and Medicare within those states. Funding provided within such states as revenue for Medicaid and Medicare will be routed instead as revenue to UHI. If the federal government need not provide the service, provided instead within member states by the UHI, the federal government does not need the funding from those states. Having said that, as with employer-based health insurance, if some member state's citizens prefer to be insured via Medicare, those on Medicare will be given the choice to join UHI (dropping Medicare) or of using their own existing “Medicare Trust” funds and pay Medicare premiums and associated backfill private insurance premiums. Medicare at the federal level continues to exist and be funded by and for states currently choosing to not be part of the UHI. As state membership with the UHI increases, the federal responsibility for Medicare/Medicaid decreases.


• All citizens involved with UHI, currently employed or not, are expected to pay in some way for UHI-based health insurance. Each state decides how to provide their contribution, but a form of health care-directed sales tax can be used, applicable to all, to ensure that even those least capable of paying premiums for their health insurance are paying in some way. In particular, those temporarily without employment will be covered by UHI, but temporarily be freed of the premiums paid as an employee but would still be contributing via such a sales tax. Each state – with advice from its own citizens – can determine on its own how it meets its taxation-based population-proportional obligations to the UHI, but some form of Medicare-like payroll taxation and state income taxation would seem reasonably consistent. Contributions from any other state-based sources are also expected to be considered.


• There will be no notion of an HMO (Health Maintenance Organization) within UHI. All health care providers will be paid for services provided so HMO-like limitations and associated financial kickbacks will not be required.


• The UHI will support a fraud detection and action organization stronger than that used by most health insurance companies today. Like health care companies today, civil financial penalties will be used, but the force of the rule of law similar to that of Medicare today are also possible. The primary intent, though, is to ensure that health care providers are paid for services provided without excessive involvement of citizenry.


• Revenue available within member states needed for the UHI payments to providers is expected to vary with economic conditions. UHI's expenses are a function of the need for health care. It's available revenue, though, is a function of employment rates and state's contributions. Each state is expected, then, to maintain a reasonable and UHI-monitored balance as a buffer. When that buffer is exceeded, states exceeding the buffer can use excess funding as needed, including rebates. But, UHI must be funded with revenue sufficient to always meet expenses.


• UHI is a health insurance provider. It is not responsible for long-term nursing-home care. Individual or subsets of states, though, can decide to provide that benefit of Medicaid independently if they so prefer. Having said that, the division between where necessary short-term care and long-term care exists is a matter required for negotiation between states supporting UHI.


• So often we perceive government management as sure-fire failure. The UHI, though, is a corporation, a business entity in its own right. It is an insurance company, one where revenue comes from a different source. It need not even be a new entity. Much of the technology used in today's insurance companies is completely applicable. It just has different means of being funded and some rules defined by the UHI's member states. Further, given that the private insurance market will be perceived as shrinking, existing non-profit insurance companies might find it to their advantage to take on this near nation-wide management responsibility.

Those are the basics. As always, the devil is in the details, all of which must be negotiated. Please, though, while mulling what you would prefer, the following outlines a few things additional things to keep in mind:

• With any universal health insurance, there is expected to be an increase in demand for health care. Those newly insured will undoubtedly use the increased flexibility. Even so, UHI revenue funding need only be sufficient to meet expenses of paying health care providers and its own fiscal management as a corporation. UHI is a non-profit corporation. As such, even given that the UHI was the only source of insurance in this nation, the funding needed is only slightly higher than the cost of all health care for the member state's citizens today. Health care largely works today and it is nearly sufficiently funded today, albeit it in a very fragmented manner. Even today, money paying our health care providers must be met somehow by money available – often via insurance – to those doing the paying. All that is needed is slightly more to account for a slightly increased demand. (More on this in a moment.) All that the UHI is doing is cleaning up the mess we have today, and ensuring that everyone has the means of paying for the health care they demand. Even so, those not enrolled in UHI will be expected to pay for services rendered through means available today.


• UHI is a healthcare funding mechanism, not a takeover of health care. A side-effect of UHI is that providers are being paid, something different than today. Payment to a health care provider means that they continue to exist as business entities. Because of ensured funding those providers, who had been unable to today stay in business due to lack of funding, have the wherewithal to continue to provide our country's needed health care services. New providers will similarly follow with time, decreasing health care delivery wait and travel times, this resulting merely from their existence.


• Those not insured or under-insured today are nonetheless today receiving health care, often as expensive emergency events. Who, after all, whether they can pay or not, refuses an ambulance ride to the emergency room, all services there, and then follow-up hospitalization? When they do not pay, the expense to the health care provider remains. If those providers are to remain in business, their expenses must at least equal their income. Today, this causes the cost of that health care to be passed onto either those who do have insurance or to society as a whole (e.g., bankruptcies). For the insured, we – so mostly our employers and governments – see that as ever-increasing premiums, deductibles, and copays. Bottom line, we are already paying that expense and have been generally unaware. That does not mean higher costs from health care because of the UCI, it is only higher because it can now be accounted for.


• Another intent of UHI is to decrease the administrative cost to the health care providers themselves. This not-so-simple administration alone is a significant contributor to the cost of this nation's health care. Simplifying that effort, largely via near guaranteed payment, will in turn decrease the cost to the states for the health care of their citizens. HMOs, for example, exist partly because of guaranteed payment from a select set of patients to a select set of providers willing to provide service for a discount; the health care providers see the financial benefit to themselves of being ensured of payment.


• By taking health care funding away from the federal government, that expense, much of it showing up in the federal debt, will also be lessened. By 2052 under current law, just considering the Medicare component alone, Medicare will account for 19% of the federal budget. Additionally, under current funding, the Medicare's responsibilities will be insufficient by 2028. The only solution, decrease services, which in turn means increase copays and deductibles. Just like the uninsured or under-insured, those increased costs of the citizenry may or may not get paid to the providers.

Clearly, the above is just a quick overview. The devil is always in the details. But the time is now to pull together inter-state discussion and listening sessions to define what our state's citizenry would want for health care funding and how they would want their state to provide such funding.