An HSA-Eligible Public Option

Ideas for TrumpCare / ObamaCare Repeal and Replace: The People Would Benefit From an An HSA-Eligible Public Option

We explain how a HSA-eligible public option could work in a ObamaCare/Medicare repeal and replace plan. This article is written with the idea that Trump and the GOP plan to repeal and replace ObamaCare and that Ryan and the GOP have specifically expressed the desire to change Medicaid and Medicare.

For TrumpCare (the ObamaCare repeal and Replace), we should:

• Combine Medicaid, Medicare, CHIP, and roll them into a single Medicare-for-all public option that anyone could buy in to (including young people, rich people, poor people, employers).
• The premium would be paid as a tax, otherwise it would have costs structured like original Medicare.
• All Americans should be automatically enrolled in this program as a tax unless they opt-out. People could opt-out on their taxes by checking a box, or opt-out by buying a private plan instead (for every month you have other coverage or opt-out, you don’t pay the tax-based premium).
• That option should also, vitally, have tiers (like bronze, silver, gold).
• All tiers of the plan should be HSA eligible.
• The plan should retain ObamaCare’s essential benefits.
• That plan should have a separate add-on “Part D” drug plan. Drugs are a big cost, not everyone wants or uses them.
• Premium cost assistance should be offered via taxes and out-of-pocket cost assistance could be funded via an HSA. The funding should be a tax credit that scales into a tax break. This way EVERYONE gets the same “government tax benefit” (some tax credit, some tax break).
• For those who don’t pay taxes or who don’t meet a reasonable threshold (like 100% FPL), there should be a Medicaid-like plan (that like the Drug plan is part of the plan’s network, but a separate pool). Those who have this are covered, but don’t get the tax benefits. That is the trade-off, that is the incentive to earn more money.
• Those who are chronically ill should be in a sick-pool plan (again, same network, same fund, just different plan). This would have a low deductible (to avoid the chronically ill burning through their HSA and thus exiting the market-system in spirit). I.e. we structure the plan so they are still saving and spending via the HSA while core chronic care is covered. The drug plan should have a version of this too.
• This would result in tax-free-in tax-free-out quasi-private public health plan with a savings account that could utilize a large non-profit network (at least as its first go-to, it can also establish a secondary PPO with reduced cost sharing) to keep costs down.
• A public option competes with the private market for the business of ALL Americans, but it does not replace the private market. In 2016 insurers’ dread having to cover EVERYONE, by establishing a base catastrophic option we take a ton of pressure off them. By allowing tiers we don’t force people into private supplemental if they don’t want to go (thus we force everyone to truly compete). The government does not need to subsidize the private market, it just needs to use a mix of payroll and income taxes to fund the public plan. An insurer can then buy out the contract, or simply offer supplemental options over the plan.
• This “fix for ObamaCare” or this “repeal and replace plan” splits the difference between what conservatives want (a market based opt-in with HSAs), what liberals want (single payer 100% coverage for sick and poor), and what the economy wants (a for profit, market-based, healthcare system with competition which can grow over time).
• This is much better than just privatizing Medicare or repealing ObamaCare’s mandates, as both those options just make MORE products rather than solving the core issues. This also avoids having to write-up strict rules for preexisting conditions like the “continuous coverage provision” found in all GOP plans.
• This plan may end up being expensive (current cost per-citizen is already like $10,000), however, it can keep costs down by combining the many public healthcare programs into one non-profit focused plan.
• I’d also suggest rolling VA, Indian health, and all other health programs into this, thus being able to utilize those providers out of the gate.
• This plan isn’t designed to be welfare-for-all (with its only duty being taking on low-income Medicaid, our sickest, and seniors who don’t choose private coverage) it is designed for all Americans and businesses to buy into.
• Businesses should be able to enjoy tax advantages by funding HSAs and paying a part of an employee’s premium. This gives small businesses a simple public option that doesn’t require a private group health plan.
• Ideally, those with higher incomes could pay more for coverage, but enjoy some sort of tax break for doing so.
• The plan could be treated like a 501(c), allowing our benevolent 1% to overfund the program (enjoying both a tax break for doing so).
• The over-all goal is to better connect together those who want to be connected, to better connect everyone to the market-system (via HSA spending and HSA investing), and to bring costs down by banding together and utilizing pre-funded non-profit networks who move away from fee-for-service and litigation and toward focusing on care.

This concept is explained in more detail on our Alternatives to the GOP’s Pre-Existing Conditions “Fix” page where we apply it to solving the main sticking point the GOP will have in Trump’s first 100 days and in our suggestions for a Nationwide Non-Profit Public Health Network page.

There is a real demand for a public option. No one wants to be forced to buy private insurance, and no one can afford not having coverage, and insurers DO NOT want people not to have insurance. Here we take burden off the insurers by absorbing the 10% who don’t have coverage, the sick, the old, the poor, but we offset this with the charitable and those who would rather pay a simple tax than shop for plans every year (both individuals and businesses across the country, including young people who probably don’t want to deal with the same paperwork the average adult does).

Any glaring loopholes can simply be offset with a tax. If insurers put too much pressure on the option, by taking all the healthy customers, then they can pay a tax to the fund (simple, easy, if their bottom line goes up, what do they care?)…. if on the other hand, the public option is so good it hurts insurers, then, OK quality problem, but 1. they can probably solve their own issues and 2. if they can’t, then there can be some reasonable subsidization. The goal is to have failsafes for the very sick and costly and remove all other red tape by having this fallback option for all that is potentially so good insurers have to woo customers away from it.

The goal here is to use a market-system that offers products people actually want, and for millions of us, the system we want is single payer. If we can’t have that, give us a public option. And, if you are going to give us a public option, give us a REAL plan with HSAs, tiers, riders, and a non-profit network.

There are so many clever ways an idea like this can go that I didn’t mention here, and it would go a long way to actually solving our healthcare woes… plus, it fits perfectly into the Burr, Upton, Hatch plan, the House GOP “Better Way” plan, and TrumpCare… even allows Medicare repeal and replace and an exchange and fixes the potential sticking points of the aforementioned plans.

So fingers crossed we try something like this under a President Trump, if not, then i’ll be bringing the plan to my state to see if we can do it there… Assuming sec. 1332 doesn’t get repealed.

TIP: Bernie Sander’s Medicare-for-All bill (the American Health Security Act, S. 1782) is one of the better bits of legislation on healthcare i’ve seen. Anyone working on a repeal and replace plan is well advised to cherry pick it for good ideas aimed at helping America first.