George Halvorson, former CEO of Kaiser Permanente, and Dr. Mehmet Oz propose here a quick and comprehensive way to provide Americans with universal health-care coverage and better health care, especially poor, underserved communities. How? By having health insurance bought through the highly successful Medicare Advantage program. One-third of people on Medicare have opted for Medicare Advantage because beneficiaries get better care thanks to competing plans. As the authors explain, Medicare Advantage could be expanded quickly and would be infinitely better than the highly-flawed idea of Medicare for All. A timely and important piece, to say the least!
We need a mechanism to urgently fund health-care sites decimated by our nation’s Covid-19 response. Simultaneously, poorer Americans, many of whom are Black and Latino, are suffering disproportionately during the crisis because of the poor-quality health care available to them, which has been an ongoing problem in this country for generations. We offer a proven solution to both crises that should attract enough Democrats and Republicans to improve our health-care financing landscape.
A concerning percentage of American hospitals and medical groups will fall into financial failure over the next several months. Their fee-for-service model, which has created dysfunctional and expensive incentives in health-care for decades, also suffocated their cash flow when the pandemic limited lucrative medical procedures.
We should be on the cusp of a golden age in health-care delivery that uses all of the best patient-support tools to deliver continuously improved care. Instead, the piecework way in which we buy almost all of our services today will keep that golden age from happening for the vast majority of American patients for the foreseeable future. We need an approach to buying health care that can give security to all Americans concerned about the quality and cost of care, while also creating a resilient health-care system for future health crises.
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We could achieve these goals by buying health-care coverage for every American who is not on Medicaid through the Medicare Advantage program, which a third of Medicare beneficiaries already use very successfully. We could fund this universal coverage entirely with full financial security by using an affordable 20% payroll tax, which is close to the amount most employers currently spend to buy insured care. Half would be paid by employers, so individual Americans would pay no more than 10% of their income to pay for much better coverage than is currently available to most.
This particular path to universal coverage isn’t a new approach nor unique to us. Most countries in Western Europe today use payroll taxes to create protected separate streams of money that each country uses to efficiently buy health care—and most of those countries also use health plans that are similar to Medicare Advantage to actually provide the coverage for each person. No one in Switzerland or the Netherlands is on a government-run single-payer program. Instead, each country has highly functioning and directly competing health plans funded by a payroll tax that creates the revenue streams for their citizens’ health care. They intentionally use a separate payroll tax to keep the health-care dollars in their governmental budgets separate from general revenues and expenditures.
Some in the U.S. have argued for extending our standard Medicare program to all Americans, but this would be more difficult on multiple levels. Our government doesn’t directly administer standard Medicare today, and doing so would require an entirely new infrastructure with intermediaries. More important, that would continue the highly dysfunctional approach of buying every item of care by the piece, which incentivizes abuse and cripples systematic process improvement.
In contrast, Medicare Advantage has negotiated payment rates with care providers and already has extensive care networks that could be expanded very quickly to fill gaps needed for our newly insured Americans to receive their care. Medicare Advantage also has much better benefits, care coordination, quality controls, levels of performance accountability and cash-flow models for implementing and delivering continuously improving models of care. Accordingly, the government pays each private insurance company that manages Medicare Advantage plans a fixed amount of money each month for each covered person, which incentivizes quality over quantity of care.
We could expand the Medicare Advantage program next year to nonseniors and cover all Americans who are not on Medicaid with a new dedicated 20% payroll tax on all workers. This would exactly copy the approach used now with the Social Security payroll-tax process. As the starting point for every work site, the 20% tax would be split 50-50 between employers and employees; any employer that wanted to increase its percentage could do so at its own discretion.