An interesting Hybrid Plan

Hybrid Plan


The Medicare for America Plan, HR 2452 (DeLauro and Schakowsky), gives all Americans a choice of Medicare or private insurance. Individuals can choose public coverage through Medicare or private coverage through their employer or private coverage through a Medicare Advantage plan.


For individuals with incomes below 200% of FPL, there is no cost sharing and there are no premiums. For individuals with incomes above 200% of FPL, cost sharing and premiums are income linked. Medicare, Medicaid, CHIP and individual insurance through the marketplaces are replaced.


All US residents, including all legal permanent residents, are covered. It is unclear to me whether the undocumented are covered and if so whether they only get coverage for emergency care.


Large employers must cover their full time employees or pay an 8% payroll tax into the fund. Employers must pay 70% of the costs of coverage, and coverage must include all covered benefits with an 80% insurer payment and 20% patient cost share. Large and small employers can choose to cover their employees through Medicare. Employees can choose coverage through Medicare and take their employer’s contribution with them to offset their premiums.


Individuals are auto-enrolled. Coverage is for your entire lifetime. Individuals can choose annually between public coverage and private coverage.


The benefits are comprehensive, including vision, dental, hearing and long term care. There is no cost sharing below 200% of FPL. Cost sharing is linked to income between 200 and 600% of FPL. Cost sharing is capped at $3500 for an individual and $5000 for a family. Cost sharing is 80/20, the same as Medicare, but there are no deductibles or coverage expenditure caps.


There are no premiums below 200% of FPL. Above 200 and up to 600% of FPL, they increase linearly to a maximum of 8% of income. Above 600% of FPL, individuals pay the full amount of their individual or family premium or 8% of income whichever is less.


Medicare and Medicaid providers must participate in the program. There is a student loan forgiveness program for those physicians who do participate. Balance billing and surprise medical bills are prohibited.


Payment rates are Medicare or Medicaid, whichever is higher. Hospital reimbursement rates are 110% of Medicare. Primary care and behavioral health reimbursement rates are increased by 30%. Reimbursement for physician office and hospital outpatient visits shall be site neutral. Prescription drug prices are negotiated with the Secretary of HHS


Medicare Advantage plans shall be paid at 95% of Medicare rates.


Medicare and Medicaid are gradually replaced by the new program. State maintenance of effort requirements assure that existing state and local financing is transitioned to the new program.


The program is financed by an 8% payroll tax on employers who choose Medicare rather than offering coverage to their employees. Individuals choosing Medicare for America pay a sliding fee premium that increases to 8% of income or the program’s premium whichever is less. Individuals choosing to leave their employer plan for Medicare for America bring their employer share with them, which reduces their contribution accordingly.


Other potential new revenue sources are from repeal of the Trump tax cuts, a 5% income tax surcharge on incomes over $500,000, estate tax, supplemental Medicare tax on high earners, an increase in the net investment tax from 3.8% to 6.9% and excise taxes on alcohol and tobacco and sugary drinks. 


Comments: this is a very interesting and well thought out proposal, which could provide a middle ground if Republicans are interested in negotiating universal coverage, with ample room for private insurance plans who wish to and can compete, and for individuals who prefer either public or private coverage. While you may disagree with the particulars of the financing specified, it is financed unlike its counterparts, which lack the details of their financing.




Prepared by: Lucien Wulsin

Dated: 7/12/19

Federal Budget and its Deficits

Public Option Plans