I have written frequently about universal catastrophic care (UCC) as a possible healthcare reform compromise, under which the government would provide health insurance with a deductible scaled to household income. [1] [2] [3]  My early posts provide hypothetical examples, but how would real people fare? Here are two examples based on an article by Abby Goodnough in this week’s New York Times.

One is the middle-class Hurd family, struggling to afford coverage on the ACA exchange. Both of them work but neither gets healthcare benefits. They earn about $82,000, more than four times the poverty level for their family of three, too much for ACA subsidies. Their healthcare premium is $928 a month with a $6,000 deductible per person, plus copays. The NYT article does not give full details, but based on averages, their maximum out-of-pocket healthcare costs would be about $25,800, or 32 percent of their total income.

Compare this with two possible UCC formulas. Under Formula 1, which might set the deductible at 10 percent of the amount by which income exceeds the Medicare threshold, with a family maximum of 20 percent, the Hurds would pay at most $10,000 even if two or more of them were seriously ill in one year. Formula 2, less generous, might set the maximum at 15 percent of the amount by which income exceeds the federal poverty level. The Hurds would pay a maximum of about $17,500.

The other NYT example is Emilia DiCola, a single woman working part-time while trying to establish a career in opera. She now earns $15,000 from part time work, qualifying for Medicaid. (Even if her state introduces work requirements for Medicaid, she will qualify because of her part-time jobs.) Under UCC she would still get for full coverage, given her $15,000 income, but there would be one big difference: Now she must carefully limit her hours of work to stay under the Medicare threshold. Under UCC, her out-of-pocket costs would remain low even if she doubled her earnings. She would have a far greater incentive to become self-supporting.