Niskanen Center supports universal catastrophic coverage (UCC) as part of its program for faster growth and fairer growth. UCC is an approach to health insurance designed to protect all Americans against financially ruinous medical expenses, while preserving the principle that those who can afford it should contribute toward the cost of their own care. Low-income households would receive full first-dollar coverage. Everyone else would get a policy that limited out-of-pocket expenses to a set percentage of their incomes. High-income families could use supplemental insurance, health savings accounts, or other mechanisms to deal with the high deductibles of their UCC policies.
Two new healthcare proposals, although not as comprehensive as full UCC, would move the United States in the right direction.
Family First Medisave
The first proposal is H.R. 8473, the Family First Medisave Empowerment Act from Rep. Anthony Gonzalez (R-OH). It is summarized by its sponsor in a recent op-ed in the Washington Examiner. The proposal would expand current rules for health savings accounts to make them fully portable and allow families to use their Medisave accounts towards the purchase of any type of insurance. Primary-care arrangements would be treated as a qualified expense, allowing patients to visit the doctor of their choice at an affordable monthly fee. Contributions to Medisave accounts would be partially subsidized.
The inspiration for Gonzalez’s plan is the Medisave component of Singapore’s much-admired healthcare system. According to Gonzalez, Singapore’s program has been successful in supporting the country’s poorest citizens while still incentivizing them to climb up the ladder of success. His own bill, like the Singapore version, would offer direct financial assistance to low-income individuals and families, providing a safety net to those who otherwise cannot afford to put money aside.
Gonzalez modestly acknowledges that his bill “is just a small piece of the puzzle.” To fill in the other pieces that would move the United States toward a full UCC program, we need look no further than the other two pieces of Singapore’s three-part healthcare system. In addition to Medisave, Singapore has a program called MediFund, which serves as the government’s safety net for needy Singaporeans who can’t cover their out-of-pocket expenses, even with MediSave. On top of that, the country has MediShield Life, a universal basic health care insurance that is mandatory for citizens and permanent residents and provides lifelong protection against large hospital bills and select costly outpatient treatments.
Mark Cuban’s Healthcare Plan
The second new proposal is Mark Cuban’s “10P” healthcare plan, summarized by John Goodman in Forbes and described in greater detail in a research brief from the RAND Corporation. Under Cuban’s plan, as under other UCC-type proposals, people would be responsible for medical bills up to a certain percent of their income, while the government would provide catastrophic coverage for anything larger.
The originality in Cuban’s version of UCC is that once a family’s spending hits 10 percent of its income (hence the name “10P”), it would get an immediate low-interest government loan that would pay the doctors and the hospital in full. Then in each successive year, the family would be required to use 10 percent of its income to pay off the loan. There is a 15-year limit on this arrangement. If the loan has not been fully paid off by then the government would forgive any remaining balance. Repayment would be stopped when an individual enrolls in Medicare or paused when an individual becomes eligible for Medicaid. The Cuban plan could be combined with an enhanced system of health savings accounts, like Gonzalez’s Medisave.
The Rand analysis gives detailed examples of how loan balances would rise and fall under scenarios including costly one-time acute care needs and income-draining chronic conditions. The concept seems sound, but I have some questions about how it would work in practice. For example, could 10P balances be discharged through personal bankruptcy, or would they become a form of lifetime debt-slavery like student loans? How would the accumulation of substantial lifetime balances by young people who contract chronic illnesses affect their access to other forms of credit, say, auto or home mortgage loans? How would loan balances be handled in cases of marriage or divorce?
Neither Cuban’s 10P plan nor Gonzalez’s Medisave goes all the way to full universal catastrophic coverage, but both are constructive steps in the right direction. It is encouraging to see an increasing number of UCC-type proposals entering into the national conversation on healthcare policy.