Our quest for an optimal health insurance system is starting to come into focus. It would have several features in common with Medicare For All (MFA), Obamacare, and The Public Option (TPO), but with a few critical differences.
Like MFA, it would be financed entirely through taxation, not premiums. It would recognize a minimally-acceptable level of healthcare as a human right. Involuntary exposure to large uninsured healthcare expenditures would be a thing of the past. Like Obamacare, it would recognize and even promote the vital contribution private insurance makes to financial security. And like TPO, it would give middle-income households a wider array of affordable health insurance choices.
What it would not do is cause unprecedented levels of moral hazard (like MFA), perpetual adverse selection (like Obamacare), or the crowding out of private insurance (like TPO). It wouldn’t rely on an individual mandate either. Or necessarily cost more in taxes than the current system.
I’ve referred to this optimal health insurance system as a free public option, but as an economist, my heart skips a beat every time I see the word “free” and it’s not really a public option anyway. The option is whether to buy private insurance to go along with the public insurance every household would be entitled to.
So, I need to come up with a better name. In my last post I explained that for this system to work, public insurance and private insurance need to change from substitutes into complements and that this could only be achieved by making public insurance primary and allowing some providers to balance bill.
By the title of this posting you might have guessed that the name I have selected is Medicare Prime. It would be a Federal program that uses Medicare payment levels to replace Medicaid, the Children’s Health Insurance Program (CHIP), and Obamacare, but would not replace Medicare Parts A, B, C and D. It would only affect people who don’t already qualify for traditional Medicare. In other words, people still in the prime of their lives. And more to the point, it would be primary. Hence the name.