A new universal coverage proposal combines Medicare and the ACA

Whether it’s Obamacare, repeal and replace, Medicare for All or some other debate, there’s no shortage of suggestions for how to fix and/or change America’s health care system. The latest policy proposal, from The Urban Institute, aims to take the best of existing models to create something new.

The institute’s Healthy America Program: Building on the Best of Medicare and the Affordable Care Act (ACA) looks to present policies that would provide something close to universal coverage while preserving options of employer coverage and Medicare but also create a “more flexible individual incentive to remain insured than that under the ACA.”

Related: Elizabeth Warren’s health care proposal would limit premiums to 8.5 percent of income

Key to the proposal is integrating and simplifying government health programs. According to the proposal:

• Non-elderly Americans could participate in a public plan or private insurance plan and, like Medicare Advantage, would benefit from caps on provider payment rates
• Would collect enrolees’ monthly payments, reconciled with income at tax time
• The default plan would cover 80 percent of health care costs, compared to 70 percent under the ACA. Lower-income people could also choose plans that cover an even higher share of their health care costs
• Rather than have an individual mandate, Americans would lose a share of their standard tax deduction if they were uninsured

The report further states, that “even though more people would be insured under this approach, overall health care spending would fall by $28.9 billion a year. This modest 1.4 percent decrease is attributable to the significant numbers of people moving out of more expensive employer-sponsored and non-group health insurance plans and into Healthy America coverage; savings would exceed the increase in costs resulting from non-elderly Medicaid acute care enrolees shifting into the new program.”

Employer role

The proposed policy reforms would allow employer-sponsored insurance to maintain a central role. In contrast to the ACA, the Urban Institute’s suggestions would not employ penalties for employers who do not provide coverage.

“We recognize that requiring employers to provide or help finance insurance coverage for their workers leads to increased financial burdens for low-income workers and contributes to employer opposition and firewalls often create inequities where identical workers with different employer offers are treated differently, and low-income workers with offers may ultimately fare worse than their counterparts without offers,” says the report. “Even with these changes, most workers with employer-sponsored insurance today would keep it.”

That is why the Institute says the current tax exclusion for employer-sponsored insurance would remain, and provide a significant incentive for most workers to seek out employers offering insurance and to enrol in.

The Urban Institute would also like to see an integration of Medicaid acute care for non-elderly people and the Children’s Health Insurance Program with coverage for people enrolled in private non-group insurance and currently uninsured people into a large new Medicare-style marketplace. This marketplace would include both a public plan and private insurer options and would cap provider payment rates.

The plan also proposes extending the Medicaid rebate on drugs covered under Part D of Medicare for low-income beneficiaries. Using figures from the Congressional Budget Office, the Urban Institute notes that extending rebates to low-income beneficiaries in the first year of implementation could save about $10 billion.

One issue when it comes to health care is cost. The Healthy America Program says some costs would come from existing sources – Medicaid and the ACA in particular. The Institute suggests that other needed funding could come from an increase in the existing Medicare tax to raise about $800 billion over 10 years, which they think would cover much of the new costs.

While the authors of the report recognize that their proposal will be unsuccessful in the current political environment, their aim is to provide practical insights into how future models can salvage the parts of today’s system that work while fixing the parts that aren’t working.