Part 3: Making Health Care More Affordable

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Thanks to advanced practitioner skills, research findings, and new technologies, amazing health care achievements occur in this country every day.

But many Americans receive inadequate care or no care at all, because the system is unaffordable (without accruing excessive debt) or inaccessible. It's well known we spend a much higher percentage of our Gross Domestic Product on health care than do other industrialized countries, but on outcomes ranging from infant mortality to life expectancy rates, the results don't reflect that. And among the world's developed countries, the United States is the only one that doesn't provide universal health care.

Solving this problem is ultimately a question of will and creativity, not capacity.

Our fragmented system leaves approximately 9% of the population uncovered. It's too expensive for some Americans to obtain coverage, and for others, bureaucratic challenges stand in the way.

And then there are many of us who can’t afford to take full advantage of the coverage they have.

Also, health insurance plans contain wide variations in benefit coverage and levels of personal financial responsibility. Plan selection is sometimes needlessly complex.

So what now? How should the system be changed to ensure Americans can get the health care they need when they need it?

To begin with, there's no logical reason for having different health care structures for different people – the employer-based market, the individual market, poor folks, old folks, somewhat poor kids, union members, federal employees. (There are also separate programs for military veterans and Native Americans, but as they address the needs of populations with unique circumstances, these carve-outs may be justifiable.) Varying benefits, varying costs, varying subsidies leave us with a “system” that is inefficient, overpriced, and unfair, as well as confusing.

Everyone should have access to affordable, high-quality health care as needed (including the elephant in the room, long-term care). No favorites, no second-class citizens. Only a unified system makes sense, everyone working within the same structure and rules.

Whether health insurance should take a public, private, or hybrid form is open for debate. (Assessing these options and their variations extends beyond the scope of this discussion.) But certain principles should apply in the interest of fairness, simplicity, and affordability. These include:

1. A single set of basic benefits for everyone. (Supplementary insurance offerings can be dealt with as a separate matter.)
   

2. A single drug formulary with pre-established price lids.
   

3. No monthly premiums. This would ensure patients’ coverage has no interruptions.
   

4. An out-of-pocket spending limit applied to health care services and prescription drugs in total. 

The amount of the spending limit can be derived by integrating the basic health care program with A Basic Deal's framework.

In determining a manageable personal health care “budget,” we should again use as our base the financial capacity of individuals working at a Public Job (representing a worst-case scenario for employable people) in combination with their short-term Basic Need deposits. Since long-term BNA funds can also be applied to health care payments, we can use these dollars, too, in calculating an out-of-pocket spending maximum. And, of course, the funds applied each month to everyone's BNA health care account would be available to meet their health care needs.

Let's translate this into numbers. Applying the same set of assumptions from our earlier discussion, an individual performing a Public Job full-time during 2024 would earn $30,120. During that same period, $6,000 would be deposited into his/her short-term and long-term Basic Need accounts ($500/month x 12 months). The total is now $36,120. If we then set an out-of-pocket spending limit percentage for health care at, say, 8% of Public Job-based income, we arrive at a figure of $2,890. Let's round down to $2,800. In addition, the $100/month deposited into the BNA health care account and available exclusively for that purpose provides another $1,200 per year. The sum of $4,000 would thus constitute a person’s out-of-pocket limit for health care expenditures. (An exception would be made for low-income seniors and low-income disabled individuals, where a lower threshold would apply due to their lack of earning capacity.)

Also, note that any household member's BNA funds could be applied to the needs of any other member of that household. This further ensures the $4,000 per person standard is manageable.

On a parallel course, consumers and taxpayers need to get more bang for their buck. America's extravagant health care system needs to be reined in. Thoughtful incentives and direct government action need to be applied to drive down supply-side (hospital, medical device, physician, pharmaceutical, etc.) costs and consumer prices when they are based on market power and could be deemed excessive.

To that end, the standardization of a basic benefit plan would reduce the massive administrative costs of our health care system.

And why not re-structure medical malpractice insurance, which is incredibly expensive for the practitioner and incentivizes wasteful defensive medicine?

Finally, from a preventive, and ultimately cost-saving, standpoint, are we adequately encouraging the development of creative health care strategies (including those that serve the needs of the care providers themselves) and making the necessary investments in primary care and our public health systems? In doing so, let’s not hesitate to learn from the experience of other countries, including those in the developing stage, impelled by necessity to create economical, but still effective, practices. We've got lots of clever people in America, but we don't have a monopoly on ingenuity.

Not to be forgotten, of course, is the importance of addressing gaps in the provision of health care itself. Whether through systemic re-structuring or additional public subsidies, it is critical to meet the needs of those struggling with drug or alcohol addiction, or severe mental illness, or those residing in low-income or geographically remote communities. Having affordable insurance isn't of much value if the health care one needs isn't available.

Part 4 will discuss practical considerations regarding implementation of A Basic Deal.