Instead Of Obamacare or Trumpcare I Propose “Medicare Junior”

The Republicans have had almost seven years to come up with a reasonable healthcare plan for all Americans and they couldn’t do it.

Obama essentially broke his presidency on Obamacare, and though it’s better than nothing it’s not a great plan by anyone’s standards.

So, let’s start over with a clean sheet of paper.**

This time let’s try to keep it very simple by using what we already have in place that’s already working — Medicare.

My New Healthcare Plan: Medicare Junior

Everyone Is Enrolled

Everyone with a social security card is eligible for Medicare Junior.

Everyone over 22 is required to pay a basic premium of $100/month, adjusted for average monthly gross income.

Anyone who doesn’t pay their Medicare Junior premiums has them added to their taxes at the end of the year and they’re collected just like any owed and unpaid income taxes.

Adjusting Premiums For Low And High Earners

Premiums would be reduced if you earned a gross income of less than $2,000 in this way:

$100 X Your Gross Monthly Income/$2,000.

So, if your average gross monthly income was $1,000 then your premium would be $1,000/$2,000 = 50% X $100 or $50/month.

They would also be increased if you had a gross income of over $4,000/month in this way:

$100 X Your Gross Monthly Income/$4,000.

So, if your average gross monthly income was $8,000 then your premium would be $8,000/$4,000 = 200% X $100 or $200/month but never to exceed $300/month.

Employers Also Contribute

Also, each employer of every full-time employee would additionally pay another $150/month. This would be cheaper than many if not most major medical plans that employers already have in place.

Employers could keep those plans if they wanted to and the employee would would choose whether to stay on the employer’s major medical plan or opt out of the employer’s plan and be covered by Medicare Junior.

I suspect most employers would probably drop or curtail their existing major medical plans because Medicare Junior would be cheaper.

A full-time employee would be someone employed for 30 or more hours per week. If an employee worked 29 hours then the employer would pay 29/40 X $150 or $108.75. If the employee worked 20 hours then the employer would pay 20/40 X $150 or $75.

Children

If you are under 24 then the premium would be $50 for you and $75 from your employer if you had a full-time job.

The same formula that could reduce or increase premiums for low and high-wage workers would also apply to the calculation of premiums for their children

Basic Medical Care — Capped At $600,000 In Any 12 Months

Most people most of the time just need run-of-the-mill medical care — broken legs, kidney stones, food poisoning, heart attacks, skin cancer, hernia, concussion, etc..

Most people most of the time don’t need a heart-transplant, but that’s the kind of risk and cost that drives the cost of premiums through the roof.

If you take away the small but very expensive heart-transplant-type coverage and instead cap coverage at $600,000 in Medicare payments over any twelve month period I would think that you could drastically reduce the government’s cost.

Essentially, 999 people would get the much more affordable coverage they need and one person wouldn’t. The alternative is that the premiums for all 1,000 people would be so high that the government wouldn’t be able to operate the program at all.

If people want higher coverage limits they could pay extra and increase the cap to $1.5M or $5M or unlimited. That would be their choice.

Co-Pays

There’s always a tug-of-war between over-using medical care for every little runny nose on the one hand and co-pays that are so high that the insureds can’t afford to obtain the treatment they need on the other.

I have no expertise in this area, but I would guess that something like 50% coverage for the first $500, 75% coverage for the next $500 ($675 insurance paid and $325 insured paid for the first $1,000 in a policy year), 85% coverage for next $1,000, 95% coverage for the next $3,000 and 100% coverage from $5,000 up to the cap amount in a policy year might be a more or less reasonable compromise.

Of course, lower co-pays also could be purchased by the insured for an additional premium.

Drug Costs

Medicare would be allowed to negotiate drug prices with pharmaceutical companies and those companies would be required to sell those drugs at the negotiated price to pharmacies and Medicare providers for sale or use by medicare patients. Medicare would not reimburse drug charges in excess of 115% of the negotiated price.

What Would This Cost?

Great question. Finding that answer would be a big job and you’d need lots of data from Blue Cross and similar companies to figure it out.

I think you would start by running several major medical plan members’ medical claims for each age group 23–32; 33–42, etc. for at least the last two years.

Each of those medical services would then have to be priced according to the Medicare reimbursement schedule. Then you’d have to calculate the amount Medicare Junior would pay out for those claims after co-pays. You would then total the numbers for each age group and calculate a per-person average cost per year for people in each age group.

Then, you’d need to multiply the per-person average cost per age group by the anticipated number of people in each age group that would be in Medicare Junior.

Once you added all those costs up you would need to calculate the anticipated total premiums the plan would collect and subtract the total premiums from the total anticipated medical payouts.

Lastly, you would need to estimate the administration costs and add them to the net cost you previously calculated.

Once you had that number you would need to go back to the drawing board and take a brand new, hard look at the premiums and the coverage cap.

The numbers I used were just guesses, like standing blindfolded in the dark firing a machine gun somewhere in the direction of some large animal you heard crashing through the forest a hundred yards away.

You might hit it, I suppose.

Summary

Everyone gets basic “broken leg” medical coverage.

The basic policy excludes break-the-bank medical conditions unless the insured elects to pay an additional premium for higher coverage limits.

Negotiation reduces the cost of prescription drugs.

It will cover everyone and everyone will be in one big pool to average out the costs of young healthy and old sick people. Eventually, young people will become old people and their costs will average out over their lifetime as they age.

All the systems, rules, prices, software, etc. are already in place. It’s essentially Medicare with more members and a different premium and coverage-limit structure. Administratively, it’s pretty close to being all ready to go.

Is this all things to all people? No.

Will some people have massive medical costs that will not be covered? Yes.

Will it be reasonably cheap compared to current plans? Yes.

Is this far better than the current mess?

Depending on how the numbers work out, it should be.

– David Grace (www.DavidGraceAuthor.com)

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**On March 7, 2017 I published : Some Ideas For Reducing Uninsured Healthcare Costs & Health Insurance Premiums. Options I Would Explore If I Were Given The Chance To “Fix” Obamacare

Some portions of that March 7th post have been incorporated into this article.