I actually took the time to read the entire piece. It's a bit long but worth it. This is for anyone who wants to really know what's been going on with health care in this country.

http://www.sharedprosperity.org/

Health care for America

A proposal for guaranteed, affordable health care for all Americans building on Medicare and employment-based insurance

by Jacob S. Hacker

America's $2.2-trillion-a-year medical complex isenormously wasteful, ill-targeted, inefficient, and unfair. The bestmedical care is extremely good, but the Rube Goldberg system throughwhich that care is financed is extremely bad—and falling apart. One outof three non-elderly Americans spend some time without health insuranceevery two years, and the majority of those remain uninsured for morethan nine months.¹ Meanwhile, runaway health costs havebecome an increasingly grave threat, not just to the security of familyfinances, but also to corporate America's bottom line. The UnitedStates spends much more as a share of its economy on health care thanany other nation, and yet all this spending has failed to buy Americansthe one thing that health insurance is supposed to provide: healthsecurity.

Health insecurity is notconfined to one part of the population. It is experienced by allAmericans: those without insurance as well as those who risk losingcoverage; those who are impoverished as well as those with higherincomes who experience catastrophic costs; those who are sick orinjured as well as those who are just one sickness or injury away fromfinancial calamity. As health care costs have skyrocketed and theproportion of Americans with stable benefits has eroded, healthinsecurity has become a shared American experience, felt by those whothought they had it made as well as those just struggling to get by.

Thisgrowing problem is pushing health care reform back onto the agenda ofAmerican politics after more than a decade of neglect. And yet, nothingguarantees that this debate will end differently than previous battles.Again and again in the 20th century—most recently, in the early1990s—efforts to make health insurance an integral piece of theAmerican social fabric were stymied. The stakes are too high to allowreform to be blocked again. America's economy, the finances of itsmiddle class, the quality of its medical care, and the health of itscitizens all hang in the balance.

Toavoid the dismal fate of previous reform campaigns, a successful agendamust take seriously the political constraints and organizationalrealities that have hamstrung reform efforts in the past. Limits onpublic budgets, resistance to measures that might be seen as takingaway what Americans already have, and the embedded realities of thepresent system all stand squarely in the path of grand policyredesigns—from single-payer national health insurance, to individualmandates requiring that everyone purchase private coverage, to auniverse of individualized Health Savings Accounts. Instead, the mostpromising route forward is to build on the most popular elements of thepresent structure—Medicare and employment-based health insurance forwell-compensated workers—through a series of large-scale changes thatare straightforward, politically doable, self-reinforcing, andguaranteed to produce expanded health security.

A true guarantee of affordable health care

Health Care for America embodies this strategy.² Itwould extend insurance to all non-elderly Americans through a newMedicare-like program and workplace health insurance, while creating aneffective framework for controlling medical costs and improving healthoutcomes to guarantee affordable, quality care to all. It is at oncecomprehensive, realistic, consistent with American values and beliefs,and grounded in the best elements of the present system. It combinesemployer and personal responsibility with a strong public commitment toensuring that American workers and their families and Americanemployers can afford coverage. It promises better care, lower costs,more choice, healthier citizens, and immensely stronger guarantees forworkers and their families. And it promises real savings for employersand state governments—without un-raveling existing sources of healthsecurity, without forcing workers to obtain coverage on their own, andwithout pressuring patients into Health Savings Accounts or tightlymanaged health maintenance organizations (HMOs).

WhatHealth Care for America would do is simple: every legal resident of theUnited States who lacks access to Medicare or good workplace coveragewould be able to buy into the "Health Care for America Plan," a newpublic insurance pool modeled after Medicare. This new program wouldteam up with Medicare to bargain for lower prices and upgrade thequality of care so that every enrollee would have access to either anaffordable Medicare-like plan with free choice of providers or to aselection of comprehensive private plans.

Atthe same time, employers would be asked to either provide coverage asgood as this new plan or, failing that, make a relatively modestpayroll-based contribution to the Health Care for America Plan to helpfinance coverage for their workers. At a stroke, then, no one with adirect or family tie to the workforce would remain uninsured. Theself-employed could buy into the plan by paying the same payroll-basedcontribution; those without workplace ties would be able to buy intoHealth Care for America by paying an income-related premium. The stateswould be given powerful incentives to enroll any remaining uninsured.

Equally important is what Health Care for America would not do.It would not eliminate private employment-based insurance. It would notallow employers to retreat from the financing of a reasonable share ofthe cost of health insurance. It would not leave Americans coping withever-higher private insurance premiums with an inadequate voucher, orpressure them to enroll in HMOs that do not cover care from the doctorsthey know and trust. It would not break up the large insurance groupsin the public and private sectors that are best capable of poolingrisks today. And it certainly would not encourage individualized HealthSavings Accounts that threaten to further fragment the insurance marketand leave Americans even less protected against medical costs. Instead,Health Care for America would preserve what works in American healthfinancing and replace what does not—through a simple yet comprehensivestrategy that holds out the best promise of controlling costs,improving quality, and guaranteeing health security.

HealthCare for America is not single payer—a vision that, for both politicaland budgetary reasons, is unlikely to be achieved in the near future.Nonetheless, Health Care for America does embody many of the keyvirtues of a universal Medicare-like program. At heart, it rests on thetime-tested idea of social insurance, the notion that major financialrisks should be pooled as widely as possible across rich and poor,healthy and sick, young and old. Health Care for America would create alarge publicly overseen insurance pool that would bargain for lowerprices, capitalize on the vast administrative efficiencies of a singleinsurer, and use its reach and purchasing power to spearheadimprovements in the quality and cost-effectiveness of medical care.

HealthCare for America also rests on the conviction that the Medicare modelhas a proven track record—and a huge amount of untapped potential—whenit comes to controlling costs and improving care. Sustaining Medicare'svital promise to the aged and disabled does not require abandoning theMedicare model, as critics of the program frequently claim. It requiresextending the model to those without secure workplace coverage, fillingsome of the glaring gaps that remain in Medicare, and allowing the twoprograms to work jointly to hold down costs and improve the quality ofcare.

Health Care for America would begood not just for American families, but also for Americancorporations. It would make it easier for firms to provide coverage ontheir own by reducing the burden of uncompensated care and the cost toemployers of covering workers' employed dependents (because allemployers would be required to con-tribute to the cost of coveringtheir own workers). It would also offer substantial savings toemployers that decided to buy into the Health Care for America Plan—anoption that many small and low-wage employers would likely seize.Employers that chose to enroll their workers would be free tosupplement Health Care for America benefits, allowing them to providebetter coverage at a lower cost. Yet, unlike many other approachespromising business savings, this approach would guarantee that everyemployer either provided good private coverage or enrolled its workersin a broad insurance pool and contributed to its cost.

Ifone word captures the essence of Health Care for America, it is"guaranteed." Health Care for America would guarantee coverage; itwould guarantee a generous package of benefits; it would guaranteegreater choice; and it would guarantee real savings and improvedquality. The lack of such guarantees is at the heart of healthinsecurity in the United States today. To fulfill these guarantees,Health Care for America would create a new public–private partnershipwith powerful built-in incentives to control costs while improvingquality. The stakeholders in our crumbling system would forge a new andstronger social contract for the 21st century.

How Health Care for America would provide affordable coverage to all

Health Care for America has just three central elements:

• the new Health Care for America Plan, which would be open to any legal U.S. resident without good workplace coverage;³
  
• arequirement that employers (and the self-employed) either purchasecoverage comparable to Health Care for America for all their workers orpay a relatively modest payroll contribution (6% of payroll) to fundHealth Care for America coverage for all their employees;
• arequirement that Americans who remain without insurance takeresponsibility for their and their families' health by purchasingprivate coverage or buying into the Health Care for America Plan.⁴

Thebenefits of the Health Care for America Plan would be comprehensive.Besides Medicare benefits, the plan would cover mental health andmaternal and child health and include strict limits on totalout-of-pocket spending. (Medicare currently lacks such limits, andHealth Care for America would authorize a study of how best toincorporate cost-sharing limits into Medicare in the future.) HealthCare for America would also provide drug coverage directly, rather thansolely through private plans. And it would allow Medicare to providedrug coverage directly on behalf of the elderly and disabled as well.In addition, a new independent Benefits Advisory Commission would becreated to determine what both the Health Care for America Plan andMedicare should cover going forward, allowing the harmonization of thetwo programs' benefits over time. To encourage better health,preventive and well-child care and covered screenings would be providedto all beneficiaries at no out-of-pocket charge.

TheHealth Care for America Plan would provide extensive assistance toenrollees to help them afford coverage. For those enrolled in the planat their place of work, anyone whose income was below 200% of thepoverty level would pay no additional premiums. (The poverty line in2006 was roughly $10,000 for an individual and $20,000 for a family offour.) The maximum monthly premium—phased in between 200% and 300% ofthe poverty level—would be $70 for an individual, $140 for a couple,$130 for a single-parent family, and $200 for all other families.

Insum, every American with a direct or family tie to the workforce—agroup that includes more than 80% of the currently uninsured and morethan 90% of all non-elderly Americans—would be automatically covered byeither private insurance or the Health Care for America Plan.⁵ Employers,in turn, would contribute a share of earnings on behalf of everyindividual or family enrolled in Health Care for America. And Americanswith family incomes above 200% of the poverty level who enrolled inHealth Care for America through their place of work would pay a monthlypremium based on family income, as just detailed.

Non-elderlybeneficiaries of Medicaid and S-CHIP (the State Children's HealthInsurance Program) would be en-rolled in the Health Care for AmericaPlan, either through their employers if working or individually if not.Enrollment in the plan would relieve the states of a significant shareof the burden of these programs, providing states with strongincentives to streamline enrollment. To ensure that former Medicaid andS-CHIP beneficiaries received coverage at least as generous as thatwhich they had enjoyed previously, the states would be required toprovide wraparound benefits. (States could also elect to pay HealthCare for America to provide such wraparound coverage.) Moreover, alllow-income enrollees in the Health Care for America Plan would receivecost-sharing subsidies to ensure that co-payments or deductibles didnot deter them from seeking necessary care.

Forthe small share of people without direct or family ties to theworkforce and ineligible for Medicaid, S-CHIP, or Medicare, the HealthCare for America Plan would be available as an attractive new coverageoption. Premiums would again be based on income, ranging from nopremium in the case of those with incomes below the poverty line to theaverage actuarial cost of coverage for all enrollees in Health Care forAmerica in the case of those with incomes above 400% of the povertylevel. In other words, Health Care for America would allowhigher-income individuals without workplace ties to buy into theprogram for a premium that did not vary with age, region, or healthstatus (a so-called community-rated premium).

Coverageunder the Health Care for America Plan would be continuous andguaranteed. Once an individual or family was enrolled, they wouldremain covered unless they gained qualified private workplace coverage.

Building on the best aspects of workplace insurance while filling the gaps

HealthCare for America capitalizes on the untapped potential of workplaceinsurance to ensure that virtually everyone has coverage. But whileemployers would play an important role in making Health Care forAmerica work, they would not be asked to make an open-ended commitment.Most, in fact, would save money under the plan, and employers as awhole would reap substantial savings, especially over time.

Whilethe workplace would be the main conduit of coverage, employers would nolonger need to take on the administrative burden of providing insurancethemselves. For a relatively modest cost, they could simply enrolltheir workers in the Health Care for America Plan. Employers enrollingtheir workers for the first time would be eligible for transitionalsubsidies that would ensure that no firm faced a substantial newburden.

Even employers that did not takeadvantage of this cost-saving option would gain immensely.Uncompensated care would all but disappear, bringing down privatepremiums. (In 2005, annual premium costs for family health insuranceprovided by private employers were $922 higher due to the cost of carefor the uninsured, while premiums for individual coverage were $341higher.⁶) Health Care for America would also spearheadquality improvement measures that would spill over into privatepractice, as Medicare's technology standards do now. And since allemployers would be required to contribute to the cost of covering theirworkers, firms that now cover their workers' employed spouses ordomestic partners—a common expense for larger firms—would see theircosts drop.⁷

For most workers with good coverage, Health Care for America would change little—besides eliminating the very real threat of losing coverage.Employers that provide generous insurance are largely big corporationswith high wages, precisely the employers most likely to continue tosponsor tax-favored coverage, rather than pay the pay-roll-basedcontribution to enroll their workers in the Health Care for AmericaPlan. Thus, enrollees in the Health Care for America Plan would mostlybe current beneficiaries of Medicaid and S-CHIP, low-wage employees,and the working uninsured, as well as early retirees, contingentworkers, and the self-employed. All these groups have weak access toemployment-based insurance and insecure access to any insurance, and all would be vastly better off because of Health Care for America.

Tobe sure, some employers would be required to upgrade their plans tomake them comparable to the Health Care for America Plan. Others mightfind it cheaper to provide current levels of coverage by enrollingtheir workers in the Health Care for America Plan and providingsupplemental benefits. Nonetheless, detailed estimates based oneconomic simulations of the plan suggest that roughly half ofnon-elderly Americans would remain in workplace health insurance, withnearly all of the other half enrolling in the Health Care for AmericaPlan.⁸ (A small share of non-elderly Americans covered underTRICARE, the Department of Defense's health care program for members ofthe uniformed services, their families, and survivors, would beenrolled in neither.) Thus, among working-age Americans and theirfamilies, there would be a roughly 50/50 division of enrollment inemployment-based coverage and the Health Care for America Plan.

Fornon-workers ineligible for Medicaid, S-CHIP, or Medicare—includingearly retirees—states would be required to set up effective enrollmentand outreach systems that enrolled people when they sought stateassistance or obtained hospital care. States would also be encouragedto subsidize the (community-rated) premiums paid by higher-incomenon-workers, especially those that were temporarily unemployed. In thecase of early retirees, employers could contribute to the cost of theHealth Care for American Plan on a tax-free basis. Most employers wouldfind this a much less expensive way of providing retiree coverage,which is currently unraveling due to rising costs.

Insum, Health Care for America would level the playing field, ensuringthat every firm made at least a modest contribution to the cost ofcoverage for every worker. Meanwhile, Americans without ties to theworkforce would be enrolled in the Health Care for America Plan throughan individual buy-in, through state antipoverty and un-employmentinsurance programs, or through new efforts to reach the uninsured whenthey sought medical care without insurance.

Using the Medicare model to contain costs and improve quality

Theother side of Health Care for America's pragmatic approach is itscommitment to build on the success and potential of Medicare, America'smost popular and familiar health program. For millions of Americans whoare now uninsured or lack secure or affordable workplace coverage, theHealth Care for America Plan would be an extremely attractive option.Through it, roughly half of non-elderly Americans would have access toa good public insurance plan with free choice of providers. At the sametime, the Health Care for America Plan would give enrollees access to arange of high-quality comprehensive health plans that would offerbroad, easily comparable benefits.

Asingle national insurance pool covering nearly half the populationwould create huge administrative efficiencies. Medicare'sadministrative costs amount to roughly 2% of total program spending,compared with 14%, on average, in the private sector.⁹

BecauseMedicare and the Health Care for America Plan would bargain jointly forlower prices and join forces to improve quality, they would haveenormous combined leverage to hold down costs. Cross-national evidenceand the historical experience of Medicare show conclusively thatconcentrated purchasing power is by far the most effective means bywhich to restrain the price of medical services (see the accompanyingbox on the cost-control advantages of Medicare-like plans). Othernations spend much less for the same medical services than we dobecause their insurance systems bargain for lower prices. And thoughMedicare covers less than a seventh of the U.S. population, it hasstill controlled costs substantially better than the private sector,especially since the introduction of payment controls in the mid-1980s.

Toensure that bargaining for lower prices does not come at the expense ofhigh-quality care, Medicare and Health Care for America would also teamup to monitor and improve the quality of care by applying the positivemodels already developed or under development within Medicare and inthe increasingly successful Military Health System. Using the extensivedatabase of patient experiences it could amass, Medicare and HealthCare for America would come up with guidelines for best practices,create new funding streams for the coordinated treatment of chronicmedical conditions, provide comparative quality information aboutindividual providers and medical institutions, encourage prevention andscreening, and carefully assess the effectiveness of new medicaltechnology. These innovations would be made available to privatepayers, and, as they do today, many would likely follow the lead of thepublic insurance pool in its coverage and payment decisions.

TheHealth Care for America proposal promises to restrain costs not justbecause it creates a large public insurance pool. The structure of theproposal also ensures that the sector best able to control costs isrewarded with additional patients over time. Because employers coveringapproximately half of workers would continue to provide privateinsurance, employers and insurers would be free to experiment withtheir own cost-control strategies, so long as these strategies did notinvolve cutting benefits or shifting more costs onto workers. And ifemployers and insurers effectively held down costs, then privateinsurance would become increasingly attractive in comparison with theHealth Care for America Plan. If, by contrast, private premiums werenot kept in line, an increasing share of employers would enroll theirworkers in the Health Care for America Plan.

Thus,rather than a constant tug of war, Health Care for America would createa constructive public–private dynamic that would reward the sector bestable to control costs—and without holding the health security ofordinary Americans in the balance.

Health Care for America's realistic financing

HealthCare for America would require new federal spending. But because themajority of workers who now have employment-based coverage would retainprivate workplace insurance when the new Health Care for America Planwas in place, federal spending would be much lower than it would beunder a universal Medicare plan. Furthermore, most of the necessaryfinancing would come from those benefiting directly from the new HealthCare for America Plan—namely, from employers that make thepayroll-based contribution for guaranteed health insurance for theirworkers and from higher-income individuals who pay income-relatedpremiums when enrolling in the Health Care for America Plan.

Agood deal of the additional financing would come from the reduction offederal spending for S-CHIP and Medicaid, and from the redirection ofcurrent state spending on these programs. (Despite requiring that thestates continue to contribute to the cost of public health insurance,this proposal would still provide substantial savings to the states.)In addition, the movement of workers from tax-favored private coverageinto Health Care for America would reduce federal tax subsidies foremployment-based insurance. And payroll and income tax receipts wouldrise due to the substitution of wages for health benefits among firmsthat pay less for insurance than they would have without reform.

Theremaining federal costs could be financed by various combinations ofliquor and tobacco taxes and other dedicated levies and generalrevenues. Past estimates suggest that this approach has a relativelymodest net federal cost compared with other comprehensive proposals,many of which would cover fewer Americans.¹⁰ Moreover,Health Care for America requires much less new tax financing (evenincluding the payroll-based contribution) than a single-payer proposal.

The main reason why Health Care forAmerica is comparatively inexpensive is that higher-wage and largeremployers would continue to offer qualified coverage privately. Forlarge employers with higher payrolls, private employment-based coveragewould remain a good deal—especially since this proposal would noteliminate the tax-favored status of private coverage. For employers notenjoying the administrative economies of large-group purchase or withlower payrolls, the Health Care for America Plan would be the betteroption. Thus, most of the new federal spending would be targeted onthose firms and workers least capable of providing or obtaininginsurance today.

Because an employer'ssize and payroll would be the main determinants of whether firms wouldbenefit from enrolling their workers in the Health Care for AmericaPlan, there is limited reason to worry about "adverse selection"—thatis, the disproportionate enrollment of high-risk workforces in theHealth Care for America Plan. Lower-wage workers and the currentlyuninsured—the two main groups enrolled in the Health Care for AmericaPlan—differ little from the rest of the population in their basichealth characteristics overall.¹¹ While some degree ofadverse selection is unavoidable, the Health Care for America Planwould be such a large pool enrolling such a substantial share of thepopulation that it should have little problem spreading this smallamount of extra risk.

Finally, and mostimportant, Health Care for America promises substantial cost savingsover time for employers, individuals, states, and the federalgovernment. By bargaining for lower prices and encouragingcost-effective care, the Health Care for America Plan—working withMedicare—provides the best realistic hope for finally bringing Americanhealth spending under control.

Not onlywould the Health Care for America Plan reap the rewards of theseefforts, so too would Medicare. The serious cost pressures onMedicare—driven overwhelmingly by general medical inflation rather thanthe aging of the population—have led to calls for restructuring theprogram in ways that would leave its beneficiaries ever more at risk.Health Care for America represents a different bargain: Medicarebeneficiaries and younger workers would be united through a new socialcompact that extends Medicare-like coverage across the generationaldivide to ensure health security, improve medical quality, and bettercontrol costs.

Why Health Care for America is what Americans want

Americansare ready for a bold proposal for change like Health Care for America.Most believe the present system is broken, and most are willing tosupport fundamental change even if it means new taxes or an enhancedgovernment role. Americans do not believe they should be on their ownwhen it comes to health care. They want employers to remain in thegame, and they are skeptical of measures, such as Health SavingsAccounts, that would shift more costs and risks onto them. Overwhelmingmajorities of insured Americans worry that they won't be ableto afford care in the future, and a substantial majority of those whocurrently have insurance fear losing coverage altogether.¹²

Aninnovative public opinion project sponsored by the Herndon Alliance hasexamined Americans' core values with regard to health reform (for more,see the box on public opinion and health reform). It finds thatAmericans want a proposal that guarantees standard health benefits froma choice of public or private coverage. Guaranteed coverage, goodstandard benefits, shared responsibility and risk, and a choice betweenpublic and private plans are all key elements of the Health Care forAmerica Plan.

Other surveys indicatethat a Medicare-like program covering all Americans beats the currentsystem hands down. However, Americans are even more receptive to amandate on employers to provide coverage—the most popular reform optionin most polls.¹³ In a poll done after the 2006 election,among those wanting to expand health care coverage the two most popularoptions were an employer mandate (44%) and an expansion of existingpublic programs (32%)—the twin foundations of Health Care for America.¹⁴

HealthCare for America respects these longstanding views. It requires thatemployers insure their workers, but provides employers with the HealthCare for America Plan as a modestly priced option through which theirworkers can obtain insurance, thus ensuring that this requirement isnot unduly burdensome.

Health Care forAmerica also responds directly to two other key elements of publicopinion. First, most Americans do not recognize the full extent towhich they pay for health care through forgone cash wages and therevenue cost of health care tax breaks. Rather than suddenly confrontAmericans with these huge hidden costs (a political nonstarter proposedby both Medicare for All plans and individual mandate initiatives),Health Care for America would largely preserve the current division ofemployer and individual responsibility, while nonetheless deliveringmajor savings to business.

Second, andno less important, Americans remain extremely wary of tightly managedhealth plans like HMOs, which have not only lost out in the market buthave also been the target of political backlashes nationwide.¹⁵ Andyet, nearly all proposals relying on private plan competition rely formuch of their savings on the rapid further movement of Americans intoHMO-style plans, with restricted choice of providers. To get thismovement underway, these plans would impose substantial penalties onthose who want to have a free-choice, comprehensive plan.

HealthCare for America does not need to rely on pushing Americans into HMOs.Its savings instead come principally from the ability of Medicare andHealth Care for America to bargain jointly for lower prices whileupgrading the quality of care. Though the Health Care for Americainsurance pool would allow Americans to purchase good private plans,all Americans enrolled in the program would be guaranteed a reasonablypriced fee-for-service health plan with free choice of providers at noextra cost to them.

To pass the test ofpublic opinion, a reform proposal should be simple, rest on familiarfoundations, and not be threatening to those Americans relatively happywith their coverage today. Health Care for America is such a proposal.It contains no complex purchasing pools or complicated new tax credits,no tough new incentives for HMO enrollment, and no unpopular changes inthe tax treatment of health benefits. Instead, it builds on the mostpopular elements of the present system, changing little for mostAmericans with secure insurance today, except to promise them truehealth security at last.

A time for vision

Overthe last generation, Americans have grown more economically insecureeven as the nation's economy has expanded handsomely. In nearly everyfacet of our economic lives—our jobs, our family finances, our pensionplans, and above all our health insurance—risk and responsibility haveshifted from the broad shoulders of employers and government onto thefragile backs of American workers and their families. This great riskshift must end, and the place to push back first is health care, theepicenter of economic insecurity in the United States today.¹⁶

HealthCare for America would provide the health security that is sorelylacking, guaranteeing affordable, quality health care to all. Withoutupending our system, it would create a new framework ensuring thateveryone is covered, that risk is spread broadly, and that costs arecontrolled and quality improved.

HealthCare for America is consistent with American values, politicallyrealistic, and based on real-world successes. It draws on the bestelements of existing ideas for reform—combining a requirement onemployers to insure their work-ers, a new Medicare-like plan coveringtens of millions of Americans, and an individual coverage requirementon those without workplace ties—to create a flexible framework foraffordable, quality universal health care that can evolve over time inthe right direction for Americans.

JacobS. Hacker is professor of political science and resident fellow of theInstitution for Social and Policy Studies, Yale University, and a fellow at the New America Foundation. His latest book is The Great Risk Shift: The Assault on American Jobs, Families, Health Care, and Retirement—And How You Can Fight Back (Oxford University Press, 2006).

Endnotes

1. Families USA, One in Three: Nonelderly Americans Without Health Insurance, 2002-2003 (Washington, D.C.: Families USA, 2005), available online at www.familiesusa.org/assets/pdfs/82million_uninsured_report6fdc.pdf

2.This proposal builds on a plan developed in 2001 for the "CoveringAmerica" project sponsored by the Robert Wood Johnson Foundation.Although key features of the proposal have not changed, a number ofprovisions have been altered or updated. Readers interested in theearlier proposal ("Medicare Plus") and the cost and coverage estimatesfor this earlier proposal that were produced by the Lewin Group canfind them at www.greatriskshift.com/ideas.html.

3. For simplicity, legal U.S. residents are hereafter referred to as "Americans."

4.All Americans would eventually be required to show proof of coverage byattaching a standard insurance verification form to their federalincome tax return. Because all workers and their families would beenrolled automatically in either Health Care for America oremployer-sponsored plans, the individual mandate would have truesignificance only for the small share of Americans who both lack tiesto the workforce and are currently ineligible for Medicaid or S-CHIP(the State Children's Health Insurance Program). To reach those in thispopulation who do not file tax returns, states would be given powerfulincentives to enroll non-workers in Health Care for America. They wouldalso be encouraged to subsidize Health Care for America coverage forthe temporarily unemployed, and to establish mechanisms for enrollingthe uninsured in Health Care for America when they sought care.

5.The estimate of the share of the non-elderly population with ties tothe workforce is drawn from the 2006 Current Population Survey andrepresents the proportion of non-elderly individuals living inhouseholds with positive earnings. The exact share is 94%.

6. Families USA, Paying a Premium: The Added Cost of Care for the Uninsured (Washington,D.C.: Families USA, 2005), available online atwww.familiesusa.org/resources/publications/reports/paying-a-premium.html.

7. Firms that do not cover all theirworkers would be required to pay 6% of payroll for health insurance(with transitional rate reductions available to newly insuring firms).Usually, this payment would fund coverage under the Health Care forAmerica Plan. However, if a firm's worker was insured by another firm,the share of payroll contributed on behalf of that worker would beremitted to the firm sponsoring coverage. The contribution rate wouldbe the same whether workers were full time or part time.

8.These estimates, prepared by the Lewin Group in response to an earlierversion of this proposal, are available at http://www.esresearch.org/publications/SheilsLewinall/E-Hacker.pdf.

9.Private administrative costs are taken from National Health Expendituredata, available atwww.cms.hhs.gov/NationalHealthEx-pendData/downloads/nhe2004.zip.Administrative and net costs of private health insurance (includingprofits) were 14.4% of private insurance payments in 2004. Medicare'sadministrative costs are calculated from tables II.B1 and III.B1 of the2006 Medicare Trustees Report, available atwww.cms.hhs.gov/ReportsTrustFunds/downloads/tr2006.pdf. The estimateincludes "administrative expenses" from table II.B1 ($6.1 billion) and"fraud and abuse control" costs from table III.B1 ($1.1 billion)—whichsum to administrative costs of 2.1% of expenditures ($336.4 billion).

10.As part of the Agenda for Shared Prosperity project, the EconomicPolicy Institute plans to commission independent estimates of the costand coverage impact of the Health Care for America proposal.

11.Although some of the uninsured are in poor health (in part because theylack insurance), many are young and inexpensive to insure. Pastestimates suggest that the overall costs of uninsured Americans shouldbe about equal to the rest of the population once they are covered. SeeAlice M. Rivlin, David M. Cutler, and Len M. Nichols, "Cost Estimates:Authors Respond," Health Affairs Supplement (Spring 1994), p.55; P. Anthony Hammond, "Actuarial Memorandum: Premiums in RegionalHealth Alliances under the Clinton Administration's Proposed HealthSecurity Act," Health Insurance Market Reform, Hearing before theCommittee on Finance, United States Senate, 103rd Congress, 2ndSession, 1 February 1994, Washington: U.S. GPO, 1994, pp. 102-4. Thesame is true of lower-wage workers. They are more likely to have awork-limiting health condition than higher-wage workers but alsoyounger. And the overall incidence of work-limiting health problemseven among low-wage workers is less than 10 percent. See Peter Schochetand Anu Rangarajan, Characteristics of Low-Wage Workers and Their Labor Market Experiences: Evidence from the Mid- to Late 1990s,Report Prepared by Mathematica Policy Research, Inc., for the Office ofthe Assistant Secretary for Planning and Evaluation, U.S. Department ofHealth and Human Services (Washington, D.C., 2004), available athttp://aspe.hhs.gov/hsp/low-wage-workers04/.

12.For a good recent compendium of polls, see Ruy Teixeira, "What thePublic Really Wants on Health Care," The Century Foundation, December4, 2006, available online athttp://tcf.org/publications/healthcare/wtprw.healthcare.pdf.

13.In a December 2003 Harvard School of Public Health/Robert WoodJohnson/ICR poll, 76% of respondents supported employers being requiredto offer a health plan, while 54% supported an individual coveragemandate. See Teixeira (ibid.).

14.Kaiser Family Foundation/Harvard School of Public Health, "The Public'sHealth Care Agenda for the New Congress and Presidential Campaign,"December 2006, available online atwww.kff.org/kaiserpolls/upload/7597.pdf. The third option, new taxcredits for private insurance, garnered support from 24% of thosefavoring action.

15. HMO enrollment as ashare of all health plan enrollment nearly doubled between 1988 and1996, but has since fallen dramatically—and in 2005 was only around athird higher than it had been in 1988. Moreover, HMO coverage hasshifted away from more tightly managed group and staff model planstoward mixed and open models. See Kaiser Family Foundation, "Trends andIndicators in a Changing Health Care Marketplace," available online atwww.kff.org/insurance/7031/index.cfm (visited January 2, 2007).

16. See Jacob S. Hacker, The Great Risk Shift: The Assault on American Jobs, Families, Health Care, and Retirement—And How You Can Fight Back (New York: Oxford University Press, 2006).

Acknowledgments

EliseGould and Josh Bivens provided invaluable assistance in preparing thisproposal. Richard Kirsch kindly provided a detailed summary of theresearch of the Herndon Alliance on public support for "guaranteeingAmericans standard health benefits from a choice of public or privatecoverage." Roger Hickey deserves credit for the "Health Care forAmerica" label, and he and Diane Archer made possible many meetingswith stakeholders and experts that have in-formed this proposal.Patrick Watson and Kieran Daly provided excellent editorial assistance,and they and the rest of the EPI team—including Ross Eisenbrey, MarkLevinson, and Larry Mishel—carefully (and patiently) shepherded thisproposal into final form.