ADVANTAGE FOR ALL will transform the three pillars of today’s system—Medicare, private insurance, and Medicaid—into a coherent premium-subsidized consumer choice structure, funded by redirecting current payments and subsidies.
A Fairer and More Fiscally Secure Medicare Program
ADVANTAGE FOR ALL will, as recommended by bipartisan reports over the past fifteen years, convert Medicare into a system in which all beneficiaries (except those currently also eligible for Medicaid) receive a premium subsidy up to a benchmark “voucher” amount, set as the second lowest priced of the traditional fee-for-service and private health plans in each area. Beneficiaries choosing an option priced at the benchmark will incur no additional cost, those selecting a plan priced below the benchmark will receive a rebate, and those selecting more expensive plans will pay the difference.
Beneficiaries will receive the same Part A and B benefits (or their actuarial equivalent) as now, with one exception: the fee-for-service hospital deductible will be lowered for multiple hospitalizations, thereby reducing financial burdens on the sickest seniors.
The results? Medicare will be a much more equitable program; every beneficiary will be treated equally, will have more choices overall, and will be guaranteed a choice of at least two plans with no additional premium. Medicare will be more fiscally secure as expenditures are reduced: the Congressional Budget Office estimates savings of up to half a trillion dollars over six years from the proposed premium subsidy approach.
Private Health Insurance—As a Right, Not a Mandate
Like Medicare, private health insurance will be transformed into a premium subsidy system, with all eligible Americans receiving a “voucher” to be used in purchasing basic coverage, sufficient to cover almost all healthcare costs for those with the lowest incomes and adequate to protect against medical catastrophe for the well-to-do.
All under-65s except disabled Medicaid enrollees will be automatically covered, to include all those currently with or without private insurance, along with those currently enrolled in CHIP or Medicaid. Under-65s will have considerable freedom of choice: they will be able to pick from multiple options with no additional premium, or may "upgrade" their coverage using their own funds. To ensure that all eligible under-65s are "in the pool", those failing to make a timely choice will be auto-assigned to the lowest-cost available plan.
The average value of a voucher will be approximately $3,100 per person, rather more than the cost of an Obamacare catastrophic coverage plan, with specific values dependent on age, income, and family size. For low-income individuals, this will provide comprehensive coverage; for higher incomes, it will provide catastrophic coverage. Premium subsidy costs will be fully financed by redirecting current tax expenditures and subsidies from three sources: employer sponsored insurance and related federal tax exclusions, ACA exchange subsidies, and Medicaid and CHIP appropriations.
Medicaid and CHIP—More Choices, Less Stigma
The existing Medicaid program will be split into two parts, reflecting the two very different populations combined in the present structure: children and families (and certain low-income adults in some states), and the aged and disabled.
Children and families and low-income adults in the current program, along with CHIP enrollees, will be merged into the overall private insurance population, but with special protections. Like the rest of the private insurance population, the former Medicaid enrollees will receive premium subsidies based on their reported incomes. In particular, those at or below 100 percent of FPL will receive premium subsidies sufficient to acquire zero-deductible, minimal co-pay coverage at no cost.
The aged and disabled will remain in state-administered programs, but with federal funding provided through block grants. Block grant funding will increase at the rate of GDP growth, with states required to match the grants at the FMAP rate. This approach reflects the relatively stable and less economy-variable nature of this group and is expected to encourage better coordination of care and more use of social services to minimize medical needs.