ADVANTAGE FOR ALL will be implemented in four phases:
Phase 1 -- Medicare
Converting Medicare to a premium subsidy program has already been the subject of detailed studies, most notably by the Congressional Budget Office and the Kaiser Family Foundation, and included in draft legislation. Consistent with the CBO approach, there will be no phase-in or grandfathering; all beneficiaries will move to the new structure simultaneously. While the regional benchmarks will be based on bids for Part A and Part B benefits (or their actuarial equivalent), private plans will also be able to offer benefit upgrades for an additional premium (potentially eliminating the need for Medicare supplement plans).
As part of this phase, new regional insurance exchanges will be created to facilitate seniors' choices (and later expanded to serve under-65s also). Grants will also be made to organizations able to offer help to seniors in making coverage choices.
Funding sources will be unchanged from today, while the move to a premium subsidy model will reduce expenditures by an estimated half-trillion dollars over the first six years.
Phase 2 -- Under 65s (non-ESI)
Under-65s (other than Medicaid and CHIP enrollees) will move to ADVANTAGE FOR ALL in two groups. The first group will be those without employer-sponsored insurance, that is those enrolled via an Obamacare exchange plan, with other individual insurance, or uninsured.
The new regional exchanges created to serve seniors will be expanded to serve under-65s. Voucher information (values, etc.) based on the prior year's tax returns will be provided to all eligible individuals and families who will then be able to enroll in the plan of their choice via an exchange. Eligibles failing to enroll will be auto-assigned to the lowest-cost available plan. Individuals and families whose ESI status has changed will be enrolled separately.
For all eligibles, the voucher may be used either simply to purchase basic coverage from an array of options, or applied to the purchase of broader coverage, with the difference paid by the individual or family. 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 makeup.
Voucher funding will be a mix of redirected Obamacare exchange subsidies and general revenues.
Phase 3 -- Under 65s (ESI)
Individuals and families with ESI will be the largest under-65 group. Two years prior to implementation of ADVANTAGE FOR ALL, employers offering ESI will be required to inform their employees of the full value of their current healthcare benefit. “Full value” means the actuarial cost of coverage taking into account employee age, family makeup, and any other rating factors. Upon ADVANTAGE FOR ALL implementation, ESI employers will be required to increase employees’ wages by no less than the full value of their current healthcare benefit. At the same time, the ESI tax subsidies will be discontinued, and the increased federal income and payroll tax collections used to finance the ADVANTAGE FOR ALL premium subsidies. (Note that the increase in payroll taxes will not be treated as FICA.)
As for the non-ESI group, these under-65s will then enroll via the new exchanges.
Phase 4 -- Medicaid and CHIP
Implementing ADVANTAGE FOR ALL will require no new monies (nor yield any dramatic savings in the initial year), but will involve redistribution of traditional Medicaid funding.
In the implementation year total federal funding will be calculated as the prior (traditional Medicaid) expenditures times GDP growth plus 1 percent, split between the block grant and the contribution to private insurance premium subsidies. In subsequent years the block grant will increase at the GDP growth rate, while the premium subsidy contribution will increase at no greater than the GDP plus 1 percent rate.
Former Medicaid and CHIP eligibles will enroll in ADVANTAGE FOR ALL in the same manner as other under-65s.