Download the entire plan in pdf format.

SUMMARY OF PLAN

Under the Health Care for America Proposal, employers would be required to provide coverage or pay a payroll tax to have their workers covered under a newly created national health insurance pool called Health Care for America (HCA). Modeled on Medicare, Health Care for America would offer a single Medicare-like fee-for-service option (public HCA plan) and a selection of Health Maintenance Organizations (HMOs) or other private managed care plans (private HCA plans). People who do not have employer-sponsored insurance (ESI) would be covered under HCA, including those now covered under Medicaid and the State’s Children’s Health Insurance Program (SCHIP). The Proposal would provide subsidies for worker HCA premiums for those living below 300 percent of the Federal Poverty Level (FPL), and premium subsidies for non-workers enrolled in HCA who are living below 400 percent of the FPL.

We estimate that there were about 47.8 million uninsured people in the country in 2007. The Health Care for America (HCA) Proposal would reduce the number of uninsured by 46.5 million people (i.e., 97.3 percent of the uninsured), leaving only about 1.3 million people uninsured. Coverage under the proposal would be as follows:

• We estimate that 122.2 million people would be covered under ESI, compared with 157.0 million people under current law;
• About 128.6 million people would be covered through the newly created HCA pool; and
• Enrollment in Medicare and the TRICARE program (i.e., military retirees and dependents) would remain the same as under current law.

The Health Care for America Proposal would cover 46.5 million uninsured people without increasing national spending for health care, largely through lower provider reimbursement, administrative simplification and other features of the proposal. The spending effects of the Proposal include:

• Spending for health care services and prescription drugs nationally would increase by $53.2 billion in 2007 as the uninsured become covered;
• Administrative simplification would reduce administrative costs by about $25.4 billion in 2007;
• There would be additional savings of $27.9 billion due to changes in provider payments, requiring people to have and use a medical home, and government negotiation of prescription drug prices for people covered through HCA.

Federal government health spending would increase under the Health Care for America Proposal by $49.3 billion, after accounting for all offsets. Total program spending under HCA would be $417.7 billion in 2007 including benefits and administration. These costs would be offset by the following:

• Employer payroll taxes for firms that do not provide coverage ($106.8 billion);
• Premiums for individuals covered through HCA ($80.3 billion);
• Federal and state government savings to Medicaid and SCHIP that would be transferred to HCA ($160.1 billion); and
• Other savings and new federal revenues under the Proposal ($21.2 billion).

We estimate that state and local governments would save $21.2 billion as a result of savings to programs that traditionally serve the uninsured (i.e., safety net programs). There would be no immediate net savings to Medicaid and SCHIP for states because they are required to pay the amount saved to HCA to help fund the program (i.e., maintenance of effort for Medicaid SCHIP only). Over time, however, savings achieved by HCA would be shared with the states.

Overall we estimate that private employers spent about $442.7 billion on health care for workers and retirees in 2007 (excludes employee contribution). Under the Health Care for America Proposal, private employer health spending would decrease by $10 billion, reflecting that many firms will find it less costly to discontinue their health plans and pay a six percent payroll tax to enroll their workers in HCA. Changes in private employer spending include:

• Private employers who currently offer coverage would save $65.6 billion by discontinuing their insurance and enroll their workers in HCA by paying the tax;
• Private employers that currently do not offer coverage would spend $55.6 billion more due to the requirement that they either provide coverage or enroll their workers in HCA by paying the payroll tax;
• On average, firms that currently offer coverage would save $809 per worker and those that do not currently offer coverage would spend $1,568 more per worker.

The Health Care for America Proposal requires that individuals obtain coverage and automatically enrolls people who do not have insurance into the public HCA plan. It also provides subsidies to help low-income people pay premiums. Overall, families would save $23.3 billion primarily from lower out-of-pocket payments. However, other financing mechanisms that would be needed to fully fund the proposal (i.e., $49.3 billion) would reduce these savings to families.

The Health Care for America Proposal would control the growth in health spending as enrollment increases, by restricting provider payment increases, negotiating deeper drug discounts, and simplified administration. Thus, national health spending under the HCA Proposal will be lower than under current law. We estimate that under these cost controls, total national health spending over the 2008 through 2017 period would be about $1.04 trillion less than under current law over that same period.