Sunday, June 15, 2014

A modest proposal for "Medicare Part O"

 - by New Deal democrat

The French health care system is frequently touted as the best in the world.  The interesting thing is, Obamacare looks a lot like that French system -- if it had been designed by Rube Goldberg.

The French system relies upon private insurers, not nationalized health care.  It has standardized policies among which people can choose.  It has standardized administrative systems and forms.  The biggest difference is, the employer is not involved, and it isn't a question of whether to enroll or not:  you are enrolled, it is just a question of with which insurer.

Contrarily, Obamacare relies on individuals to sign up, or to rely upon their employer's healthcare.  This creates a situation much like 401k's, where through inertia or laziness many employees do not sign up, or do not take full advantage of it by putting in enough of their own wages/salaries to obtain the full employer match.

Some behavioral economists have recommended that, instead of "opt-in," 401k plans should be set up on the basis of "opt out."  That is, an individual is automatically enrolled up to the level of the full employer match, unless they take action not to be included.  As expected, firms that have implemented such "opt out" 401ks have a much higher level of participation.  For example, an article in Psychology Today pointed out:
An automatic enrollment policy in a 401(k) savings plan results in substantially more employees participating in the pension plan -- a jump from one-third to nearly 90%. ...[M]ost just stay at the default level of contribution and asset allocation.
What if the ACA a/k/a Obamacare, were set up like that?  What if, instead of vast and expensive outreach programs, advertising, and assistance, all to beg, plead, and cajole people to sign up for health care as we saw earlier this year, the ACA were set up as an "opt out" system?  Under such a system, if a person were employed, an employer would automatically make a deduction for "Medicare part O" just as the employer does for Social Security and existing Medicare.  If the employer offered their own health care, the deduction would be $0.  If the employer did not offer their own health care, there would automatically be a deduction made that enrolled the worker in the "bronze" health plan offered by the exchange under the ACA (and randomly assigned to one of the qualifying insurers).

Those either not employed, or self-employed, who did not enroll on their own, would be automatically enrolled in the "bronze" plan as well, using their Social Security number, and would either include the payments in their quarterly IRS estimated taxes, or in their yearly filings by April 15 (keeping in mind that with the subsidies for low incomes under the ACA, the net amount owed by somebody who is unemployed might be $0).

It seems to me that such an "opt out" system would make great strides towards universal coverage, and by relying on existing systems already familiar to everybody (Social Security numbers, payroll deductions for Medicare, and tax returns), would have a minimum of administrative cost.