Designing a Mixed Public and Private System for the Health Insurance Market

Publication Date:

Publisher:

Author(s): B. Dowd

Research Area: Health

Type: White Paper

Abstract:

This article considers a generic health care reform proposal that would make a government-run health insurance plan available to all. The analysis begins with a description of problems in markets for health insurance that reforms might address. It then discusses the possible benefits of a government-run health plan, describes a model for such a plan, and analyses likely problems and how to resolve them.



Benefits of a government-run health plan in the commercial sector include guaranteed portability of coverage, lowered costs of marketing and underwriting, and protection of consumers against having health risk reassessed after illness or injury.



The proposed reform would be based on the following principles:



Every legal resident of the United States who lacks access to Medicare or good workplace coverage would be able to buy into a public insurance pool modeled after Medicare.
Every enrollee would have access to either an affordable Medicare-like plan with free choice of providers or to a selection of comprehensive private plans.
Employers and the self-employed are required to either purchase coverage comparable to the insurance offered by the public insurance pool for all their workers or pay a relatively modest payroll contribution to fund public insurance coverage for all their employees.
Americans who remain without insurance are required to take responsibility for their own and their families' health by purchasing private coverage or buying into the public insurance pool.Medicare provides an important precedent for such a system and offers a practical guide to the problems and opportunities offered by such a mixed public and private system.