The Healthy Americans Act is a bill being introduced by Sen. Ron Wyden of Oregon.
Executive Summary (excerpts):
The “Healthy Americans Act” (HAA) establishes a centrally financed system of private health insurance for all Americans except those covered through Medicare or the military. Participants would chose from a selection of private plans offered through newly created regional purchasing organizations called “Health Help Agencies” (HHA’s). All Americans would have coverage at least as comprehensive as the health coverage now provided to members of Congress and federal workers, although an actuarially equivalent substitution of HMO and Health Savings Account (HSA) plans is permitted.
Employers would be required to “cash-out” their health plans by terminating their existing health coverage and paying the amount saved to their workers in the form of increased wages. The current tax exemption for employer provided health benefits is eliminated to strengthen incentives for families to seek lower cost coverage. However, a new “health premium” tax deduction is created so that these wage increases do not increase federal personal income tax payments. To maintain incentives to control costs, the deduction is fixed and can not be increased by purchasing more costly coverage. However, a new “health premium” tax deduction is created so that these wage increases do not increase federal personal income tax payments. To maintain incentives to control costs, the deduction is fixed and can not be increased by purchasing more costly coverage.
All HAA participants would pay premiums through their annual income tax filings. The program would fully subsidize the premium for those below 100 percent of the federal poverty level (FPL), with the premium phasing-in for people living between 100 percent and 400 percent of the FPL. People who do not have enough income to pay taxes are assumed to be eligible for the program with full subsidies, thus eliminating the need to apply separately for assistance as under the current Medicaid program. Employers also would be required to pay an assessment ranging from 2 to 25 percent of the national average premium for the minimum benefits package, depending upon firm size and revenues per worker.
E. Private Employer Impacts (excerpts):
Private employer health spending under the HAA is reduced under the HAA by $309.8 billion, from $428.8 billion under current law to $119.0 billion under the program.
We assume that the savings to employers would be passed-back to workers in the form of increases in wages. This reflects the HAA requirement that employers “cash-out” their benefits plans. It also reflects economic theory and research indicating that changes in employer benefits for health care are, in the long run, passed back to workers in the form of wages or some other form of compensation such as pensions or disability insurance.
This reflects that the employer’s true cost of employing workers includes all compensation costs including: wages less employer payroll taxes, health benefits, pensions, and other non-cash benefits. In competitive labor markets, eliminating the health benefits (or any other form of compensation) would bid-up other forms of compensation such as wages so that aggregate compensation levels are largely unchanged. The Lewin Group consultant’s report on economic projections http://wyden.senate….
Read Sen. Wyden’s plan (with links to the Act and other documents)
Comment by Don McCanne, MD: Sen. Wyden’s proposal is an individual mandate to purchase private health plans. Much has been written about the flaws of such models, and no attempt will be made to address most of those issues here. Rather only one serious fundamental flaw in the application of economic theory will be discussed.
The theory is that in competitive labor markets, total compensation is determined by the market, but the distribution between payroll and other benefits such as health plans and pensions does not influence the total compensation. Thus termination of a health benefit program results in an increase in wages that has the same monetary value.
In Sen. Wyden’s proposal, not only does it assume this theory to be true, it also provides back-up enforcement by requiring that employers increase wages by the same amount of the health benefit that will be terminated under this Act, but only for the first two years. After that, the competition of labor markets resumes, but without the complication of a health benefit program. Employees are on their own for accessing and funding their health plans.
Whether through union efforts or in the open job market, compensation is negotiated, at least theoretically. That includes wages and often health benefits and pensions. It does not include food. It does not include housing. It does not include transportation. It does not include any other basic needs. Those needs fall under the category of personal responsibility – use your wages wisely to meet those needs. Now health care is shifted away from being considered as part of the compensation package, over into this realm of personal responsibility.
Have wages kept up with the costs of basic needs? There certainly has been a redistribution from wage earners to the wealthy. The minimum wage has not been increased for many years. Consumer debt continues to expand. Personal savings are now a negative. Personal insolvency continues to grow. Yet employers are not providing wage increases that are indexed to food, nor to housing, nor to transportation. Now that they are no longer in charge of health coverage, they will feel no obligation to index wages to health costs either.
The Lewin report contends that price competition between health plans, and greater administrative efficiencies will lower costs significantly. If the consolidated efforts of employers have been unable to control costs and waste, how can individual purchasers ever expect to exert market pressures to achieve these efficiencies?
The last section of the Act list many other potential sources of cost savings. Reading the list, the savings potential for many is simple rhetoric, not supported by fact. Some of them would actually increase costs. The Act excludes more effective cost measures such as those of the single payer model.
The point is that costs will continue to increase and wage earners will have to face those costs alone. Employers will have divorced themselves from the problem and will not make an exception for health care anymore than they already do for food, housing and transportation.
Wyden’s plan falls apart since it depends on price competition of health plans, which in turn depends on shifting more unaffordable costs directly to those who need care.
————–
For those who are interested, you can sign up for Don’s Quote of the Day at the Quote of the Day Listserv.
Again we ask, Why should the Wyden bill be getting support & publicity, when the much longer standing “Medicare for All” proposal, currently packaged in Conyers HR-676 languishes on the backbench? Conyers, Dingell (prior years’ sponser) along with Senate co-sponser Kennedy, are all more senior than Wyden. The bill has been circulated gathering congressional, grassroots and labor support… and that of lots of our new congresscritters. If it is shunted aside for Wyden’s bill, then it means either Conyers and Kennedy and their co-sponsers have not been serious with us, or the Democratic congressional leaderhip is not serious about them.
Useful links to learn more and Take Action:
Rep. John Conyers HR-676 “Medicare for All”
Write to your Congressperson to [actively] support Conyers “Medicare for All”
Add your name to the petition for “Medicare for All”
Contact both your Senator and Sen. Wyden to tell them what you think [about these health reform proposals]:
—-
And, added by AnnEM: To learn about and join in MA state-based system reform efforts see MassCare, the Health Care Amendment Campaign and Alliance to Defend Health Care
My bad. It seems that in trying to keep up and cross-post these excellent DrSteveB Diaries from DailyKos, I inadvertantly missed SteveB’s lead-in diary on the Sen. Wyden Health Plan Proposal along with its 236 comments
<
p>
Sorry about this. Here’s the correct lead-in post with comments: “Wyden’s not so democratic universal health care plan”