The COVID-19 experience has underscored the inequities, silos, and disjointed nature of our health system. The double whammy of a job loss and the consequential loss of coverage exposed the precarious nature of employment-based health coverage, especially for lower-paid workers and their families. By June 2020, layoffs meant that as many as 7.7 million workers and 6.9 million dependents1 lost their insurance. It should be impossible today for anyone to ignore the disgraceful gaps and inherent inequities in the system, with uncertain coverage for millions and poorer coverage and health for Black and Hispanic Americans.
Addressing these structural issues is no easy task in a political system that is so riven with discord. For the foreseeable political future, neither the Left nor the Right is likely to achieve its vision of a redesigned system that addresses today’s structural flaws. Americans are also, by nature, suspicious of radical change in health care. So, if we are to reach the goal of an adequate level of affordable and accessible care for all, the Biden Administration and health reformers would be wise to adopt an approach that can be built gradually from what we have, and that draws on ideas that can appeal to both sides of the aisle.
One potential approach would have three elements: it would provide a strong community health system in every neighborhood, achieve equity in financial assistance to afford coverage wherever a person works, and permit states to adapt and innovate within national goals and a national framework.2
Community health centers serve approximately one in every 12 US residents. Funded by Medicare, Medicaid, private insurance, and direct federal and local support, they are the basic health delivery system for millions of modest income and minority households, including undocumented residents and families that have lost employer coverage. Importantly, they have a long history of bipartisan support, and, through local partnerships, they often are action hubs for tackling some of the housing, transportation, and other needs of their patients that are referred to as social determinants of health.
Significantly expanding support for community clinics would help build a much stronger foundation of affordable, accessible care for families that fall through eligibility gaps for many programs and plans and otherwise could not afford care. In tandem with this expansion, further increasing the flexibility of Medicaid and Medicare to pay for nonclinical services related to health, such as housing, transportation, and nutrition, would help address factors that contribute to poor health in many communities and demographic groups.
In an economy with many high employee-turnover sectors, tying health coverage to the place of work makes little sense. The practice continues because the compensation earmarked for health insurance is tax free to the worker, a break known as a tax exclusion. That can be a good deal to a well-paid employee with long-term job security (who receives the biggest tax break). For lower-paid workers, however, the tax benefit is small. And for many part-time employees, service and gig-economy workers, and employees in small firms, employer-sponsored insurance and the tax break are not even available. Unless these workers qualify for Medicaid or for subsidies to purchase health exchange plans, they are on their own.
The regressive subsidies and coverage in employer-sponsored insurance is a major contribution to inequities in the health system. These need to be replaced gradually with a subsidy system based on the principle of “horizontal equity.” That means households with the same income and insurance needs would receive the same tax benefit or direct subsidy to purchase insurance. They could keep that insurance wherever or however they are employed.
Converting the tax exclusion into a progressive, refundable income tax credit related to income would rearrange a roughly $270 billion annual federal tax break to achieve much greater equity and consistency. A refundable credit means those below the tax threshold would receive the equivalent of a tax credit to pay for insurance. By also adjusting the subsidy structure for exchange plans to make it consistent with the proposed credit system and allowing credits to be used for health exchange plans, the federal support for working households to obtain coverage would be the same regardless of place and type of work.
The exclusion–credit conversion has a long history of support even among Republicans; the main Republican alternative to President Clinton’s reform in the 1990s took this progressive approach, and a variety of tax credit proposals have come from that side of the aisle since then. So, there is a basis of support to build on. Moreover, as managed care plans are increasingly common in Medicare, Medicaid, and private coverage, the result of workers utilizing credits would likely look much like a version of Medicare Advantage plans—the regulated private plans that are increasingly popular with seniors. Thus, we could see the system for working-age Americans evolving into what might best be characterized as “Medicare Advantage for All.” It is worth noting that Medicare Advantage has enjoyed bipartisan support, and so progressives would be far more likely to achieve this form of Medicare for All than a disruptive version based on sweeping away private insurance.
While the appeal of a “national” health system is that everyone, everywhere, can be assured the same level of affordable and accessible care, that does not mean the system has to be organized in the same way throughout the country. Moreover, the US system of federalism and state variation makes it easier for us to achieve an equitable national system.
One reason federalism helps is by allowing contentious features to be tried first at the state level using waivers. This can pave the way for more consensus by giving reformers with different philosophies the opportunity to showcase their ideas at the state level. To build bipartisan support for reform, the Biden Administration thus should make use of the waiver authority under Medicaid and the Affordable Care Act (ACA) to test both conservative and progressive concepts. Waivers could allow variations in ACA subsidies and benefit design, for instance, and allow more flexible Medicaid payment rules to explore the health benefits of addressing social determinants.
Federalism also allows states to adopt a more politically acceptable pathway to the same goal. That could help bring on board the states that have so far refused to accept federal funds to expand Medicaid. These nonexpansion states could be offered the same federal funds if they created their own programs that achieved the equivalent extent and quality of Medicaid coverage.
To be sure, the political devil is in the details for each of these elements, and much needs to be done to restore more trust among lawmakers before the reforms can be accomplished. But by seeking gradual rather than radical change, by strengthening the community clinic system, by making progress toward horizontal equity in subsides for coverage, and by recognizing that federalism is a tool for building acceptance of reform, we would have a bipartisan pathway to reach the goal of an equitable and comprehensive health system.
See also Benjamin, p.
CONFLICTS OF INTEREST
The author has no conflicts of interest.
