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Universal Coverage Now: a Proposal by Kaiser Permanente’s George Halvorson

Today’s post describes a proposal for universal coverage outlined by George Halvorson, longtime Chairman and CEO of Kaiser Permanente, in his 2007 book Health Care Reform Now! Although the book is over five years old, I tremendously enjoyed reading it due to the author’s obvious in-depth knowledge of the health care industry, which offers a welcome contrast with some other health care books (no, I won’t name any names but let me say some management gurus like to jump on bandwagons). Halvorson’s expertise and his ability to explain his thoughts to a lay audience in a clear and engaging fashion make this volume one of the very best discussions on the present and future of health care in the U.S. that I have read.

His Universal Coverage Now! (UCN) proposal – discussed at length in Chapter 11 of his book – consists of four building blocks, numbered A, B, C and D. In his words:

  • “Part A of the UCN proposal sets up universal coverage as a mandated benefit.
  • Part B funds it.
  • Part C measures how well the program is doing and provides a context for accountability and continuous improvement.
  • Part D describes a specific benefit plan design for the uninsured that [Halvorson believes] will make the most sense at this point in our history.”

Part A: Individual Coverage Mandate

Individual coverage would come from several sources: existing ones such as employers, Medicare, Medicaid or a new one called HealthPrime outlined in the UCN proposal. Enrollment would be verified every year at tax filing time, when taxpayers “would be required to include written proof of health insurance as part of his or her tax filing.” The inability to show proof of health insurance would trigger “a process to sell coverage directly and immediately to the uninsured person” through a high-deductible plan. In terms of numbers, Halvorson estimated at the time of his writing that people with income more than three times the federal poverty level (“high income”) could enroll in a $10,000 deductible plan for approximately $100/month.  Halvorson also provides guidelines into changes in the Medicaid process so that all low-income Americans (with less than two times the federal poverty level) become eligible.

For low-income Americans making more than two times the federal poverty level, Halvorson envisions a system called HealthPrime, “in essence a Medicaid-like program for the low-income but not lowest income uninsured population”, which would be “administered in every state by the existing state Medicaid program infrastructure.” Community clinics would serve as core HealthPrime providers.

Part B: The Source of the Money

Halvorson believes that “universal health care would best be funded with a separate dedicated tax source – a dependable, highly visible, directly accountable source of funding.” He suggests two tax sources: a health care sales tax and what he calls an in-lieu sales tax. To justify the adoption of a health care sales tax, he uses the example of Minnesota, which has successfully implemented this approach for many years. The second tax (in-lieu sales tax) would be “charged to any employer who does not offer health care coverage for their employees.” Both taxes would be set at about 4% in Halvorson’s proposal.

Part C: Keeping Score

In Halvorson’s words, “several levels of information that can be made available from an insurance claims payment system could go a very long way toward filling the huge and unacceptable data deficit that now exists in health care.” Keeping score will be made possible by electronic health care data records. (Some eye-popping numbers: 0.5% of the population spends 1/4 of all health care dollars.  10% of the population spends nearly 70% of all health care dollars.)

Part D: HealthPrime Benefit Designs

The HealthPrime benefit package would emphasize primary care (in an alternative read of the statistics mentioned above, “90% of our population spends only 30% of our care dollars, and that 30% of our care is provided largely by primary care practitioners,” with obvious consequences for politicians eager to be reelected). The package would also have “first solid dollar-first visit benefits”, with some cost sharing at the level of “a $10 copayment for chronic care or prenatal visits and a $20 copayment per visit for all other acute care needs.” Prescription drugs would be set up on a similar basis.

The package would also “create a financial incentive for each patient to use preventive medicine in order to avoid [a costly hospitalization]” (“encourage primary care and discourage hospital stays”) through the use of a “disappearing deductible that kicks in after each patient has spent $2,000 for primary care and acute care prescriptions.” For instance, an asthma patient would have his office visits and his inhaler covered by the insurance, but would have to pay the first half a day of hospitalization himself [roughly $2,000] for emergency care that wouldn’t have been needed if he had adhered to his treatment. Alternative benefit features, such as a 50% temporary copay as opposed to a $2,000 disappearing deductible, could easily be incorporated.

While health care reform has made some progress since the book was published, it is far from being complete. The current political climate makes it even more important for us to hear what knowledgeable professionals like Halvorson have to say regarding the best avenues for health care reform in the years ahead.

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