A Tour of the Proposals

To help direct people to reform plans that may be most useful to their current work, we now categorize the plans developed under the Covering America Project. This is inevitably a rough approximation because the proposals do not fit neatly into bins related to different philosophies and political preferences. Nevertheless, we hope that this "taxonomy" will prove useful.

Covering America Proposals At A Glance (PDF)To help direct people to reform plans that may be most useful to their current work, these charts categorize and compare the 17 plans developed under the Covering America Project. Users can easily access author's full proposals by clicking on their names located at the top of the charts.

Proposals that Replace the Current Health Care System

Several of the reform plans would have largely or completely replaced the current system built on employer-based coverage and Medicare and Medicaid. Some of these plans can be categorized as "single payer" systems while others do not quite fit this description, but would make health care a "right" to all citizens and move away from the job-based system.

Authors James Morone and Helen Halpin developed different versions of a single payer plan modeled on a "Medicare for All" approach. Of course, benefits would be modified and expanded to fit the whole population. Under Morone's plan, financing would be provided by a federal value-added tax with no employer contributions, and there would be no co-payments. The Halpin plan would have provided incentives for people to join a public plan that would ultimately be a single payer. Employers not funding health coverage would pay a 6.5 percent payroll assessment (5.5 percent for small firms) and household premium contributions would be capped at 2.5 percent of income. The new public plan would offer HMOs or similar plans.

A somewhat different version of this "school of thought" was presented by Alan Weil. He offered a new "Medical Security System" that would make health insurance a "right" for all Americans. Under Weil's plan, all legal U.S. residents would have to enroll in the new system or be placed in it by default when they use health services. Government would set up and regulate insurance exchanges, forward tax revenues and determine the size of the payroll tax. Funding would be provided by a new payroll tax on employers and employees, premiums, and federal subsidies.

Jacob Hacker proposed a different variant of a universal coverage plan that would start with elements of the current system but contain incentives to encourage rather than compel working Americans to obtain insurance through a common framework. It required employers to either provide comprehensive coverage or pay a modest payroll tax to enroll their employees in a public framework modeled after Medicare, with appropriate extra benefits. The result would be a juxtaposition of public and private coverage and competition between them for enrollees. Financing would be provided primarily by payroll contributions, general revenues, and premiums scaled to income.

Richard Kronick and Thomas Rice proposed giving all legal U.S. residents a right to comprehensive health insurance through a nationwide social insurance program. Administered by the states and overseen by the federal government, this system would replace employer coverage and other current insurance arrangements except Medicare and the long-term care component of Medicaid. Financing would come primarily from employer and employee payroll contributions and general revenues. States would have flexibility in designing universal coverage plans.

Replacing the Current System Proposals At A Glance (PDF)To help direct people to reform plans that may be most useful to their current work, these charts categorize and compare the plans that replace the current system developed under the Covering America Project. Users can easily access author's full proposals by clicking on their names located at the top of the charts.

Proposals Blending an Enlarged Role for Government with New Market Incentives

Another group of health reform proposals combined a larger role for government with new market-oriented incentives aimed at fostering more cost-conscious choices. This group forms a kind of "intermediate range" of plans that fall between single-payer plans and those built mainly on reforms of the private insurance market.

Jonathan Gruber presented a reform plan that features state-based purchasing pools offering an array of health plans to all individuals and all employers, though employers are not required to take their workers into these pools. Federal subsidies would cover the full premium for people with incomes below 150 percent of the federal poverty line (FPL) and provide assistance on a sliding-scale basis to people with incomes up to 300 percent of the FPL. Part of the financing would emerge from placing a ceiling on the tax exclusion for employer-sponsored health insurance pegged to the median-cost health plan, and additional funding would come from phasing out the SCHIP program and Medicaid except for the elderly and people with disabilities. Risk-adjusted re-distribution payments to health plans participating in the pool would help compensate for adverse risk selection.

A proposal by Judith Feder, Larry Levitt, Ellen O'Brien and Diane Rowland blended an expansion of public programs with tax credits to employers. People with incomes below 150 percent of the FPL could enroll in SCHIP or Medicaid without cost sharing or premiums, while those with incomes in the range of 150-200 percent of the FPL would pay modest premiums and cost-sharing. Those with higher incomes could "buy into" these programs with a sliding-scale premium. Small, low-wage employers would receive a tax credit for providing health coverage to their workers.

John Holahan, Len Nichols and Linda Blumberg created a plan with financial incentives for all states to provide new subsidies to everyone with incomes up to 250 percent of the FPL and to people with higher incomes who experience higher-than-average health care expenses. Subsidized coverage could be purchased only through the state-based pools. Anyone could join the pools, including those who are currently enrolled in private coverage. Employers would be required to offer employees the state pool option and could choose whether to buy coverage exclusively through the pool.

Sara Singer, Alan Garber and Alain Enthoven combined refundable federal income tax credits with both state-level insurance exchanges and a "U.S. Insurance Exchange," to move toward universal coverage while creating the exchanges as aggressive purchasers seeking to improve quality and manage costs. The tax credits, available only through the exchange, would equal 70 percent of the median-cost health plan for the lowest-income people and would be available on a sliding-scale basis to moderate-income people. Financing would include a phased-in cap on the federal tax exclusion of employer contributions.

Elliot Wicks, Jack Meyer and Sharon Silow-Carroll presented a plan featuring refundable, advanceable federal income tax credits for everyone, with the amount varying by income. These credits would entirely replace the current tax exclusion, and financing would be provided by the taxes on employee health benefits and general revenues. Everyone would be required to obtain health insurance; if they did not choose a private plan, they would automatically be enrolled in Medicare and billed for the premium. Employers would be required to offer, but not necessarily fund, health benefits. Administrative savings would emerge from establishing purchasing pools, which would be the source of coverage for individuals and small businesses, and a national centralized electronic mechanism for paying claims and coordinating benefits.

David Kendall, Jeff Lemieux and Robert Levine proposed a "performance-based" approach to achieving near-universal coverage. They advocate refundable, advanceable tax credits to individuals and families for low and middle-income people. States would receive performance-based grants to improve coverage rates, access, quality and outcomes. Public programs would remain intact, and states could set up pools and widely disseminate information on quality. After five years, a Commission would decide whether to deny individuals who remain uninsured the personal exemption on their taxes.

Michael Calabrese offered a plan moving the U.S. to universal coverage through tax credits and required participation in the health care system for both individuals and employers. Tax credits would limit households' contributions to health coverage to no more than 10 percent of income, with low-income people exempt from premium sharing. States would set up "Community Insurance Pools" to offer everyone a choice of plans. Employers would be required to offer coverage or pay a payroll tax, and all individuals would be required to obtain insurance. The current tax exclusion would be capped to help provide financing for this plan.

Paul Seltman proposed sliding-scale government subsidies for lower-income people, a requirement on employers to pay at least 50 percent of the premiums, and community-rated purchasing pools for firms with fewer than 25 employees. Employers can postpone the deadline to fund coverage by purchasing government-issued "allowances" not to cover workers, similar to the "cap and trade" approaches used in some environmental policies.

Blending an Enlarged Role for Government with New Market Incentives Proposals At A Glance (PDF)To help direct people to reform plans that may be most useful to their current work, these charts categorize and compare the blended approach plans developed under the Covering America Project. Users can easily access author's full proposals by clicking on their names located at the top of the charts.

Market-Based Reform Plans

Another group of reform plans relied mainly on market-based incentives and tax reforms to cover the uninsured. Generally speaking, these plans did not envision a substantially enlarged role for government beyond increased financing, but aimed instead to redesign and better align government subsidies and policies to promote more affordable health coverage. Mandates on individuals and firms are not featured.

Mark Pauly proposed to use refundable income tax credits or vouchers to make some level of health coverage affordable to lower- and middle-income people who are currently uninsured. Very low-income households would initially be eligible for publicly financed zero premium comprehensive insurance. Pauly relied on a phased-in cap on the tax exclusion, general revenues and savings from competition, improved information on cost and quality, and cost-conscious choices to provide financing for the subsidies.

Stuart Butler offered a refundable tax credit for working households to replace the current tax exclusion. Credits could be used to buy coverage through the workplace but also a range of other choices including association plans. Employers would not have to fund coverage but would have to provide a "clearinghouse" function including adjusting withholding for the credits and automatic enrollment. Federal grants to states would help low-income people buy health coverage.

Eugene Steuerle suggested redirecting tax subsidies from the current open-ended exclusion (via a cap) to gradually and steadily increasing refundable tax credits. Individuals failing to obtain insurance would lose income tax benefits. Employers would be required to offer at least one state-approved plan but would not have to fund it. Auto-enrollment at the work place would make employer coverage the "default option."

Tom Miller focused on re-designing incentives to assign more responsibility for health spending decisions to individual consumers and less to third-party payers. Miller favored using tax credits to everyone to purchase high-deductible insurance coverage, coupled with greater emphasis on expanding the safety net system as an alternative to covering all of the uninsured. Additional funding for high-risk pools along with more regulatory flexibility is also featured.

Enacting Market Reforms Proposals At A Glance (PDF)To help direct people to reform plans that may be most useful to their current work, these charts categorize and compare the market reform plans developed under the Covering America Project. Users can easily access author's full proposals by clicking on their names located at the top of the charts.

Other Important Contributions

To complement these proposals, we commissioned several papers that provided a framework for thinking about and evaluating the advantages and disadvantages of various plans to cover the uninsured. Some of these papers focused on a particular set of reform ideas, such as those featuring insurance exchanges and mostly voluntary participation in the health care system, or the value of Medicaid to our overall health system, while others focused on more cross-cutting issues that all reform plans must address.

Michael Chernew assessed important tradeoffs facing three reform plans offered by Singer et al., Gruber and Holahan et al. These plans feature insurance exchanges and voluntary participation (with defaults or delayed mandates in some cases). He noted that these plans provide incentives for efficient purchase of coverage and a reduction in search and transaction costs associated with plan switching. A single payer system, Chernew noted, has more buying power and lower administrative costs than these "hybrid" plans, but the latter foster more heterogeneity and flexibility in health plans choices.

Katie Merrell developed criteria for assessing various reform plans keyed to the "after-tax price per value" and argued that we should examine how people in different income groups fare against this measure. She stressed the importance of recognizing that the regressive tax treatment of employer-based insurance, combined with its enhanced value, make private insurance most expensive for the lowest-income purchasers.

Christine Ferguson, Patricia Riley and Sara Rosenbaum alerted readers to the dangers embedded in proposals that would eliminate Medicaid and replace it with some type of "voucher." They explained how Medicaid helps many people with very special needs ranging from children with disabilities to the frail elderly and people with developmental disabilities. These special needs are frequently not met in commercial coverage.Edward Lawlor and Ann Dude explained how the missing ingredient in health reform has been not a shortage of carefully designed proposals, but rather how the agenda can be reformulated to overcome political opposition and build public support. They presented case studies of successful campaigns in education reform, laws against drunk driving and international trade legislation to provide guidance for framing the case for health reform.

Bruce Vladeck offered a critique of many of the proposals included in our mix of policies, and other similar exercises, based on their heavy emphasis on health insurance, which he claimed authors frequently assumed, without supporting evidence, will translate rather easily into ensuring adequate access to a full range of important health services. Noting the drawbacks of incremental reform plans, Vladeck outlined a reform approach based on the principle that no one, once covered, should lose health insurance.

Particular Relevance to Current Reform Proposals

Several key features and program design elements are now getting considerable attention in health reform. We list some of these issues below, and note some of the Covering America proposals—identified by authors' last names—that are particularly relevant to those issues. Of course, others might identify a different set of reform components, and our matching of reform elements and authors may not identify every single proposal that addresses aspects of the issue. This grouping is meant to illustrate how many of the Covering America proposals are relevant to the current debate.

Issues in Coverage Expansion Design and Occasional Papers

The Covering America Project also produced several papers that explored specific issues that policy-makers need to consider in designing a coverage expansion policy. These are listed below:

Decision Points and Trade-Offs in Developing Comprehensive Health Coverage Reforms: This paper by Elliot K. Wicks presents an overview of the range of decisions that policy makers must make as they develop new programs to cover the uninsured.

Coping with Risk Segmentation: Challenges and Policy Options: This paper by Elliot K. Wicks discusses in detail the problem that confronts anyone proposing to extend health insurance to various populations—how to ensure that premium costs are fairly shared among people of high and low risk and how to make certain that sicker people are not priced out of the insurance market. The paper presents the range of possible solutions to the issues raised.

Options for Financing Health Coverage Expansion: This paper by Jack A. Meyer and Elliot K. Wicks discusses issues to be considered when policy-makers decide how to finance new coverage programs, including the differences between budgetary and social costs, criteria for choosing a financing source and various sources for funding.

Building Quality Improvement into Health Coverage Expansion Proposals: This paper by Jack A. Meyer and Sharon Silow-Carroll presents a number of quality improvement tools and strategies that could be built into the full range of proposals to expand health coverage. The paper shows how health care purchasers—public and private—could use better information systems, financial incentives, and quality measurement against standards to improve health outcomes as we expand health care coverage.

History and Primer on Cost Containment Efforts and Implications for Future Prospects: This paper by Elliot K. Wicks examines the cost containment strategies that have been used in the last 25 years and assesses their success.

Tax Credits for Individual Health Insurance-Effects on Employer Coverage and Refinements to Improve Overall Coverage Rates by Rick Curtis and Ed Neuschler, Institute for Health Policy Solutions.

Prospects for a Reduction in the Number of Uninsured Americans by Elliot K. Wicks and Jack A. Meyer.