by Lonnie Palmer
Now that the Affordable Care Act’s mandate requiring Americans to buy health insurance has been eliminated, other red states like Maine — and now Virginia — will begin pressing harder for Medicaid expansion.
And what would be the harm in that. At $5,736 per enrollee per year Medicaid is the lowest cost and most effective public health insurance program in the U.S.
The question is: how do we pay for Medicaid for all?
Medicaid for all? Are you crazy?
Not at all. With expanded Medicaid, the government would control a larger share of the health care market. With that control the government could set reasonable prices for services and drugs, encourage the growth of cost saving cooperation among providers already started with Obamacare and take more of the middleman (health insurance companies) and their useless charges, paperwork and distortions out of the health care cost equation.
Exorbitant drug prices and excessive salaries for medical specialists, hospital administrators and insurance company executives would retreat closer to where they belong. Unnecessary medical procedures and bills would be curtailed. (Employer sponsored health insurance policies currently drive medical costs higher because they pay much higher rates for drugs and medical services than Medicaid.)
The Medicaid Public Option I’m proposing would require all Medicaid recipients (except the severely disabled and elderly in nursing homes) to contribute 10 percent of their household income (or the actual cost of Medicaid for their family, whichever is lower) through a payroll deduction.
(I chose 10 percent because it seemed like a reasonable place to start. As I calculated the cost and savings, I discovered that 10 percent would generate $242 billion a year in income for the federal government and actually lower the federal deficit.)
The following factors — how many households need Medicaid, how many adults vs. children are in each household, what is the average income of American households — have to be considered to determine cost and savings through my Medicaid Public Option.
Let’s start by determining the number of households that need the Medicaid Public Option.
- There are there are 117 million households in the U.S., according to the 2010 U.S. Census. click here
- 64 percent of U.S. citizens have employer sponsored health insurance, Medicare or VA insurance. click here
- That leaves 36 percent of citizens or 42 million households (36 percent X 117 million households = 42 million households) that right now either have Medicaid, private health insurance purchased on the Affordable Care Act exchanges or elsewhere or no insurance.
- Instead of traditional Medicaid or the Affordable Care Act or nothing at all, these 42 million households or 108 million Americans — which actually adds up to 34 million more people than the 74 million who are currently covered by traditional Medicaid — would pay 10 percent of their incomes for the Medicaid Public Option plan.
In order to come up with the per household cost for the Medicaid Public Option, you have to know how many adults vs. children there are in each household.
- The average household in America includes 2.58 people, according to the 2010 U.S. Census. click here
- 25 percent of the 2.58 people in each household are children and 75 percent are adults. click here
- 25 percent of 2.58 is .65 (0.25 X 2.58 = 0.65 children) and 2.58 – .65 = 1.93 adults.
So how much would Medicaid cost for the average household?
Since there are .65 children per household and 1.93 adults per household and Medicaid on average costs $2,492 per child and $4,141 per adult click here, the Medicaid Public Option plan would cost $9,612 for the average household. ($2,492 X .65 = $1,612 per household plus $4,141 X 1.93 = $8,000 equals $9.612 per household.)
How much is 10 percent of the average household and how much of that $9,612 would be covered by the 10 percent payroll deduction?
- The median US household income is $53,719
- 10 percent is $5,372.
- 10 percent would cover slightly more than half of Medicaid costs for each household ($9,612 – $5,372 = $4,340), leaving $4,340 for government Medicaid spending to cover.
- Note: These calculations assume state contributions to Medicaid remain at present levels, State Medicaid budgets would not increase with this Medicaid Public Option.
Right now, the federal government pays $574 billion for Medicaid, $300 billion of which goes to cover Medicaid for the 10 million severely disabled and elderly in nursing homes. The remaining $274 billion ($500 billion – $300 billion = $274 billion) presently provides Medicaid for the 64 million children and adults who are not disabled or in nursing homes.
The $300 billion would be the same under my Medicaid Public Option, but the federal government would only be responsible for $182 billion (the remaining $4,340 X 42 million households = $182 billion) rather than $274 billion because of the 10 percent payroll contribution by Medicaid recipients.
Since the federal government now spends $274 billion under traditional Medicaid services beyond the $300 billion for the severely disabled and those in nursing homes, my Medicaid Public Option will produce $92 billion in deficit reduction savings each year for the federal government. ($274 billion – $182 billion = $92 billion)
This 10 percent payroll deduction would apply to poorer citizens with minimal incomes who now get Medicaid free as well as their lower wage neighbors the same way Social Security and Medicare payroll deductions are made.
Same payroll deduction rates, same benefits.
This change addresses red state concerns that Medicaid for poor people who don’t work (with $0 deductibles and $0 co-pays at the doctor’s office) is unfair to low wage workers who are forced to pay high Obamacare premiums (over $12,000 average per family per year in 2017) with thousands of dollars in deductibles (average over $8,000 per family per year) click here and $20 plus co-pays at the doctor’s office. And the traditional premiums support (averaging $3,500) is small compared to the premiums, deductibles and co-pays. click here
Under Obamacare they lay out an average of $15,000 to $20,000 (that’s even after government’s premiums support) a year and under the Medicaid Public Option they would lay out an average of $5,362. Rather than spending 20 percent of our gross domestic product on health care, we would be spending closer to 10 percent and be more in line with other developed countries. click here
Americans with employer supported health insurance can keep their employer insurance or take the cash the employer was paying for their health insurance (beyond the cost of Medicaid for them and their families which would be paid to the government as a payroll deduction by the employer) and buy into my Medicaid Public Option.
If the employer’s contribution didn’t pay for the full cost of Medicaid, the employee would make up the difference with payroll deductions not to exceed 10 percent of their salary.
Private health insurers would be forced to compete and beat Medicaid prices and benefits to stay in business.
These budget figures include Medicaid for all the poor children not covered by a family health insurance plan.
Are you listening Democrats?
For more information call Sheila Carmody (518) 366-6148.