A Public Option that Doesn't Directly Compete with Private Insurance

Discussion in 'Healthcare/Insurance/Govt Healthcare' started by dseger, Oct 13, 2009.

  1. dseger

    dseger Rookie

    Aug 21, 2009
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    A Public Option that Doesn’t Directly Compete with Private Insurance

    The cost of a government health insurance plan could be based on the average health care cost for people in each age group plus a certain percentage. For example the government insurance for a person born in 1950 could be the average health care cost of everyone born in 1950 plus a percentage, maybe somewhere between 5 to 15 percent, minus likely deductibles and co-pays.

    Private insurance companies could pick their customers, but they could not cancel their customers, their rates would have to be the same for all people in each age group, and they would have to cover preexisting conditions.

    People without private insurance would be required to take the government insurance. People would pay the government insurance though employer withholding and though sending the money to the government. The cost of the government insurance would be limited to a certain percentage of a person’s total income. The percentage of income that is limited could be higher for older people.

    For example a 25 year old person’s government insurance cost could be limited to 3 percent of that person’s income, while a 60 year old person’s cost could be limited to 12 percent. A person’s total income could include income from work, capital gains, dividends, interest, gifts, and inheritances.

    This type of government health insurance plan would increase payroll payments on some people, however they would be covered and they would have incentives to be healthy to find cheaper rates. The standard deduction amount, the personal exemption amount, and the earned income credit amounts could somewhat take in account the government insurance cost.

    By having everyone insured, prices may be driven lower since all medical bills could be paid. This type of plan would not directly compete with private insurance, but still it would keep private insurance companies from charging extreme amounts.

    The government plan may need extra funds since the plan would be covering the less healthy people and people not paying the full amount. A possible way of getting extra funds would be to tax capital gains and dividends at the same rate as regular income for people with incomes over $250,000.

    To get health care reform passed, different states could try different types of reforms as long as everyone is covered. One state could have a Republican plan, another state may want a single payer plan, and hopefully a plan as mentioned here could be tried. Then the best plans would become apparent in time.

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