There are two legitimate paths to passing health care reform that use reconciliation. One is a reconciliation sidecar, and the other is a brand new bill using only reconciliation. This reconciliation-only option appears to have the support of DCCC chairman Chris Van Hollen, who thinks the Senate bill is politically toxic. If Democrats go this reconciliation-only route, a politically smart move would be to go big, but go very focused. Make sure the bill at least addresses the single biggest problem with our health care system: medical bankruptcy. It would be very possible to use reconciliation to pass simple measures that could prevent all medical bankruptcy in this country.
The fact that if people get really sick they can go bankrupt or can’t afford needed medical care is the worst moral problem with our health care system. Things like rescission or refusal to cover based on pre-existing conditions are disgusting practices by private insurance, but the main reason they are so terrible is because they can cause medical bankruptcy or create unmanageably tough financial choices because of medical cost.
Reconciliation could be used to create a new program, or use the existing Medicaid and Medicare programs, as a form of universal catastrophic insurance. Simply write the bill so that if any American without insurance gets seriously ill and is forced to spend a large percentage of their income (say over 12%) on health care in a year, they will (after spending that amount) automatically be covered by Medicaid or Medicare. This idea is modeled after a similar, near-universal catastrophic insurance program in Singapore called Medishield. For example, if a family without insurance makes $45,000 a year and has a child who needs chemotherapy that costs $50,000, after the family spends $5,400 (12% of their income) on medical costs, the family is automatically covered by Medicaid or the new program.
The threshold could be a percent of income like the example above, some level of medically induced poverty, or a mixture of the two. One’s level of medically induced poverty would be your total income minus the cost of an extreme medical emergency. If medical costs cause your effective income to go below a certain threshold (say 185% of federal poverty level), you are automatically enrolled on Medicaid. So, for a family of four making $50,000 a year spending $9,200 on medical costs, sending their effective income below $40,792 (185% of FPL), they are automatically enrolled in Medicaid. But if that family of four was making $70,000, they would need to spend $29,200 before automatically being enrolled in Medicaid.
To prevent insurance companies from gaming the system, there would need to be some form of a ban on rescission or annual and lifetime limits. Even if, due to the Byrd rule, an outright ban would be impossible through reconciliation, it should still be possible to use a special free-rider tax on insurance companies that sell policies with annual or lifetime limits to effectively end the practice. The plus side to this is it would give the government a financial incentive to make sure insurance companies are not ripping off their customers.
If it were up to me, I would use reconciliation to create Medicare for all. Given that Medicare for all is unlikely, I would strongly back using reconciliation for a large expansion of Medicaid, SCHIP, and Medicare that deals with the bulk of the uninsured. But if Democrats are afraid of the complexity of even that solution, they still need to achieve something big with health care. I think just ending medical bankruptcy by creating, through reconciliation, a universal catastrophic insurance program would be a politically smart solution, and the most “scaled down” reform we could get without it looking like a full retreat and an epic failure.
Ending medical bankruptcy polls very well. The program would extremely easy to explain, and would be focused enough to address a major fear. “If an American gets very sick in this country, we will make sure they will not go bankrupt and lose their home as a result.” If Democrats had spent the past year focused on simple and direct ways to solve our health care problems, instead of a corrupt Rube Goldberg plan to enrich the insurance and drug companies, maybe they would not be in such terrible political shape right now.