Americans say health care affordability is their number one pocketbook concern. In response, progressive politicians, health care economists, and many think tanks are offering a panoply of non-solutions. The left backs Medicare for All, which has proven politically non-viable over the eight decades since President Harry Truman first proposed it.

Over the past several months, I’ve offered a comprehensive plan (see this, this, and this) that can be adopted nationally, by individual states, or even at the county or regional level. Today, I want to take a different tact for drawing attention to these ideas by trying my hand at speechwriting. I offer this 15-minute speech free of charge to any candidate who wants to run on it:

TO THE VOTERS:

If you elect me for (fill in the position here) in November, I promise to introduce and fight for legislation in the next session of (fill in legislative body here) that will end forever your health care affordability problem.

My bill will:

Place a strict limit on the share of your household income that can be spent on health care each year;
End forever the scourge of new medical debt;
Take prior authorization out of the hands of insurance companies;
Preserve the employer-based insurance system by making it fairer and by immediately lowering premiums for you and your employer; and, most important of all,
Not raise your taxes.

Sound too good to be true? We can make it happen if we just apply a simple rule to every form of health insurance, whether you’re a working-age family or individual in an employer-based or exchange-based plan; a senior on Medicare; or you are poor or disabled on Medicaid.

What are these new rules that we must apply to every insurance plan, whether public or private?

First, we must place a firm cap of 8 percent on the share of income that any household—old or young, rich or poor—pays for health care each year. What falls under the cap? All insurance premiums and co-premiums, including those in traditional Medicare, Medicare Advantage, Medicare supplementals, and Medicaid; all deductibles and co-pays, no matter the plan, public or private; and the 1.45 percent Medicare payroll tax on wages.

Who benefits? First and foremost, any family with someone who is sick and has very high and unexpected out-of-pocket bills. It will be especially helpful to the more than half of all workers who now choose high-deductible plans offered by employers or on the exchanges in order to save money on their upfront co-premiums.

Here’s the math. The median household income last year was around $88,000. That family’s co-premium for a high-deductible plan was about $6,345 (25 percent of the average $25,379 total cost with employers paying the rest, according to the annual KFF survey; it’s higher if they choose a more comprehensive plan). The average deductible before insurance kicks in was about $3,300. That household’s workers also paid $1,276 in Medicare payroll taxes. Even before adding in co-pays for drugs, doctor visits, and hospitals, the median income family with a serious illness in a high-deductible plan will pay 12.4 percent of their adjusted gross income for health care.

That’s not affordable. Capping outlays at 8 percent of income will immediately save that median-income family with a serious illness $3,881. It will save those below the median even more. And it will provide a safety net for every family struck by expensive illnesses in the future.

Adjustments needed

Private plans will need to adjust their plans to conform to this new regulation. Today, virtually all employers in the U.S. offer the same choice of plans to all their workers, with each plan choice (Preferred Provider Organization, Health Maintenance Organization, or High-Deductible Health Plan) having the same co-premium, deductible, and co-pays no matter what their income. Workers earning $80,000 a year pay the same co-premium as workers earning two or three times that amount. They also face the same out-of-pocket costs when a family member gets sick. That means lower-wage workers pay a much higher share of their total income for health care than higher wage workers.

That’s not fair. It also harms their health, since they are more prone to postponing or entirely avoiding needed care. For a healthier America, access to health care must be equally available to all. Capping everyone’s household expenditures at 8 percent of income accomplishes that goal.

Medicare is similarly flawed. The Medicare Part B premium, which is deducted from Social Security checks, costs a minimum of $203 a month in 2026 or $2,436 a year. That alone is nearly 10 percent of the average Social Security benefit, which is the only source of income for 28 percent of seniors, according to the most recent Census Bureau survey. Add to that the cost of supplemental plans, the Part D drug benefit, and uncovered co-pays, and it is likely that well over half of seniors are paying more than 8 percent of their total retirement income (including pensions, 401(k)s, IRAs, and Social Security) for health care. An 8 percent cap will be a huge benefit for the nation’s seniors.

A handful of employers and union-run health plans across the country have experimented with policies that adjust co-premiums, deductibles, and other out-of-pocket expenses based on income. Lower-wage workers in these so-called tiered co-pay plans pay smaller amounts than better-off workers for the same coverage. This new rule will force all plans to adopt tiered co-payments that are set at levels where no one pays more than 8 percent of income for their health care each year.

There’s precedent for this approach in the public sector. Congress created tiered payments for Medicare Part B’s physician care premiums in the 2003 Medicare Modernization Act. But they fell far short of adopting a reasonable fairness standard. This year’s $690 monthly Part B premium for someone earning $500,000 a year represents 1.7 percent of their total income. Compare that to a senior household with $50,000 in total retirement income that pays $203 a month. They wind up paying nearly 5 percent of income for the same benefit.

Flagrant inequality in out-of-pocket expenses within nearly every health insurance plan (Medicaid, which has very limited co-premiums and co-pays, being the exception) presents a major roadblock to accessing care for tens of millions of Americans. Instead of incurring unmanageable costs, they postpone physician visits when sick, cut pills in half, and ignore bill payments to make ends meet.

The only appropriate name for this sad situation is “rationing by price,” which is the most unfair and pernicious form of rationing. It leads to worse health outcomes for those with the least resources, who tend to be sicker than the general population. It allows most upper-income Americans to obtain the best care at a much smaller fraction of their overall income, although the IRS reports that one in four tax filers who itemized deductions in 2022 (10 percent of all filers) exceeded 7.5 percent of income in health care expenses with an average deduction of $17,000. The 8 percent cap may well benefit some of them, too.

Who will pay?

The U.S. is 80 years behind the rest of the industrialized world in making access to health care the right of every citizen. The key to universal access is affordability. Placing a fixed cap on the share of income that any household pays for health care in any given year will protect everyone, thus making it politically unassailable once enacted. It guarantees individual finances will never stand in the way of anyone gaining access to health care when they need it most.

You’re probably thinking: Won’t this cost employers and taxpayers more? Won’t this jeopardize what I already have?

To avoid those problems, we need to simultaneously reform the payment system. Here’s the second part of my plan: We will create a single-pricing system for all hospitals, physicians, and other providers, or one that sets a firm cap on the ratio of private sector prices to public sector prices (down from the current 2.5:1 to, say, somewhere between 1.5:1 and 1.75:1). We’ll also put providers on a budget.

Together, these two reforms will create a fairer way for businesses to pay their share of health care benefits while providing a politically palatable way of lowering society’s total cost of health care over time.

This fairer system will not end any employer-based insurance plan. It will not take an immediate whack out of provider revenue. It will immediately lower business and worker premiums and co-premiums for their plans. It will generate significant savings by lowering both insurers’ and providers’ exorbitant administrative costs.

And, it can be fully paid for by aligning a significant share of a business’s health insurance costs with their total wage bill, not the age or illness profile of their workforce.

Few people recognize the lack of fairness in the current employment-based health insurance system. It doesn’t take into account anyone’s ability to pay. As I’ve already noted, lower-paid workers pay a much higher percentage of household income for health care than higher-paid workers because their co-premiums, deductibles, and co-pays are the same as everyone else in the same plan. The equal distribution of out-of-pocket expenses is not based on ability to pay.

The same is true for private businesses, who on average pick up between 75 percent and 80 percent of the total cost of plans and pay on average 2 ½ times what Medicare pays for hospitalizations, physicians, and other health care services. These higher payments are not evenly distributed among employers because disease incidence—and thus total cost of any individual company’s plan—depends entirely on their industry and their employees’ demographics.

Companies with better-educated and higher-paid workers—in Silicon Valley, for instance, or at software or business service firms—pay the least for each employee’s health insurance coverage because their employees and their families tend to be younger and healthier. They also have high payrolls.

Manufacturing firms, unionized trades, and other slow-growth fields pay the most for each employee because their workers tend to be older and sicker, with many more chronic conditions. Those firms also tend to be the least profitable, and pay more modest wages.

Moving to a single-pricing system, or a system with more closely aligned private and public payer prices, begins to address those inequities. Requiring every insurer pay the same or nearly the same price for the same service at any given provider will lower prices for employer- and exchange-based plans while raising prices for Medicare and Medicaid.

Individual tax increases not required

Through use of global budgets, total outlays at the outset of the program can remain the same (thus short-circuiting provider objections) with a pre-determined annual growth factor, which will be set below the rate of economic growth. That will keep health care prices in check in succeeding years while slowly ratcheting down the share of the economy devoted to health care.

You may be thinking: Whoa, won’t lower prices and a big break in premiums be just another giveaway to big corporations and the wealthy? Won’t it raise taxes to pay for the higher prices for Medicare and Medicaid?

It doesn’t have to, not if we simultaneously recapture the revenue from employers by raising only their taxes. How can we do that in a way that is fair? We could end some of the massive tax breaks Trump gave out in the One Big Ugly Bill. We could raise taxes on industries firms that encourage unhealthy behaviors (cigarette, soda, alcohol, and junk food firms, for instance).

Or, we could combine some of that with raising the employer share—and only the employer share—of the Medicare payroll tax. We’re not going to raise the amount of money employers pay for health insurance. We’re going to reduce it while changing the way they pay for it.

As I mentioned earlier, employees currently pay a 1.45 percent payroll tax for Medicare. Employers match that with an equal 1.45 percent. But if we look at insurance premiums, employers and employees don’t pay an equal share of the total cost of a health insurance plan. Employers pay about 75 percent on average for a family plan and 80 percent for an individual plan. Employees pay 25 percent and 20 percent, respectively. That’s 3:1 and 4:1 ratios, respectively.

If we raised the employer Medicare payroll tax to 4.5 percent (thus maintaining the 3:1 ratio), it would raise more than enough money to pay for the program. If we combine it with loophole closing and pro-health taxes on certain industries, it could be even less.

Think of the benefits:

It would immediately lower employer prices and premiums with the greatest reductions flowing to employers currently paying the most for coverage. This reform amounts to a pro-manufacturing, industrial policy for America;
It would lower employee co-premiums as long as the new law and accompanying regulations required employers to maintain the current ratios of what they expect employees to pay out of their paychecks for their health insurance. Again, the greatest benefits would go to employees in plans with the highest costs because they are older and sicker;
It would move U.S. businesses toward basing employee health care coverage on a firm’s total wage bill, not total health care costs, which is a much fairer method of distributing the cost burden;
To the extent the chosen price levels raised Medicare and Medicaid rates, this would be a boon to safety net providers whose revenue depends overwhelmingly on those two programs; and
Equalizing Medicaid rates to Medicare rates would end the second class status of that program, and provide its beneficiaries with equal access to all physicians and hospitals participating in the Medicare program.

Prior Authorization—down, but not out

Finally, one more regulation will be included in my legislation, one that removes the second biggest thorn in the sides of providers and their patients: Prior authorization. Unquestionably, many providers pad their paychecks by prescribing unnecessary tests and procedures, or ordering brand name drugs instead of generics and biosimilars.

The two methods insurance companies use to curb these unnecessary prescriptions are variable co-pays (low for the generic; high for the brand) and prior authorization. An 8 percent cap on total out of pocket expenses still allows insurers to adopt co-pays that send a signal to plan beneficiaries and their providers that they are choosing the more expensive option that provides no real or additional benefit. They will just have to reduce those variable co-pays for lower-wage workers and their families to accommodate the cap.

But prior authorization needs to be taken out of the hands of insurers entirely. They have a conflict of interest. Any decision to withhold care benefits their bottom line (less the administrative cost of erecting roadblocks to care).

Some states have succeeded in setting up an independent board staffed by full-time physicians and other medical professionals to make those determinations within 24 or 48 hours of a request. They also set limits on the number of services subject to prior authorization, focusing on those most prone to abuse. Such an agency can be financed entirely by a small per-capita user fee on any insurance plan, private or public, that wants providers in its networks to make use of this new, independent board when requiring prior authorization.

I recognize that a cap on householders’ out-of-pocket expenses, payment reform, and an independent board overseeing prior authorization won’t solve all of our health care affordability woes. This nation will still face huge problems in how to finance the needs of an aging population; raise salaries for an underpaid health care support workforce; and pay for rapidly advancing and frequently overpriced new technologies.

But adopting the reforms I’ve laid out will set the stage for our having confidence that we’ll be able to deal with these issues humanely, and in ways that all of us—families, workers, employers, and taxpayers—can afford.

Thank you.