December 7, 1996
Author’s Note: This originally was written for the U.S. Federal Government, then I decided to re-write it for the Commonwealth of Massachusetts. – Diane Stoler
We are all aware of the downfall of managed healthcare. It does not allow us the freedom to choose the health professional or services of our choice. As adults we have the ability to choose our car, lawyer, where we want to eat, but the present healthcare system does not believe we can freely choose our own health care services.
For the past four years I’ve worked on this proposal. I’ve presented it to state and federal legislators. Some have written back that they really liked this proposal. I wanted to share this proposal with you. If you like it, feel free to copy it or change it. All I want is that our present healthcare system to be changed so that we have the freedom of choice and that all uninsured Americans are covered with health insurance.
In addressing rising health care costs, we have neglected to address sufficiently the related problems of a vast uninsured population and the diminishing personal autonomy of patients under the managed care system. The cost of providing care to residents of the Commonwealth accrues to all of us. Every uninsured resident adds to the potential burden on the Commonwealth as a whole. Too often we wrongly focus attention on business as the source of a solution to our “health care crisis,” and fail to look to the individual to act as a responsible consumer of health care.
The consumer of health care is not the corporation that purchases insurance plans for its employees. The true consumer is the individual patient who relies upon the insurer to cover his or her medical expenses. The Stoler Proposal recognizes this reality and focuses on the way real people interact with the health care industry. The Proposal is underpinned by three concepts. First, every resident of the Commonwealth must take responsibility for his or her own health care. This means that individuals will be required to obtain health insurance, and will also be required to make some contribution to the costs of their care.
Secondly, every resident of the Commonwealth must be given greater autonomy in choosing his or her physician or other provider, as well as in choosing what procedures and treatments he or she will undergo.
Lastly, the burden of purchasing and maintaining health insurance for individuals should not fall upon businesses, but instead must be borne by the individuals who demand the services. Nevertheless, businesses, because of their relative purchasing strength, should be encouraged to provide health care options for their employees. Should they choose not to, they should be required to shoulder only a portion of the burden of providing for the health care needs of the Commonwealth.
The overriding goal of the Stoler Proposal is to provide individuals with the maximum choice of health care plans and providers. Currently, many insured individuals are restricted in their choice of health care plans and providers to the choices made for them by their employers. Under this plan, individuals would be free to choose the plan they preferred, and moreover, regardless of what plan they chose, would be free to choose the provider they prefer up to a minimum level of spending. The Stoler Proposal removes a minimum amount of basic health care benefits from the constraints of the managed care system and its gatekeepers.
The Proposal places personal responsibility and choice at the forefront of the health care regime. Only those individuals covered by Medicare or Medicaid will be excepted from the requirements of the Proposal. Under this plan, every citizen of Massachusetts will be required to obtain a minimal level of health insurance, known as the Basic Minimum Benefit. Furthermore, every individual would be required to make at least a minimal contribution toward the cost of their health care based upon their ability to pay. This will impart a sense of responsibility and cause individuals to act as genuine consumers of health care, while providing access to those currently without access. The current system encourages a sense of entitlement in those lucky enough to be covered by an employer’s plan, and a sense of helplessness in those who are not. Under the Stoler Proposal, employers will not be required to provide health plans to their employees, though they will remain free to do so if they wish. Those employers who chose to continue to offer health plans will receive a tax credit. Those who choose not to offer such a benefit will be subject to a modest increase in their tax burden, depending on the size of the business. Small businesses will be exempted from this additional burden.
In requiring each individual to obtain health insurance, the Commonwealth will also mandate a premium scale linked to income, under which those in the highest income brackets will pay the most for the required coverage, and those in the lower brackets would pay less. Except for those qualifying for Medicare and Medicaid, however, every individual will qualify to pay some level of premium. The mandated premium scale would apply only to the Basic Minimum Benefit.
The Basic Minimum Benefit which every citizen must obtain will be an annual health care dollar limit. An insured person may obtain health care services of his or her choosing up to that limit. Insurers may not limit or control the way in which an insured uses his or her minimum benefit, nor may an insurer limit or otherwise restrict the speed at which a provider is reimbursed for services. This ensures that, up to a minimum level, every individual shall have full control of what provider he or she sees and what treatment he or she undergoes. Costs of treatment for catastrophic illnesses and injuries shall not be applied to the Basic Minimum Benefit.
Health care expenditures above the Basic Minimum Benefit shall be subject to approval and restriction by the insurer as is the present practice. Providers shall be free to tailor their plans as they wish beyond the Basic Minimum Benefit, and may charge what premium the market will bear for coverage above the minimum.
All citizens of the Commonwealth will be required to carry a minimum level of health insurance, to be known as the “Basic Minimum Benefit.” If an individual has a Social Security number, he or she must carry an insurance package offering at least this minimum amount of coverage. Compliance with this requirement will be tracked by the Department of Revenue, which will assess a penalty if a taxpayer or dependent is not insured. Furthermore, the receipt of all state benefits and services will be contingent upon an applicant’s health insurance status. Just as every automobile owner must carry car insurance, every owner of a Social Security number must carry health insurance.
The Basic Minimum Benefit shall constitute a dollar amount of services available annually to the insured without encumbrances. A health care “credit card” or “debit card” shall be issued to each insured. The card shall be presented to a provider and shall be accepted for payment for services up to an aggregate annual amount equal to the Basic Minimum Benefit level.
The Basic Minimum Benefit required of every insurance plan and insurer will be evidenced by a “Health Care Credit Card” or “Debit Card” which a patient may present to a provider for the payment of the provider’s bill. The Card will represent an annual credit or debit line equal to the Basic Minimum Benefit. Funds expended up to the limit and the treatments they pay for shall not be subject to restriction or “gatekeeping” by the insurer. Thus the insured may obtain at least a fixed dollar amount of medical services annually from the provider(s) of his choice.
All providers qualified by the Commonwealth may accept the insured’s “credit” card as payment for services provided. If the insured has not exceeded the annual minimum benefit level, the insurer must reimburse the provider for services rendered. This provides the insured with wide discretion in “spending” his or her health care dollars, up to an annual level. Beyond the annual minimum level of benefits, the insurer may impose restrictions on whom it will reimburse and for what procedures it will provide coverage. Up to the Basic Minimum Benefit level, however, the individual insured shall have autonomy in choosing his or her physicians and other providers, as well as the nature of the care he or she seeks.
Under this universal health insurance model, health insurance would be obtained by individuals and families directly. No employer shall be required to provide health insurance for its employees. Insurance providers would be encouraged to market their products more directly as individuals would be required to be covered to a minimum level. Perhaps more importantly, individuals will not be limited to plans offered and chosen by their employer. While employers would still be able to offer insurance packages to their employees, employees of businesses that do not offer health insurance would be required to obtain private insurance. Businesses greater than a predetermined size who do not provide health insurance to employees shall be subject to an additional tax.
An employer who pays all or part of the premium for its employees’ health insurance shall be granted a tax credit commensurate with the proportionate amount of the premium subsidized. Thus, employers will have an incentive to provide health insurance for their employees, but small businesses shall not be penalized if they do not.
Every insurer who provides health insurance in the Commonwealth will be required to provide a Basic Minimum Benefit, operating as described above, allowing each insured to obtain a minimum amount of health care services as measured by an annual “credit” or “debit” limit. Insureds will present their health insurance card at the provider of their choice, and if the insured has not exceeded his or her annual basic minimum level of benefits, the insurer must reimburse the provider for services provided until the basic minimum level of benefits are reached.
An insurer may allow an insured to increase his or her level of basic benefits obtainable with the card by contributing funds to the insurer’s pool, thus increasing his or her “credit,” or by whatever other means the insurer may offer.
Every insured shall pay an annual premium for his or her health insurance Basic Minimum Benefit. This premium shall be graduated according to the insured’s income. Those qualifying for Medicare and Medicaid shall be covered under those programs, and will be exempt from the requirements of this proposal. Those not qualifying for those programs shall pay premiums. Providers shall be allowed to charge higher premiums to those in higher income brackets, and will be restricted in the premiums they may charge to those in lower income brackets. In this manner, every resident of the Commonwealth will help to finance the health care costs of the Commonwealth as a whole, commensurate with his or her ability to do so.
By requiring every resident to obtain insurance, the market for such coverage will be opened to individuals, whereas currently it is largely restricted to institutional purchasers. Residents of the Commonwealth should be allowed the greatest freedom of choice in insurers and benefits, and not restricted to a greatly limited selection as provided and determined by their employer.
Residents of the Commonwealth are being increasingly limited and restricted in their choice of doctors and other providers from whom they may obtain health care. Under the Stoler Proposal, individual policy holders will be free to choose any provider when they spend their basic minimum health care benefit. When an individual’s annual health care expenditure rises above the Basic Minimum Benefit, then and only then may the insurer determine when and from whom an insured may receive health care services.
By providing the insured with the autonomy to seek initial treatment when he or she chooses and from whom he or she wishes, individuals will be encouraged to seek treatment and preventive care before their health care problems become acute and require more expensive intervention. Furthermore, because each individual will be responsible for shouldering a degree of financial responsibility for his or her health care, he or she will be further encouraged to pursue beneficial lifestyles and preventative check-ups and treatments.
While those who qualify for Medicare and Medicaid shall be exempt from the requirement that they purchase private health insurance, they shall be allowed to purchase coverage beyond that provided by those programs, if they are able to do so and if insurers choose to offer such policies.
A provider shall be allowed to set his or her own fees for services provided under the Basic Minimum Benefit. For care provided to an insured and paid for by the Basic Minimum Benefit, the consumer shall have the choice of seeking treatment from a more or less expensive provider, and the insurer must reimburse the provider according to his or her fee schedule. In this manner, the insurer’s annual “unmanaged” exposure is limited to the Basic Minimum Benefit, and providers can be assured of being properly reimbursed for their services at least up to a minimum level for each patient.
Insurers may offer benefit packages of any type in addition to the Minimum Basic Benefit, and premiums for those packages and plans may be set by the insurer. This allows the competitive marketplace to determine the cost of insurance beyond the minimum level, and allows insurers to target market segments and recoup the costs of providing the Basic Minimum Benefit.
The implementation of the Stoler Proposal shall include a grace period during which any individual may obtain insurance under this proposal from any insurer regardless of preexisting medical conditions.
The Employee Retirement Income Security Act of 1974 broadly preempts state laws “relating to” employee benefit plans. Exempt from preemption are state laws which regulate insurance. While health insurance plans provided by employers fall under the category of employee benefit plans as contemplated by ERISA, only self-insured ERISA plans are subject to total exemption from state laws regulating insurance. The United States Supreme Court’s recent decision in New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Insurance Company, 115 S. Ct. 1671 (1995), has narrowed the scope of ERISA preemption by excluding from preemption those state laws which have only an indirect economic influence on an employee benefit plan.
The Stoler Proposal regulates and directly affects the relationship between insurer and insured. Because it applies to all insurance plans offered in the Commonwealth, it does not affect employers’ choice of medical insurance. It directly regulates the insurance industry, and any influence it may have on an employee benefit plan will be indirect. To the extent that it affects employee benefit plans, it is exempt from preemption because its affect indirect and economic in nature. To the extent that the Proposal directly addresses employer conduct or administration of benefit plans, it does so through the state’s power to tax, and ERISA is therefore not implicated.
The Model uses approximately $100 million dollars in revenues from an additional 25 cent increase in the cigarette tax to help finance the health insurance premiums of the lowest income citizens. An additional tax on alcoholic beverages will contribute to funding. The Proposal further contemplates a modest tax on the largest employers who do not offer health insurance to their employees.