Medical Care

Some crucial aspects of the provision of medical care—gaining the requisite cooperation from physicians and other medical-care providers—lie outside the primary focus—socioeconomic rights of citizens—of the investments approach. Unfortunately in light of this, other aspects of medical-care provision—assuring people financial access to medical care—remain integral concerns of the investments approach. It would be much simpler to follow the libertarians by limiting ourselves to an income-maintenance system;^[18] however, such an approach will not assure citizens protection from common social hazards. The need for medical care is highly intermittent for most people, but the costs—once care is needed—are frequently quite high. These features make it infeasible to cover the provision of medical care through income-maintenance means. Instead, health insurance that assures access to care at manageable cost—the technique adopted by the contemporary American upper middle class—is the appropriate tool.

The process of assuring access to medical care in such a fashion need not entail confronting the providers of medical services with intolerable changes. What I have in mind is a system similar in some respects to the decentralized, quasi-public national health insurance of the Federal Republic of Germany. This system should have the following general features. With respect to depth of coverage we need to develop a reasonably comprehensive national minimum. In most areas of provision this minimum could be similar to the current Medicare. But we should place some feasible, income-graduated maxima on out-of-pocket annual expenditures (for incomes below $10,000, $500; for incomes between $10,000 and $20,000, $1,000; and so on). With respect to breadth of coverage, this program should represent an integral aspect of employment. The carriers themselves would be the existing private insurance companies. And coverage would be extended throughout the working population by public subsidy for certain groups of employers

and employees. Households with children, even those with no employed adult, would be served through the deduction of the relevant insurance premiums from the universal child allowances. These broad features leave the practice of medicine relatively unchanged for most providers. The basic changes are the extension of access to medical care through the requirement that employers offer their employees insurance coverage meeting the minimum criteria and the use of public subsidies to help pay for coverage.

With this brief overview behind us, let us look with greater care at the specifics. My guess is that developing this sort of coverage requires as a prerequisite the establishment of a national bargaining council, as discussed at the end of chapter 7. This council, operating within general guidelines such as those outlined in the previous paragraph, would create an initial version of the specific rules about prices and limits. Existing providers could expect to continue their activities as relatively autonomous units as well as to receive their customary incomes. Public officials in return would gain assurances about future cost increases. I would anticipate that limitations on provider practices would initially be fairly modest and would grow with time, experience, and the gradually broadening recognition that the providers of medical care in America form an industry, and that, as is the case for other important service industries, some degree of public regulation is necessary.

The most important aspects of the initial measures involve extending access to medical care to working-aged Americans and their dependents. The basic mechanism here involves a program of subsidies to low-income employees, and as necessary to small-scale employers, that allows employees to join a system of compulsory medical-care insurance meeting minimum national criteria. The employees of small-scale employers might, for instance, be consolidated into several groups for which risks are shared by private carriers with federal subsidies.^[19] Employers could be required to offer a choice of plans varying in coverage, expense, and manner of care—HMO or traditional fee-for-service. And a variety of cost-control features should characterize minimum coverage as is increasingly the case for existing private group insurance. The central objective of this coverage would be to place feasible upper limits on the annual out-of-pocket medical expenses of families in varying income ranges. Conventional practices with respect to deductibles

and coinsurance would not be excluded—only limited—by this goal. Whether coverage would extend to all known treatments would have to be debated in the bargaining council. These aspects as well as other facets of coverage limitations would be subject to change and, as with other rights' limits issues, would represent public decisions about cultural conventions.

Households with children would be covered under this program, regardless of the employment status of their adults, by virtue of an automatic system of deducting the relevant insurance premiums from the child allowances. This practice is consistent with the conception developed in chapter 2, that children are not responsible for their predicaments and should have support extended to them on the basis of need. Collectively, these two proposals would cover employed households and households with children. Unemployed single adults and childless couples should be able to join this insurance scheme at subsidized rates similar to those available for employed persons. These high-risk individuals could be spread across insurance carriers so as to minimize the problems of specific companies.

Individuals for whom an episodic social hazard did not mean an end to employment would be covered by the system described above. Those whose hazards spelled an end to employment—retirement or long-term total disability—would be picked up by the Medicare program. This program would also serve those enrolled and making satisfactory progress in job training programs. People whose disabilities placed them in the residual SSI program would also come under Medicare, but hopefully under expanded provisions that allowed appropriate human-intensive care.

Existing Medicare provisions can generally stand. But I do propose some changes that would bring Medicare into line with my other medical-care proposals. First, I propose an out-of-pocket ceiling for covered care similar to that for the households of working-aged adults. Second, we should extend limited coverage of low-intensity care for chronic conditions. Third, I propose cutting back the degree to which public programs support prolonging the lives of terminally ill patients.

Realizing these provisions would assuredly add to the proportion of GNP that is funneled into the medical-care sector of the economy, and it would add as well to the costs of public programs

directed at medical-care problems. For these reasons it is crucial that the provisions follow the efforts described in chapter 7 to create cost-control structures by both public regulation and market means. I suspect that no one could predict with any accuracy the cost increases that these proposals would involve, but I will identify major components. Extending minimum national medical-care insurance coverage to working-aged adults and their dependents will involve the largest single cost increase. I have suggested a way of placing limits on these increases by explicitly raising the possibility of placing some new, expensive, and exotic treatments beyond the limits of this minimum coverage. Coverage for these treatments should be available for those who want and can pay for it, but it need not be included in the initial basic minimum public coverage. Within Medicare, expenses would rise as a consequence of realizing these proposals, primarily due to the addition of new beneficiaries—participants in job training programs and SSI beneficiaries. The three recommendations that I made with respect to the existing Medicare provisions offset one another. Adding annual out-of-pocket payment ceilings and limited low-intensity care for chronic conditions would both increase expenses, but these increases would be largely offset if substantial cuts were made in the use of Medicare to prolong the lives of the terminally ill. The overall increases in public medical-care expenses that these proposals entail would add to the case for building progressive tiers into social insurance payroll tax deductions.