The Health Care Peace Process: A Two System Solution

The factions have drawn their battle lines. One side wants to wipe health reform off the map, replacing it with a hazy market fundamentalism popular only among their intellectual classes and the plurality of people they can fool on their side of the border. Depending on who you ask, their idols are anyone from Hamas to Reagan.

The other side had the tactical advantage and used it to win a pyrrhic victory a few years ago, crushing the enemy with brute force and the Senate budget reconciliation process, all at great cost to their standing in the public eye. For some in their ranks, the long-term plan is total occupation of the health system under one monolithic state-run payer. Depending on who you ask, their idols are anyone from Chairman Mao to FDR.

Each of us approaches this conflict with our own biases and beliefs. I know I do. But all of us will suffer greatly if we don't engage in some sort of peace process and move on. Medicare can't go on expanding faster than the economy, payroll tax receipts, and premiums. Those of us with private coverage are getting tired of $1500 deductibles and payers who, despite the glossy rhetoric, don't really compete for our business or advocate for our health. Many of us run the risk of bankruptcy. Many more forego needed care, and none of us are getting what we pay for.

Barring unilateral annihilation of one side or another, there will be a two-system solution. We will have a mix of public and private payors interacting with patients and providers to produce something akin to real, coordinated care provision. Without some unimaginable legislative nuclear option, Medicare and Medicaid will remain, and private insurance will fight alley-to-alley insurgent warfare to remain an entrenched, profitable piece of our health care system.

Many on the left hope to expand Medicare and Medicaid to cover all ages and needs. Some would like the government to have a total monopoly on health finance. A few are indifferent to the tradeoff of expensive treatments for the desperate few in exchange for cheap coverage for many. Many on the right believe that the free market can provide care to the publicly insured more effectively than any public program. Some believe that health insurance should be a matter of personal preference no different than buying a car. A few believe it's fine if some of us take the bus, or walk, or limp, or crawl. People who pay attention on all sides know there must be a peace process leading to a final status that allows everyone to get on with their lives in a way that neither bankrupts the country nor ourselves.

What are the contours of such a process? Before we can even talk, we have to agree on what we're talking about. For me, the only term for negotiation should be the acknowledgment that there is a future for both the public and the private sectors in the territory of the health care system.

The current status is that Medicare and Medicaid provide coverage for the poor, elderly, and disabled. Health reform has made it so that almost everyone else will be covered by private insurance plans with some help from government subsidies. Skirmishes and periodic wars around the role of the state will continue to break out. Territory will be gained and lost. People, governments, businesses, and families will continue to live with uncertainty of endless war over 20 percent of our economy.

Both sides have real grievances. We have employed all matter of dirty tricks and arm twisting to get us where we are today. Budget reconciliation was used to pass the non-negotiated, unfunded drug benefits under Medicare Part D. It was also used to pass health reform. But something looking like a final status is emerging on the distant horizon.

The latest GOP budget abolishes health reform's private health insurance exchanges for the general population and replaces Medicare for the elderly with benefits that function almost exactly the same as  what they have fought tooth-and-nail to repeal for the rest of us. For any agreement to happen, they'll have to acknowledge that their own ideas for private insurance will apply to all of us. Democrats have long advocated for a "public option" to rival private insurance providers, or even replace them altogether. If they want to make peace, Medicare will be their bargaining chip.

I propose a two-system solution:

Eligibility to Medicare is opened to all lawful residents of the United States. Its plans and premiums are managed on the health insurance exchanges like any other. The tradeoff is that seniors, the poor, and disabled will be no exception. States will continue to contribute to funding health plans for the poor, but will no longer be required to run their own Medicaid plans. A general fund will be established for all premium subsidies and will be devolved to the states according to need.

The employer tax exemption for health benefits is abolished, and the new revenue will go to premium subsidies for those who need them. Employers will drop coverage, leaving individuals to seek it on their own in the exchanges. People will choose between Medicare or any qualifying private plans on the market. If one plan or another doesn't work for them, they can switch once per calendar year.

If needed, the Medicare payroll tax rate on the employer side should go up in order to compensate for the expanded public role in the system, but the program will be mandated to operate under a balanced budget to ensure that it does not outcompete the private sector with the cheap sovereign debt it has access to as a federal entity.

We will all live in one land under two systems. Insurance will be bought and sold in state exchanges, regardless of how old we are, or how much money we have, and everyone will pay to ensure that care is affordable for all. Everyone will need to sacrifice something they held sacred. Our health care system's problems are solvable by rearranging the pieces that are already in place. Peace and its dividends are possible, but we must first decide that peace is worth the price to our side, and trust the other side to do the same.

Maybe someday, but not this year. Not with these leaders.