There is a simple alternative to having the federal government involved in healthcare and expose taxpayers to large unfunded liabilities. The costs and benefits would be managed at the State level while addressing most, if not all, of the concerns from pundits. The goal is to ensure that all citizens have access to health care. Here's how to achieve this goal.

First, impose a corporate tax on the income obtained by all health insurance companies which are licensed in the State. An additional source of income could possibly be generated through a nominal "bed tax" for hospitals and other facilities. In necessary the federal government could also provide some initial matching funds.

Second, all individuals who are not insured or lose insurance will be require to register into a central "pool" adminstered by the State (such as Medicaid, DOR, or DOI).

Third, all insurance companies licensed in the State will be required to "bid" for minimum of a proportional share of this uninsured population - for example if Cigna has 80% of the market share they have to cover 80% of the unisured pool.

Lastly, the benefits and premiums would set but something akin to the Public Service Commission. It then would be up to the insurance company to petition this State agency for benefit changes or premium increases.

The result would be care delivered and managed locally. Insurers would have an incentive to lower administrative costs to keep individuals from falling into the lower paying unisured pool. And if the whole thing falls apart, there then exists the framework for a public option.

The only loophole I see has to do with cost control. Can legislation be passed which would require hospitals, physicians, etc., etc. to accept a defined level of reimbursement? But, I guess this question exists in the current debates as well.

The biggest objection I have to your plan is that it maintains the link between employment and insurance. That link is not the only reason unemployment is so high, but it's a major part of it.

Your proposal sounds like Health Insurance Exchanges (HIEs). Every state will have a market where there would be a minimum defined benefits package every insurance company would have to offer. Consumers would know exactly what was in these identical packages and insurers would compete on price. Insurers could also offer enhanced benefits at higher prices. All uninsured would be required to buy insurance. It seems you don't allow consumer choice in your proposal so the HIEs has the advantage of allowing people to pick and choose what level of coverage they want though, like your proposal, they are required to get some form of coverage.

Of course what I describe is basically what is proposed in both the Senate and the House bills. The major question is whether there will be a public option competing on the HIEs or not. So I don't quite understand why you think your proposal is radically different than the proposed bills in Congress. Your proposal doesn't include subsidies which means you're requiring people to buy something they can't afford. Congress is trying to deal with that problem and specifies funding sources.

You are correct, SteveH. The two are very similar in many respects. Some differences, however, include:

1. Managed at the State level rather than federal level. Programs and reimbursement levels which make sense in the very urban NE make not make sense in the very rural plain states (for example). Enrollees would have access to local representatives and regulators and advocates - at least at State level.

2. Insurers would have to offer a defined minimum level of benefits to this pool. At this bare minimum, all policies would be the same regardless of the insurer. However, an insurer could offer BETTER benefits (such as one of their standard policies), but would NOT receive any greater premium. An insurer might choose this option to avoid the adminstrative expense of configuring non-standard benefits and additional fee schedules.

3. The funding mechanisms for this program are much different than what is in the current Congressional bills. Congress proposes to pay for the program through a) Medicare Savings b) Taxes on wealthy c) Taxes on "premium" health policies d) Operational income from plan e) Prefunded contribution from government.

I envision a) letting the Government recoup any savings from Medicare and use these savings strictly for the Medicare program - offset unfunded liabilities b) Taxes on ALL profits from Health insurers (i.e. investments, corporate holdings) - not just profits on premium savings c) concessions from medical providers through such concepts as hospital bed taxes, rebates from medical supply companies or pharma.

Medicaid could still exist for those who qualify or States could fold the Medicaid population into this program. Premiums would be subsidized depending on the needs of the uninsured.

I'm torn as to whether all unisured should be required to enroll.

The Senate Finance Committee sets up HIEs state by state. Health Policy experts worry that for small population, rural states the single state HIEs won't have a critical mass of customers. Another advantage to a nationwide HIE would be portability. If you move across state lines, you'd still have the same insurance. Also, sheer numbers on a national exchange would enable more competition.

"However, an insurer could offer BETTER benefits (such as one of their standard policies), but would NOT receive any greater premium." Not sure what you mean. Why would they offer more for the same amount of money? How could they? Also, it defeats the purpose of a basic benefits package which allows easy comparison shopping.

In addition, total profits of insurers probably aren't enough to fund the program.