Universal Health Care Vouchers

VII. Key Issues: Regulation & Reform >> C. Health Reform >> Mandatory Health Reform Plans >> Universal Health Care Vouchers

Basic Design

This proposal by Ezekiel Emanuel and Victor Fuchs is a social insurance model that would achieve universal health coverage through risk-adjusted vouchers provided to all citizens that would guarantee basic health care services through private health insurance without any means-testing. It is the least market-oriented of the proposals being assessed in that substantially narrows the differences in insurance coverage that would be permitted under the other proposals, i.e., substituting a much larger degree of third party coverage for out-of-pocket payments whether individuals prefer to do so or not.

• Eligibility: all U.S. citizens under 65 would be given risk-adjusted vouchers, with Medicare gradually phased out as voucher-covered citizens reach the age of Medicare eligibility. Those failing to obtain coverage would be assigned to a health plan. Except for Medicaid long-term care, all means-tested health programs such as SCHIP would be eliminated.
• Benefits: all qualified plans would cover basic health services similar to the acute health benefits typically offered by large employers (including hospital inpatient/outpatient services, physician visits, well-child care, preventive services, mental health care and tiered pharmacy benefits) with modest deductibles and copayments. A Federal Health Board (FHB) would define and periodically modify this benefits package. An independent publicly funded Institute for Technology and Outcomes Assessment (ITOA) would assess the cost-effectiveness of various interventions and treatment strategies. Medicaid would continue to provide subsidized long-term care coverage for those who need it.
• Freedom of Choice: individuals may obtain their coverage through an employer or private individual insurance; more comprehensive coverage could be purchased with after-tax dollars.
• Financing: all Americans would receive a voucher that would guarantee basic health services through a plan of their choice without any form of means-testing. These vouchers would be funded with an earmarked value-added tax to provide a direct connection between the generosity of the benefit levels and the taxes required to support it. The ITOA be funded from 0.5% of the value-added tax.
• Regulation: all qualified plans would have to offer guaranteed enrollment and renewal for the risk-adjusted value of each member’s voucher, regardless of the member’s medical history.  The FHB would provide management and oversight, but in each geographic region, regional boards would be responsible for contracting with health plans, advising area citizens of their health plan options, reimbursing health plans and collecting uniform data regarding patient satisfaction, quality of care, and information required for risk/geographic adjustments needed to make equitable payments to plans.

Theory

• Fuchs VR. Let’s make Volkswagen medicine compulsory. Medical Economics 1969:110-119.
• Ezekiel J. Emanuel and Victor R. Fuchs. Health care vouchers: a proposal for universal coverage. New England Journal of Medicine 352(12), March 24, 2005: 1255-1260. Available at: http://www.robert-h-frank.com/PDFs/Emanuel-Fuchs.NEJM.3-24-05.pdf.

Practice

No country uses a system such as this, but it essentially is the market equivalent of a “Medicare-for-all” system in its provision of a national standardized package of benefits provided to all citizens regardless of income and financed by the federal government using a dedicated tax. Unlike Medicare–which relies on administered prices for services established by a federal agency and a single government-selected private health plan in each geographic area to administer Part A benefits (and possibly a different administrator for Part B benefits)–the voucher approach would rely on individual choice among competing plans to determine which plans thrive, giving plans an incentive to find the best ways of offering value for the money in terms of what kind of providers are included, how much they are paid, how care is organized and the incentives given to patients and providers for healthy lifestyles and prudent service use.